As filed with the Securities and Exchange Commission on May 28, 2021.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Century Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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2836
(Primary Standard Industrial
Classification Code Number)
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84-2040295
(I.R.S. Employer
Identification Number)
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3675 Market Street
Philadelphia, Pennsylvania 19104
(267) 817-5790
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Osvaldo Flores, Ph.D.
President and Chief Executive Officer
Century Therapeutics, Inc.
3675 Market Street
Philadelphia, Pennsylvania 19104
(267) 817-5790
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
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Rachael M. Bushey
Jennifer L. Porter
Troutman Pepper Hamilton Sanders LLP
3000 Two Logan Square
Philadelphia, Pennsylvania 19103
(215) 981-4331
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Richard Truesdell, Jr.
Roshni Cariello
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
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Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
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.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☒
Emerging growth company ☒
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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 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
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Title of each class of
securities to be registered
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Proposed
maximum
aggregate
offering price(1)
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Amount of
registration fee(2)
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Common Stock, $0.0001 par value per share
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$100,000,000
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$
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10,910
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(1) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. Includes the aggregate offering price of additional shares of common stock that the underwriters have the option to purchase.
(2) Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to completion, dated May 28, 2021
Preliminary prospectus
shares
Common stock
This is the initial public offering of shares of common stock of Century Therapeutics, Inc.
We are offering shares of our common stock. Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial public offering price per share will be between $ and $ .
We have applied to list our common stock on the Nasdaq Global Select Market under the trading symbol “IPSC”.
We are an “emerging growth company” and a “smaller reporting company” as defined under the federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and may elect to do so in future filings.
Investing in our common stock involves a high degree of risk. See the section titled “Risk factors” beginning on page 1 to read about factors you should consider before buying shares of our common stock.
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Per share
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Total
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Initial public offering price
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$
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$
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Underwriting discounts and commissions(1)
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$
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$
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Proceeds to us before expenses
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$
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$
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(1) See the section titled “Underwriting” beginning on page 189 for additional information regarding compensation payable to the underwriters.
We have granted the underwriters an option for a period of 30 days to purchase up to additional shares of common stock at the initial public offering price, less the underwriting discounts and commissions.
The underwriters expect to deliver the shares against payment in New York, New York on , 2021.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
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J.P. Morgan
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BofA Securities
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SVB Leerink
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Piper Sandler
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Prospectus dated , 2021
Table of contents
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Page
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ix
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xi
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1
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58
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60
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70
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87
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149
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161
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172
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175
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177
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182
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185
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189
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200
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201
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202
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F-1
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“Century Therapeutics” the “Century Therapeutics” logo, and other trademarks, trade names, or service marks of Century Therapeutics, Inc. appearing in this prospectus are the property of Century Therapeutics, Inc. All other trademarks, trade names, and service marks appearing in this prospectus are the property of their respective owners. Solely for convenience, the trademarks and trade names in this prospectus may be referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert their rights thereto.
Neither we nor the underwriters have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus or in any applicable free writing prospectus is current only as of its date, regardless of its time of delivery or any sale of shares of our common stock. Our business, financial condition, and results of operations may have changed since that date.
For investors outside the United States: Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus or any free writing prospectus we may provide to you in connection with this offering in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus and any such free writing prospectus outside the United States.
Prospectus summary
This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus. You should carefully consider, among other things, the sections titled “Risk factors,” “Special note regarding forward-looking statements,” and “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus. As used in this prospectus, unless the context otherwise requires, references to “we,” “us,” “our,” “the company,” “Century,” and similar references refer to: (i) on or prior to June 2019, to our predecessor, Century Therapeutics, Inc., which we refer to as “Prior Century,” (ii) from June 2019 to the completion of the 2021 Reorganization (as defined herein), to Century Therapeutics, LLC, and (iii) upon completion of the 2021 Reorganization, to Century Therapeutics, Inc., the registrant on the cover page of the registration statement of which this prospectus forms a part.
Overview
We are an innovative biotechnology company developing transformative allogeneic cell therapies to create products for the treatment of both solid tumor and hematological malignancies with significant unmet medical need. We have created a comprehensive allogeneic cell therapy platform that includes industry-leading induced pluripotent stem cells, or iPSCs, differentiation know-how to generate immune effector cells from iPSCs, or iPSC-derived cells, clustered regularly interspaced short palindromic repeats, or CRISPR, mediated precision gene editing that allows us to incorporate multiple transgenes and remove target genes intended to optimize cell product performance, sophisticated protein engineering capabilities to develop proprietary next generation chimeric antigen receptors, or CARs, our proprietary Allo-EvasionTM technology intended to prevent rejection of our cell products by the host immune system, and cutting edge manufacturing capabilities intended to minimize product development and supply risk. We believe that these vertically integrated capabilities will allow us to further expand our existing pipeline and develop therapeutics from iPSC-derived natural killer cells, or iNK cells, or iNK, and iPSC-derived T cells, or iT cells, or iT, that may provide enhanced clinical outcomes compared to available therapeutic options. Our vision is to become a premier cell therapy company by developing and ultimately commercializing allogeneic cell therapies that dramatically and positively transform the lives of patients suffering from life-threatening cancers. To achieve our vision, we have assembled a world-class team whose members collectively have decades of experience in cell therapy and drug development, manufacturing, and commercialization.
The field of cell therapy is rapidly evolving, with autologous and allogeneic technologies demonstrating the strong potential of this therapeutic modality. We believe that our industry leading, end-to-end iPSC-derived allogeneic cell therapy platform will allow us to overcome technical and biological limitations of other donor-derived cell therapies. The unlimited replication capacity of iPSCs allows us to incorporate multiple genetic modifications at precise sites, or loci, in the genome of iPSCs that are designed to improve cell function using a CRISPR-mediated approach targeting a DNA repair pathway called homology directed repair, or HDR. The precision of our CRISPR-HDR gene editing technology and clonal selection eliminates random integration events and allows more controlled expression of transgenes of interest compared to other gene editing methodologies. The self-renewal capacity of iPSCs also enables the generation of master cell banks derived from single genetically engineered clones thus allowing the implementation of cost-efficient manufacturing of drug product that is available on demand at any clinical site. We have assembled a unique and powerful combination of technologies that bring together a preeminent iPSC-derived allogeneic cell therapy platform with highly advanced cell engineering and manufacturing capabilities. We believe this unique combination puts us in a position to disrupt the oncology treatment paradigm and market.
The key elements of our approach include:
Our efficient precision gene editing technology: We have developed highly efficient gene engineering processes to generate our product candidates. Our first product candidate will have six CRISPR-mediated homologous
recombination and repair edits, and we plan to incorporate additional edits in our future product candidates. We are currently using the CRISPR-MAD7 nuclease to enable precise cutting of the iPSC genome, and have developed proprietary applications of the CRISPR-MAD7 technology to genetically modify iPSCs by simultaneously removing target genes or adding transgenes (which is commonly known as knocking-out and knocking-in, respectively) of interest at precise genetic loci. Our approach preserves genome integrity and achieves more predictable and consistent transgene expression as compared to approaches driven by viruses or transposable segments called transposons, which result in varied gene copy number and random integration events that risk mutations, namely insertional mutagenesis.
Our proprietary Allo-EvasionTM technology: We are leveraging our Allo-EvasionTM technology to design cells capable of evading identification and destruction by the host immune system. We believe this technology may permit dosing in patients with limited or no immune preconditioning regimens. The reduction in allogeneic immune-reactivity enabled by our use of this technology, which is designed to prevent rejection by the patient’s immune system, may allow repeat dosing of our CAR-modified cell therapies, and sustain therapeutic efficacy over a long period of time.
CAR and protein engineering: CAR design is a critical component of innovative cell therapy product candidates. We assembled a team of scientists with deep protein engineering expertise and invested in the single domain antibody fragment, or VHH, antibody platform to develop world-class CAR engineering capabilities that we believe will allow us to create multi-specific CAR constructs targeting more than one tumor antigen. We believe that targeting multiple antigens on tumor cells will help address tumor heterogeneity and antigen loss, which are frequently observed in tumor cells. We have created a proprietary synthetic library of humanized VHH binders to enable in-house binder screens and multiple campaigns against several tumor antigens are ongoing to generate the CAR constructs for future product candidates.
Common engineered iPSC progenitor accelerates new product candidate generation: With other cell therapy platforms generated from cells with limited replicative capacity, the creation of a new product candidate requires starting over with each of the gene engineering steps having to be incorporated into the product. This is not only time and resource intensive; it also makes it more difficult to predict functionality and safety based upon products that may have been clinically tested in earlier programs. In contrast, all of our iPSC-derived product candidates include a set of shared core features intended to increase their functionality, safety, and persistence. We integrate these core features into a common engineered iPSC progenitor, which has several advantages:
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Significant acceleration of new product candidate generation. Multiple product candidates are generated by engineering additional features, such as adding different CARs, to the common progenitor to create new clinical candidates for different tumor indications. With this approach, we do not need to reengineer common functionalities every time we generate a new product candidate.
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Robust manufacturing processes for multiple product candidates. Since the starting iPSC line is the same for multiple product candidates, our manufacturing processes are predictable and robust.
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Predictability of product candidate functionality, safety, and persistence. Because multiple clinical candidates are derived from the same engineered iPSC line, the lessons learned from one product candidate can be leveraged across multiple product candidates, which facilitates clinical development. For instance, the allo-reactivity of products derived from the same common engineered iPSC progenitor should be very similar.
We expect to file an investigational new drug application, or IND, with the U.S. Food and Drug Administration, or the FDA, for our lead product candidate CNTY-101, a CAR-iNK product candidate targeting CD19 for lymphoma, in mid 2022. We expect to file an IND for CNTY-103, our CD133 + EGFR iNK product candidate designed to treat glioblastoma, in the first half of 2023. Our third candidate, CNTY-102, is a bi-specific CD19 + CD79b iNK or iT product candidate targeting lymphoma, with IND filing expected in the second half of 2023, and, our fourth candidate, CNTY-104, is a multi-specific product candidate targeting acute myeloid leukemia, or AML, with IND filing expected in mid 2024. As there are disease settings which will favor iNK or iT products, we are actively investigating both iNK and iT cell platforms for CNTY-102 and CNTY-104, as either may have preferential clinical features. We are also advancing an earlier discovery stage pipeline with novel CARs and binders against multiple
solid tumor targets using our iNK and iT cell therapy platforms. We believe that the therapeutics we discover and develop, if approved, will have a significant impact on the quality of life of patients suffering from devastating solid tumor and hematological malignancies. Our approach to developing therapies for life-threatening cancers of highly unmet medical need potentially presents an opportunity to efficiently advance our product candidates through clinical development, regulatory approval and ultimately to commercialization.
Our collaboration with FUJIFILM Cellular Dynamics Inc., or FCDI, provides us with licenses to certain premier iPSC technologies, patents and know-how, giving us our initial start which enabled us to accelerate generation of our first-generation product candidates and development of our manufacturing processes. We have built and expanded on this foundation with our own resources, applying our own gene editing, protein engineering, process development, and manufacturing expertise to develop our novel product candidates and platforms for which we are developing our own intellectual property. We retain exclusive commercialization rights in the United States and other major commercial markets for our product candidates developed pursuant to our collaboration with FCDI.
Advantages of our proprietary allogeneic cell platform technology
Key advantages of our proprietary allogeneic cell platform technology include:
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Greatly improved therapeutic application: We believe that our Allo-EvasionTM engineering technology will allow our cell product candidates to escape recognition and destruction by the host immune system. We believe the reduction in allogeneic reactivity enabled by our use of this technology will allow repeat dosing of our CAR-modified cell therapies to improve therapeutic efficacy. In combination with the extended killing capability of optimized immune cells derived from single genetically engineered cell cloning, we envision utilizing repeat dosing to maximize durability of response and efficacy. Additionally, we believe this technology may permit dosing in patients with limited or no immune preconditioning regimes.
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Manufacturing, product quality, and COGS advantages: We believe our use of iPSCs, which have the potential to propagate indefinitely, will allow us to develop a streamlined manufacturing process with scalability advantages while producing consistent, high quality, off-the-shelf products at reduced manufacturing costs. Given the indefinite propagation potential of iPSC-derived allogeneic cells, we believe that a single master cell bank can be used for the lifetime of the product.
Our pipeline
We are assembling a portfolio of allogeneic iNK and iT cell therapy product candidates across solid tumor and hematological malignancies. This pipeline is comprised of cell therapies intended to address diseases where we believe current therapies are inadequate. All product candidates incorporate our proprietary Allo-EvasionTM technology to avoid host rejection and potentially increase the durability of clinical responses. With the exception of our lead product candidate, CNTY-101, each of our product candidates is designed to target multiple tumor antigens. We currently anticipate filing an IND for our lead product candidate, CNTY-101, targeting B-cell lymphoma, in mid 2022. Our second product candidate, CNTY-103, is designed to treat glioblastoma, and we currently anticipate filing an IND in the first half of 2023. Our third product candidate, CNTY-102, is designed to further improve B-cell malignancy treatment, and we are planning on filing an IND for it in the second half of 2023. Our fourth product candidate, CNTY-104, is being developed to treat AML with the IND filing expected in mid 2024. Our development programs consist of the product candidates illustrated in the pipeline chart below:
![[MISSING IMAGE: TM218551D3-FC_PIPELINE4C.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-FC_PIPELINE4C.JPG)
(1)
We are party to an option agreement with Bayer HealthCare LLC, or Bayer, pursuant to which Bayer was granted certain bidding rights relating to the potential transfer of rights with respect to certain product candidates being researched and developed by us which are comprised of iNK cells, macrophages or dendritic cells, including CNTY-101, CNTY-103 and any other product candidate comprised of iNK cells that we develop in the future. Bayer's rights under the option agreement are subject to important limitations. See "Business—Licensing, partnership and collaboration—Bayer HealthCare LLC—Option Agreement" for more information.
CNTY-101: Our CAR-iNK candidate targeting CD19 for relapsed, refractory B-cell lymphoma. Our lead product candidate, CNTY-101, is an allogeneic, iPSC-derived CAR-iNK cell therapy that has been engineered to express CD19 CAR, soluble IL-15, an EGFR safety switch, and also contains gene edits needed to incorporate Allo-EvasionTM technology. We expect clinical candidate clone selection in the first half of 2021, and plan to move into IND enabling preclinical and technical studies and manufacturing at that time. We anticipate filing an IND to advance CNTY-101 into a Phase 1 clinical trial in mid 2022.
CNTY-103: Our CAR-iNK candidate targeting CD133 + EGFR for recurrent glioblastoma. We are pursuing a differentiated approach addressing glioblastoma multiforme, or GBM, tumor heterogeneity, and planning local administration of the iNK cell product candidate. CNTY-103 represents our first clinical product candidate targeting a solid tumor and we believe targeting GBM with our engineered iNK cells may provide an opportunity to assess the clinical utility of, or establish proof of concept for, our iPSC-derived iNK cell therapy platform. We are projecting filing an IND and/or clinical trial application, or CTA, for recurrent GBM in the first half of 2023.
CNTY-102: Our CAR-iT or CAR-iNK candidate targeting CD19 + CD79b for relapsed, refractory B-cell lymphoma and other B-cell malignancies. CNTY-102 will simultaneously target CD19 and CD79b, intended to increase depth and durability of response by eliminating the effect of CD19 antigen loss that has been observed as a factor limiting treatment durability, as well as targeting CD79b, an independently regulated, ubiquitous and validated B-cell target. We currently envision filing the IND for CNTY-102 in the second half of 2023.
CNTY-104: Our CAR-iT or CAR-iNK multi-specific candidate for acute myeloid leukemia. CNTY-104 will utilize our multi-specific iNK or iT cells for the treatment of AML. Given the known therapeutic activity of natural killer, or NK, cells in AML, there might be an advantage to using the iNK cell platform to build the product candidate, but we will evaluate both the iNK and iT cell therapy platforms and choose the one likely to provide the best therapeutic index in the clinic. We currently envision filing the IND for CNTY-104 in mid 2024.
Discovery platform. In addition to our named programs, we are actively engaged in a number of earlier stage discovery programs where we believe our iPSC-derived allogeneic cell therapy platform may provide differentiated therapeutic benefits. These discovery stage initiatives are focused on several solid tumor indications including bladder cancer and renal cell carcinoma. For these and other indications, we plan to use multispecific CARs and explore the use of both iNK and iT cells to identify the best cell platform to build the product candidate.
Our strategy
Our vision is to be a leader in the treatment of both solid tumor and hematological malignancies that address unmet medical needs by developing innovative allogeneic cell therapy products derived from our proprietary technologies. We are initially focused on advancing the clinical development and commercialization of tumor-targeted iNK and iT cell therapeutics. We believe that our iPSC-derived allogeneic cell therapy platforms have the potential to overcome the limitations of existing therapies, lower manufacturing costs and improve patient outcomes. To deliver on our mission, we intend to:
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Build a leading cell therapy company leveraging our comprehensive iPSC-derived allogeneic cell therapy platforms designed to overcome the limitations of existing cancer therapies.
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Maximize the potential to treat a broad range of cancers by exploiting the distinct biologies of both NK and T cells.
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Leverage our Allo-EvasionTM technology across our product platform to avoid host rejection and enable repeat dosing.
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Exploit serial gene editing of iPSCs to create product candidates with enhanced functionalities and fit for purpose product characteristics.
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Leverage our own future manufacturing infrastructure, product and process understanding, and scale-up technologies to minimize manufacturing risk.
Our team
We are led by pioneers and subject-matter experts with decades of collective experience in cell therapy and oncology drug development. Dr. Osvaldo Flores, our Chief Executive Officer, has over 25 years of experience in pharmaceutical research and development. Prior to Century, he was Vice President of R&D at Janssen after the acquisition of Novira Therapeutics, where he was a co-founder, President, and Chief Science Officer. Earlier in his career, he held senior positions at Merck & Co. and Tularik Inc. Dr. Hyam Levitsky, our President of Research and Development, previously held key R&D positions at Juno Therapeutics and Roche. Dr. Adrienne Farid, our Chief Operations Officer, has over 25 years of drug development experience and previously worked at Celgene, Roche, and SmithKline Beecham. Dr. Greg Russotti, our Chief Technology Officer, has over 30 years of experience and previously worked at Celgene and Merck. Dr. Luis Borges, our Chief Scientific Officer, has over 25 years of experience, with precedent positions in Cell Medica, Five Prime Therapeutics, Amgen, and Immunex. Dr. Michael Diem, our Chief Business Officer, has more than 15 years of experience in the pharmaceutical industry and held business and investment roles at Amicus, AstraZeneca, Aevi Genomics, GlaxoSmithKline, and SR One.
Our board of directors includes members with extensive experience leading companies in the fields of biotechnology and biopharmaceuticals, including Joseph Jimenez, former Chief Executive Officer of Novartis, and Toshikazu Ban, Corporate Vice President and Senior Deputy General Manager of the pharmaceutical product division at FUJIFILM Corporation Ltd. Our internal abilities are further underpinned by our Scientific Advisory Board, which consists of world-renowned scientists, clinicians, and key opinion leaders with decades of experience in the fields of stem cell biology, immunology, oncology, and cell therapy.
Since our inception in 2018, we have raised gross proceeds of approximately $340 million. Our stockholders include premier life science and strategic investors, including Versant Ventures, Leaps by Bayer, FCDI, Casdin Capital, Fidelity Management & Research LLC, the Federated Hermes Kauffmann Funds, RA Capital, Logos Capital, OrbiMed, Marshall Wace, Qatar Investment Authority, Avidity Partners, and Octagon Capital.
Risks associated with our business
Our business is subject to a number of risks of which you should be aware before making a decision to invest in our common stock. These risks are more fully described in the section titled “Risk factors” immediately following this prospectus summary. These risks include, among others, the following:
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we have a limited operating history, have incurred significant losses since our inception, and anticipate that we will continue to incur significant losses in the foreseeable future;
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we are very early in our development efforts and our business is dependent on our ability to advance our current and future product candidates through preclinical studies and clinical trials, obtain marketing approval and ultimately commercialize our current and future product candidates;
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we will need to raise substantial additional financing to fund our operations and continue the development of our product candidates;
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we are highly dependent on our strategic relationships and collaborations and any termination or loss of significant rights under such arrangements with our strategic partners could seriously harm our business;
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the COVID-19 pandemic may materially and adversely affect our business and our financial results and could cause a disruption to our supply chain and the development of our product candidates;
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utilizing CAR-iNK and CAR-iT cells represents a novel approach to immuno-oncology treatment of cancer, and we must overcome significant challenges in order to develop, commercialize, and manufacture our product candidates;
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the manufacture and distribution of our iPSC-derived cell product candidates is complex and subject to a multitude of risks;
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if we are unable to successfully commercialize our lead product candidate CNTY-101 or any of our other product candidates for which we receive regulatory approval, or experience significant delays in doing so, our business will be materially harmed; and
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we may face difficulties in obtaining, protecting, maintaining, and enforcing our intellectual property rights, including intellectual property rights that are licensed to us.
Recent developments
Series C Preferred Stock Financing
On February 25, 2021, we sold 24,721,999 shares of our Series C preferred stock, par value $0.0001 per share, or the Series C preferred stock, to certain institutional investors at a price of approximately $6.472 per share, for gross proceeds of approximately $160 million, which we refer to herein as the Series C Financing. The shares of Series C preferred stock were sold pursuant to an exemption from registration under the Securities Act. Upon the closing of this offering, all outstanding shares of our preferred stock, including our Series C preferred stock, will be automatically converted into an aggregate of 85,865,789 shares of common stock.
Our corporate information
We were formed in 2018 as Century Therapeutics, Inc., a Delaware corporation, or Prior Century. In connection with an investment in our Company by Bayer HealthCare LLC, or Bayer, in 2019, Prior Century contributed substantially all of its operating assets and cash to a newly formed entity, Century Therapeutics, LLC, or the LLC Entity, in exchange for units of the LLC Entity. We refer to this transaction as the 2019 Reorganization. From June 2019 to February 2021, our business was operated through the LLC Entity. On February 25, 2021, the LLC Entity converted from a Delaware limited liability company to a Delaware corporation, and changed its name to CenturyTx, Inc. Upon completion of this conversion, Prior Century merged with and into CenturyTx, Inc., with CenturyTx, Inc. as the surviving entity and CenturyTx, Inc. changed its name to “Century Therapeutics, Inc.” In
connection with this merger, the holders of equity interests in Prior Century received equivalent equity interests in Century Therapeutics, Inc. We refer to these transactions on February 25, 2021 as the 2021 Reorganization.
Our principal executive offices are located at 3675 Market Street, Philadelphia, Pennsylvania 19104, and our telephone number is (267) 817-5790. Our corporate website is www.centurytx.com. Information contained on, or accessible through, our website shall not be deemed incorporated into and is not a part of this prospectus or the registration statement of which it forms a part. We have included our website in this prospectus solely as an inactive textual reference and do not intend it to be an active link to our website.
Implications of being an emerging growth company
As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise generally applicable to public companies. As such, we may take advantage of reduced disclosure and other requirements otherwise generally applicable to public companies, including:
•
presenting only two years of audited financial statements, in addition to any required unaudited interim financial statements, with a correspondingly reduced “Management’s discussion and analysis of financial condition and results of operations” disclosure in this prospectus;
•
not being required to have our registered independent public accounting firm attest to management’s assessment of our internal control over financial reporting;
•
an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;
•
presenting reduced disclosure about our executive compensation arrangements;
•
not being required to hold non-binding advisory votes on executive compensation or golden parachute arrangements; and
•
extended transition periods for complying with new or revised accounting standards.
We have taken advantage of some of these reduced disclosure and other requirements in this prospectus. Accordingly, the information contained herein may be different than the information you receive from our competitors that are public companies or other public companies in which you hold stock.
The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies.
We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year following the fifth anniversary of the closing of this offering, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year, or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.
If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
The offering
Common stock offered by us
shares.
Underwriters’ option to purchase additional shares
shares.
Common stock to be outstanding after this offering
shares (or shares if the underwriters exercise in full their option to purchase additional shares).
We estimate that the net proceeds from this offering will be approximately $ million (or approximately $ million if the underwriters exercise in full their option to purchase up to additional shares of common stock), based on the assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
We intend to use the net proceeds from this offering to fund research and development of our product candidates and development programs, including our pre-clinical and clinical development of CNTY-101, CNTY-103, CNTY-102, and CNTY-104, to continue developing manufacturing capabilities for our product candidates, and for working capital and other general corporate purposes, including costs and expenses associated with being a public company.
See the section titled “Use of proceeds” for additional information.
You should read the section titled “Risk factors” for a discussion of factors to consider carefully, together with all the other information included in this prospectus, before deciding to invest in our common stock.
Proposed Nasdaq Global Select Market trading symbol
“IPSC”
The number of shares of our common stock to be outstanding after this offering is based on 110,247,171 shares of common stock outstanding as of March 31, 2021, (which includes 4,648,745 shares outstanding that are subject to forfeiture or our right to repurchase as of such date) assuming the conversion of all outstanding shares of our convertible preferred stock into an aggregate of 85,865,789 shares of common stock upon the closing of this offering, and excludes:
•
8,603,052 shares of our common stock issuable upon the exercise of stock options as of March 31, 2021, at a weighted-average exercise price of $0.73 per share;
•
40,540 shares of our common stock issuable upon the exercise of warrants to purchase common stock, at a weighted-average exercise price of $5.55 per share;
•
6,169,655 shares of our common stock reserved for issuance pursuant to future awards as of March 31, 2021 under our 2018 Stock Option and Grant Plan, as amended, or the 2018 Plan;
•
shares of our common stock reserved for future issuance under the 2021 Plan which will become effective upon the effectiveness of the Registration Statement of which this prospectus forms a part, as well as any future increases in the number of shares of our common stock reserved for future issuance pursuant to the 2021 Plan; and
•
shares of our common stock reserved for future issuance under our Employee Stock Purchase Plan, or the ESPP, which will become effective upon the effectiveness of the Registration Statement of which this prospectus forms a part, as well as any future increases in the number of shares of common stock reserved for issuance under the ESPP.
Unless otherwise indicated, all information contained in this prospectus, including the number of shares of common stock that will be outstanding after this offering, assumes or gives effect to:
•
no exercise of the outstanding options or warrants described above;
•
the filing and effectiveness of our second amended and restated certificate of incorporation immediately prior to the closing of this offering;
•
a for reverse stock split of our common stock to be effected prior to the closing of this offering;
•
the automatic conversion of all our preferred stock outstanding into an aggregate of 85,865,789 shares of our common stock upon the closing of this offering; and
•
no exercise by the underwriters of their option to purchase up to additional shares of our common stock.
Summary consolidated financial data
The following tables set forth our selected consolidated financial data for the periods and as of the dates indicated. The year ended December 31, 2020 and the period of June 21, 2019 through December 31, 2019 are referred to herein as Successor and the period of January 1, 2019 through June 20, 2019 is referred to herein as Predecessor. We have derived the selected consolidated statements of operations data for the Year Ended December 31, 2020 (Successor), the period from June 21, 2019 through December 31, 2019 (Successor) and the period from January 1, 2019 through June 20, 2019 (Predecessor), and the selected consolidated balance sheet data as of December 31, 2020 and 2019 (Successor) from our audited consolidated financial statements and related notes included elsewhere in this prospectus. For interim periods, we have derived our selected statements of operations data for the three months ended March 31, 2021 and 2020 and the selected balance sheet data as of March 31, 2021 from our unaudited condensed financial statements and related notes included elsewhere in this prospectus. The unaudited condensed financial statements were prepared on a basis consistent with our audited financial statements and include, in management’s opinion, all adjustments, consisting only of normal recurring adjustments that we consider necessary for a fair presentation of the financial information set forth in those statements. Our historical results are not necessarily indicative of the results that may be expected in the future. You should read the following consolidated financial data together with our audited consolidated financial statements and our unaudited condensed consolidated financial statements, and the related notes included elsewhere in this prospectus and the information in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
|
(in thousands, except share and per share data)
|
|
|
March 31,
|
|
|
December 31,
2020
|
|
|
Successor
period from
June 21, 2019
(Inception) to
December 31,
2019
|
|
|
Predecessor
period from
January 1,
2019 to
June 20,
2019
|
|
|
|
2021
|
|
|
2020
|
|
|
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
$
|
15,374
|
|
|
|
|
$
|
7,943
|
|
|
|
|
$
|
39,681
|
|
|
|
|
$
|
10,107
|
|
|
|
|
$
|
4,159
|
|
|
|
General and administrative
|
|
|
|
|
2,688
|
|
|
|
|
|
2,050
|
|
|
|
|
|
9,495
|
|
|
|
|
|
3,622
|
|
|
|
|
|
2,145
|
|
|
|
Write off of in-process research and development
asset
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4,722
|
|
|
|
|
|
225,946
|
|
|
|
|
|
—
|
|
|
|
Total operating expenses
|
|
|
|
|
18,062
|
|
|
|
|
|
9,993
|
|
|
|
|
|
53,898
|
|
|
|
|
|
239,675
|
|
|
|
|
|
6,304
|
|
|
|
Loss from operations
|
|
|
|
|
(18,062)
|
|
|
|
|
|
(9,993)
|
|
|
|
|
|
(53,898)
|
|
|
|
|
|
(239,675)
|
|
|
|
|
|
(6,304)
|
|
|
|
Interest expense
|
|
|
|
|
(314)
|
|
|
|
|
|
—
|
|
|
|
|
|
(381)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Other income, net
|
|
|
|
|
28
|
|
|
|
|
|
320
|
|
|
|
|
|
704
|
|
|
|
|
|
908
|
|
|
|
|
|
302
|
|
|
|
Net loss
|
|
|
|
$
|
(18,348)
|
|
|
|
|
$
|
(9,673)
|
|
|
|
|
$
|
(53,575)
|
|
|
|
|
$
|
(238,767)
|
|
|
|
|
$
|
(6,002)
|
|
|
|
Net loss per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted(1)
|
|
|
|
$
|
(0.95)
|
|
|
|
|
$
|
(0.51)
|
|
|
|
|
$
|
(2.85)
|
|
|
|
|
$
|
(12.68)
|
|
|
|
|
$
|
(0.40)
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted(1)
|
|
|
|
|
19,278,887
|
|
|
|
|
|
18,825,136
|
|
|
|
|
|
18,825,136
|
|
|
|
|
|
18,825,136
|
|
|
|
|
|
15,029,240
|
|
|
|
Pro forma net loss per share attributable to common stockholders – basic and diluted (unaudited)(2)
|
|
|
|
$
|
(0.17)
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.51)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma weighted-average number of common shares – basic and diluted (unaudited)(2)
|
|
|
|
|
105,144,676
|
|
|
|
|
|
|
|
|
|
|
|
104,690,925
|
|
|
|
|
|
|
(1) See Note 15 of our audited consolidated financial statements and Note 13 of our unaudited condensed consolidated financial statements included elsewhere in this prospectus for an explanation of the calculations of our basic and diluted net loss per share, and the weighted-average number of shares outstanding used in the computation of the per share amounts.
(2) See the subsection titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Unaudited Pro Forma Information” for an explanation of the calculations of our basic and diluted pro forma net loss per share, and the weighted-average number of shares outstanding used in the computation of the per share amounts.
|
|
|
|
March 31,
2021
|
|
|
December 31,
|
|
|
(in thousands)
|
|
|
2020
|
|
|
2019
|
|
|
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
79,483
|
|
|
|
|
$
|
27,211
|
|
|
|
|
$
|
44,064
|
|
|
|
Working capital(1)
|
|
|
|
|
172,387
|
|
|
|
|
|
66,685
|
|
|
|
|
|
81,128
|
|
|
|
Total assets
|
|
|
|
|
286,055
|
|
|
|
|
|
106,776
|
|
|
|
|
|
90,896
|
|
|
|
Convertible preferred stock
|
|
|
|
|
339,389
|
|
|
|
|
|
179,761
|
|
|
|
|
|
179,761
|
|
|
|
Accumulated deficit
|
|
|
|
|
(310,690)
|
|
|
|
|
|
(292,342)
|
|
|
|
|
|
(238,767)
|
|
|
|
Total stockholders’ deficit
|
|
|
|
|
(91,557)
|
|
|
|
|
|
(106,412)
|
|
|
|
|
|
(91,859)
|
|
|
(1) We define working capital as current assets less current liabilities. See our audited consolidated financial statements and the related notes included elsewhere in this prospectus for further details regarding our current assets and current liabilities.
Risk factors
Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our consolidated financial statements and the related notes and “Management’s discussion and analysis of financial condition and results of operations,” before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could have a material adverse effect on our business, financial condition, and results of operations. In such an event, the market price of our common stock could decline and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.
Risks related to our financial position and capital requirements
Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
We are a preclinical stage biopharmaceutical company with a limited operating history on which to base your investment decision. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, conducting discovery and research activities, filing patent applications, identifying potential product candidates, and preparing to initiate and conduct clinical trials, undertaking preclinical studies, in-licensing intellectual property, and establishing manufacturing processes and arrangements with third parties for the manufacture of initial quantities of our product candidates and component materials. All of our product candidates are still in the discovery and preclinical testing phase. We do not expect to submit an Investigational New Drug Application, or IND, for any of our product candidates until mid 2022. We have not yet demonstrated our ability to successfully commence or complete a clinical trial, submit an IND, or submit a biologics license application, or BLA, for a product candidate, obtain regulatory approval for any product candidate, manufacture a product at a commercial-scale or arrange for a third party to do so on our behalf, or conduct sales, marketing, and distribution activities necessary for successful product commercialization. Consequently, any assumptions you make about our future success or viability may not be as informed as they could be if we had a longer operating history.
We have incurred significant operating losses since our inception and expect to incur significant losses for the foreseeable future.
We have incurred significant operating losses since our inception. If our product candidates are not successfully developed and approved, we may never generate any revenue. Our net losses were $6.0 million, $238.8 million, $53.6 million, and $18.3 million for the period from January 1, 2019 through June 20, 2019 (our predecessor, Century Therapeutics, Inc., or Prior Century), the period from June 21, 2019 through December 31, 2019 (our successor after the completion of the 2019 Reorganization (as defined herein), or the Successor), the year ended December 31, 2020 (Successor) and the quarter ended March 31, 2021 (Successor), respectively. We had an accumulated deficit of $310.7 million as of March 31, 2021. Our net loss for the period from June 21, 2019 through December 31, 2019 (Successor) and our members’ deficit as of December 31, 2020 (Successor) included a charge to expense of $225.9 million related to in-process research and development assets, or IPR&D, acquired from Prior Century. Substantially all of our losses have resulted from expenses incurred in connection with our research and development programs, the acquisition of IPR&D from Prior Century and from general and administrative costs associated with our operations. All of our product candidates will require the expenditure of substantial additional development time and resources before we would be able to apply for or receive regulatory approvals and begin realizing product sales. We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will increase as we continue our development of, seek regulatory approval for, and potentially commercialize any of our product candidates and seek to identify, assess, acquire, in-license, or develop additional product candidates. Our prior losses, combined with expected future losses, have had and will continue to have a negative effect on our stockholders’ deficit and working capital.
We expect that it will be several years, if ever, before we have a commercialized product. We anticipate that our expenses will increase substantially if, and as, we:
•
continue to advance our induced pluripotent stem cells, or iPSC-derived allogeneic, cell therapy platforms;
•
continue preclinical development of, and initiate clinical development of CNTY-101 and our other product candidates;
•
seek to discover and develop additional product candidates;
•
establish and validate our own clinical-scale current good manufacturing practices, or cGMP, facilities;
•
seek regulatory approvals for any of our other product candidates that successfully complete clinical trials;
•
maintain, expand, protect, and enforce our intellectual property portfolio;
•
acquire or in-license other product candidates and technologies;
•
incur additional costs associated with operating as a public company, which will require us to add operational, financial, and management information systems and personnel, including personnel to support our drug development, any future commercialization efforts, and our transition to a public company; and
•
increase our employee headcount and related expenses to support these activities.
We may never succeed in any or all of these activities and, even if we do, we may never generate revenue.
We have never generated revenue from product sales and may never achieve or maintain profitability.
We have no product candidates in clinical development or approved for commercial sale and have not generated any revenue. To become and remain profitable, we must develop and eventually commercialize product candidates with significant market potential, which will require us to be successful in a range of challenging activities. These activities can include completing preclinical studies and initiating and completing clinical trials of our product candidates, obtaining marketing approval for these product candidates, manufacturing, marketing, and selling those products that are approved and satisfying any post-marketing requirements. We may never succeed in any or all of these activities and, even if we do, we may never generate sufficient revenues to achieve profitability. Because of the numerous risks and uncertainties associated with biologics product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability.
Even if we do achieve profitability, we may not be able to sustain or increase profitability. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business, or continue our operations.
We will require additional funding in order to finance operations. If we are unable to raise capital when needed, or on acceptable terms, we could be forced to delay, reduce, or eliminate our product development programs or commercialization efforts.
Developing biopharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive, and uncertain process that takes years to complete. Our operations have consumed substantial amounts of cash since inception, and we expect our expenses to increase in connection with our ongoing activities, particularly as we conduct preclinical and clinical trials of, and seek regulatory and marketing approval for, our product candidates. Even if one or more of our product candidates is approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate. We have financed our operations primarily through private placements of our securities. We intend to use the proceeds from this offering to, among other uses, fund research and development of our product candidates and development programs, including our preclinical and clinical development of CNTY-101, CNTY-103, CNTY-102, and CNTY-104. Our research and development expenses increased from $14.3 million for the year ended December 31, 2019 to $39.7 million for the year ended December 31, 2020 and from $7.9 million for the quarter ended March 31, 2020 to $15.4 million for the quarter ended March 31, 2021. As of March 31, 2021,
we had cash, and cash equivalents of $79.5 million and marketable securities of $166.6 million. Based on our current business plans, we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will be sufficient for us to fund our operating expenses and capital expenditures requirements for the next months after this filing.
Attempting to secure additional financing will divert our management from our day-to-day activities, which may impair or delay our ability to develop our product candidates. In addition, demands on our cash resources may change as a result of many factors currently unknown to us including, but not limited to, any unforeseen costs we may incur as a result of preclinical study or clinical trial delays due to the COVID-19 pandemic or other causes, and we may need to seek additional funds sooner than planned. If we are unable to obtain funding on a timely basis or at all, we may be required to significantly curtail or stop one or more of our research or development programs.
Raising additional capital may cause dilution to our stockholders, including purchasers of our common stock in this offering, restrict our operations or require us to relinquish rights to our technologies or product candidates.
Until and unless we can generate substantial product revenue, we expect to finance our cash needs through the proceeds from this offering, a combination of equity offerings and debt financings, and potentially through additional license and development agreements or strategic partnerships or collaborations with third parties. Financing may not be available in sufficient amounts or on reasonable terms. In addition, market volatility resulting from the COVID-19 pandemic or other factors could adversely impact our ability to access capital as and when needed. We have no commitments for any additional financing, and will likely be required to raise such financing through the sale of additional securities, which, in the case of equity securities, may occur at prices lower than the offering price of our common stock in this offering. If we sell equity or equity-linked securities, our current stockholders, including investors in this offering, may be diluted, and the terms may include liquidation or other preferences that are senior to or otherwise adversely affect the rights of our stockholders. Moreover, if we issue debt, we may need to dedicate a substantial portion of our operating cash flow to paying principal and interest on such debt and we may need to comply with operating restrictions, such as limitations on incurring additional debt, which could impair our ability to acquire, sell, or license intellectual property rights and impede our ability to conduct our business. Furthermore, the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our common stock to decline.
If we raise additional funds through licensing or collaboration arrangements with third parties, we may have to relinquish valuable rights to our product candidates or grant licenses under our intellectual property on terms that are not favorable to us. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability.
Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
The net operating losses of Prior Century carried over to us as a result of the merger of Prior Century with and into us on February 25, 2021 in the amount of approximately $5.0 million of federal net operating loss carryforwards, and approximately $9.5 million of state and local net operating loss carryforwards. To the extent that we continue to generate taxable losses, subject to certain limitations, unused losses will carryforward to offset future taxable income, if any, until such unused losses expire. Under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an ownership change (generally defined as a greater than 50 percentage points change (by value) in its equity ownership over a rolling three-year period), the corporation’s ability to use its pre-change net operating losses and other pre-change tax attributes to offset its post-change income may be limited. We believe that Prior Century or we may have experienced an ownership change in the past, which may affect our ability to utilize our net operating loss carryforwards. In addition, we may experience ownership changes in the future as a result of this offering or subsequent shifts in our stock
ownership, some of which are outside our control. Similar limitations will apply to our ability to carry forward any unused tax credits to offset future taxable income.
Our Option Agreement with Bayer HealthCare LLC may require us to sell certain of our product candidates, which may limit the value we could generate from our product candidates.
We are party to an option agreement, or the Option Agreement, with Bayer HealthCare LLC, or Bayer, pursuant to which Bayer was granted certain bidding rights relating to the potential transfer of rights with respect to certain product candidates being researched and developed by us which are comprised of allogeneic iPSC-derived natural killer cells, macrophages or dendritic cells, which we refer to as the Research Products. Under the Option Agreement, Bayer was granted a right of first refusal, or ROFR, to submit bids for the transfer or license of rights to research, develop and/or commercialize certain Research Products, which we refer to as the Research Product Rights. The Research Products include CNTY-101, CNTY-103 and any other product candidate comprised of iNK cells that we develop in the future. Bayer may exercise its ROFR for up to four of the first ten Research Products for which an IND is submitted, subject to certain limitations.
For a more complete description of the Option Agreement, please see the section titled “Business—Licensing Partnerships and Collaborations—Bayer HealthCare LLC” in this prospectus.
If Bayer exercises its ROFR for one of our Research Products, we may be required to transfer such Research Product (by sale, license, or other structure to be negotiated) to Bayer for a market value as determined by our board of directors, and such determination of market value may ultimately prove to be lower than the actual realizable value of applicable Research Product. There can be no guarantee that we will utilize the proceeds received in connection with the exercise of Bayer’s ROFR in a manner which will provide us with greater value than if we had retained the Research Product or sold such Research Product to another party. Any failure to realize or utilize the full value of our Research Products due to the Option Agreement could have a material adverse effect on our business, financial condition, and results of operation.
Unstable market and economic conditions may have serious adverse consequences on our business, financial condition, and stock price.
Global financial markets have experienced, as a result of the COVID-19 pandemic, and have in the past experienced, extreme volatility and disruptions, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy and ability to raise capital may be adversely affected by any such economic downturn, volatile business environment, or continued unpredictable and unstable market conditions. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance, and stock price and could require us to delay or abandon clinical development plans. In addition, there is a risk that one or more of our current service providers, manufacturers, and other partners may not survive these difficult economic times, which could directly affect our ability to attain our operating goals on schedule and on budget.
In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies, including very recently in connection with the ongoing COVID-19 pandemic, which has resulted in decreased stock prices for many companies notwithstanding the lack of a fundamental change in their underlying business models or prospects. These fluctuations have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors, including potentially worsening economic conditions and other adverse effects, or developments relating to the ongoing COVID-19 pandemic, political, regulatory, and other market conditions, may negatively affect the market price of shares of our common stock, regardless of our actual operating performance.
Risks related to our business and industry
We are very early in our development efforts. Our business is dependent on our ability to advance our current and future product candidates through preclinical studies and clinical trials, obtain marketing approval, and ultimately commercialize them.
We are very early in our development efforts and all of our product candidates are still in preclinical development. We expect to file an IND for our lead product candidate CNTY-101, in mid 2022 and we expect to file an IND for CNTY-103 in the first half of 2023. Additionally, we are actively engaged in a number of earlier stage discovery programs that may never advance to clinical-stage development. Our ability to generate product revenue, which we do not expect will occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of our product candidates, which may never occur. We currently generate no revenue from product sales and we may never be able to develop or commercialize a marketable product.
Each of our product candidates will require additional preclinical and/or clinical development, regulatory approval in multiple jurisdictions, obtaining manufacturing supply, capacity and expertise, building a commercial organization, or successfully outsourcing commercialization, substantial investment, and significant marketing efforts before we generate any revenue from product sales. Our product candidates must be authorized for marketing by the FDA, or certain other foreign regulatory agencies before we may commercialize our product candidates.
The clinical and commercial success of our product candidates will depend on several factors, including the following:
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timely and successful completion of preclinical studies, including toxicology studies, biodistribution studies, and minimally efficacious dose studies in animals, where applicable;
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effective INDs or comparable foreign applications that allow commencement of our planned clinical trials or future clinical trials for our product candidates;
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successful enrollment and completion of clinical trials, including under the FDA’s current Good Clinical Practices, or cGCPs, and current Good Laboratory Practices, or GLPs;
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positive results from our future clinical programs that support a finding of safety and effectiveness and an acceptable risk-benefit profile of our product candidates in the intended populations;
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receipt of marketing approvals from applicable regulatory authorities;
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establishment of arrangements with CMOs for clinical supply and, where applicable, commercial manufacturing capabilities;
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establishment and maintenance of patent and trade secret protection, and/or regulatory exclusivity for our product candidates;
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commercial launch of our product candidates, if approved, whether alone or in collaboration with others;
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acceptance of the benefits and use of our product candidates, including method of administration, if and when approved, by patients, the medical community, and third-party payors;
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effective competition with other therapies;
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establishment and maintenance of healthcare coverage and adequate reimbursement and patients’ willingness to pay out-of-pocket in the absence of such coverage and adequate reimbursement;
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establishment of a physician training system and network for administration of our product candidates;
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enforcement and defense of intellectual property rights and claims; and
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maintenance of a continued acceptable safety, tolerability, and efficacy profile of our product candidates following approval.
If we do not succeed in one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which would materially harm our business. If we are unable to advance our product candidates to clinical development, obtain regulatory approval, and ultimately commercialize our product candidates, or experience significant delays in doing so, our business will be materially harmed.
Our business is highly dependent on the success of our lead product candidate, CNTY-101 and our other product candidates.
We cannot guarantee that an IND application will be cleared by the FDA for CNTY-101 or our other product candidates or that CNTY-101 or our other product candidates will be approved for commercialization, on a timely basis or at all. Although certain of our employees have prior experience with clinical trials and regulatory approvals, we have not previously completed any clinical trials or submitted an IND or a BLA to the FDA, or similar regulatory approval filings to comparable foreign authorities, for any product candidate, and we cannot be certain that CNTY-101 or our other product candidates will be successful in clinical trials or receive regulatory approval. The FDA and other comparable global regulatory authorities can delay, limit, or deny approval of a product candidate for many reasons. Any delay in obtaining, or inability to obtain, applicable regulatory approval will delay or harm our ability to successfully initiate clinical trials and commercialize CNTY-101 or our other product candidates and materially adversely affect our business, financial condition, results of operations, and growth prospects.
Furthermore, if our clinical trials of CNTY-101 or our other product candidates encounter safety, efficacy, or manufacturing problems, development delays, regulatory issues, or other problems, our development plans for such product candidates in our pipeline could be significantly impaired, which could materially adversely affect our business, financial condition, results of operations, and growth prospects.
We may also evaluate our product candidates in combination with one or more other cancer therapies that have not yet been approved for marketing by the FDA or similar regulatory authorities outside of the United States. If the FDA or similar regulatory authorities outside of the United States do not approve these other drugs or revoke their approval of, or if safety, efficacy, manufacturing, or supply issues arise with, the drugs we choose to evaluate in combination with any product candidate we develop or combination therapy, we may be unable to obtain approval of or market our product candidates.
Our business depends upon the success of our iPSC-derived allogeneic cell therapy platforms.
Our success depends on our ability to utilize our iPSC-derived allogeneic cell therapy platforms to generate chimeric antigen receptors, or CAR-iNK and CAR-iT cell product candidates, to obtain regulatory approval for product candidates derived from it, and to then commercialize our product candidates addressing one or more indications. Though iPSC-derived cell therapy product candidates have been evaluated by others in clinical trials, our product candidates have never been evaluated in human clinical trials, and we may experience unexpected or adverse results in the future. We are exposed to a number of unforeseen risks and it is difficult to predict the types of challenges and risks that we may encounter during development of our product candidates. All of our product candidates developed from our iPSC allogeneic cell therapy platforms will require significant clinical and non-clinical development, review and approval by the FDA or other regulatory authorities in one or more jurisdictions, substantial investment, access to sufficient commercial manufacturing capacity, and significant marketing efforts before they can be successfully commercialized. If any of our product candidates encounter safety or efficacy problems, developmental delays, or regulatory issues or other problems, such problems could impact the development plans for our other product candidates because all of our product candidates are based on the same core iPSC technology.
Additionally, a key element of our strategy is to use and expand our iPSC allogeneic cell therapy platforms to build a pipeline of product candidates and progress those product candidates through clinical development for the treatment of a variety of different types of diseases. Although our research and development efforts to date have been focused on identifying a pipeline of product candidates, we may not be able to develop product
candidates that are safe and effective. Even if we are successful in building our pipeline, the potential product candidates that we identify may not be suitable for clinical development, including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely to be approvable or marketable and achieve market acceptance. If we do not continue to successfully develop, get approval for, and begin to commercialize any product candidates, we will face difficulty in obtaining product revenue in future periods, which could result in significant harm to our financial position and adversely affect our share price.
Utilizing CAR-iNK and CAR-iT cells represents a novel approach to immuno-oncology treatment of cancer, and we must overcome significant challenges in order to develop, commercialize, and manufacture our product candidates.
We have concentrated our research and development efforts on developing CAR-iNK and CAR-iT cell therapies. To date, the FDA has only approved 19 cell-based therapies for commercialization. The processes and requirements imposed by the FDA or other applicable regulatory authorities may cause delays and additional costs in obtaining approvals for our product candidates. Because our iPSC-derived allogeneic cell therapy platforms are novel, and cell-based therapies are relatively new, regulatory agencies may lack experience in evaluating our product candidates utilizing CAR-iNK and CAR-iT cells. This novelty may lengthen the regulatory review process, including the time it takes for the FDA to review our IND applications, if and when submitted, increase our development costs, and delay or prevent commercialization of our iPSC-derived allogeneic cell therapy platform products. Additionally, advancing novel immuno-oncology cell therapies creates significant challenges for us, including:
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developing a manufacturing process to produce our cells on a large scale and in a cost-effective manner;
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educating medical personnel regarding the potential side-effect profile of our cells and, as the clinical program progresses, on any observed side effects with the therapy;
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unanticipated technical limitations of our CRISPR-MAD7 gene editing technology; and
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establishing sales and marketing capabilities, as well as developing a distribution network to support the commercialization of any approved products.
We must be able to overcome these challenges in order for us to develop, commercialize, and manufacture our product candidates utilizing CAR-iNK and CAR-iT cells.
We have not yet demonstrated long-term stability of cryopreserved CAR-iNK cells.
We have not yet demonstrated long-term stability of cryopreserved CAR-iNK cells and, therefore, do not know if we will be able to store the cryopreserved cells for extended periods of time. If we are unable to demonstrate long-term stability, we will need to reduce the manufacturing batch size to ensure that the material we produce will be used before it expires. In that case, the scaling of our production processes will not deliver the efficiencies we expect, and the cost per dose of our product candidates will be substantially higher. We may also encounter difficulties not only in developing freezing and thawing methodologies for large-scale use, but also in obtaining the necessary regulatory approvals for using such methodologies in treatment. If we cannot adequately demonstrate similarity of our frozen product to the unfrozen form to the satisfaction of the FDA, we could face substantial delays in our regulatory approvals.
Gene-editing is a rapidly developing technology, and our success is dependent upon our ability to effectively utilize this technology in our product candidates and implement future technological advancements in gene-editing.
We use CRISPR-based nuclease to enable precise editing of the iPSC genome. For CNTY-101, we used the nuclease Cpf-1 but have shifted to CRISPR-MAD7 for all subsequent product candidates, and we may utilize CRISPR-MAD7 for CNTY-101 in the future. We decided to shift to CRISPR-MAD7 because we entered into a license agreement with Inscripta, Inc. and obtained a non-exclusive, royalty-free, irrevocable license to a patent portfolio covering the composition, production and use of CRISPR-MAD7. We have optimized the protocols to produce CRISPR-MAD7 and have achieved similar cutting and HDR efficiencies compared to Cpf-1, but we don’t have as much experimental data with CRISPR-MAD7 as we do with Cpf1. We may encounter technical liabilities
associated with CRISPR-MAD7 that could force us to use a different CRISPR nuclease which could delay our programs and require us to enter into a license agreement for additional technology, which may not be available on commercially reasonable terms or at all.
Our gene-editing technology may create unintended changes to the DNA such as a non-target site gene-edit, a large deletion, or a DNA translocation, any of which could impact timelines for new product generation. We have developed various genome characterization assays to identify deletions/insertions that can occur as a result of gene editing.
Although we believe CAR-iNK and CAR-iT based therapies do not require further modification to avoid the risk of graft versus host disease, or GvHD, the gene-editing of our product candidates utilizing CAR-iNK and CAR-iT cells may not be successful in limiting the risk of GvHD or premature rejection by patients.
In addition, the cell therapy industry is rapidly developing, and our competitors may introduce new gene-editing technologies that render our technology less attractive. Competitive pressures may force us to implement new gene-editing technologies at a substantial cost or delay in our clinical development process. In addition, our competitors may have greater financial, technical and personnel resources that allow them to implement new gene-editing technologies before we can. We cannot be certain that we will be able to implement new gene-editing technologies on a timely basis or at a cost that is acceptable to us. If we are unable to implement technological advancements consistent with industry standards, our operations and financial condition may be adversely affected.
Our product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.
The Affordable Care Act, or the ACA, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, an application for a highly similar or “biosimilar” product may not be submitted to the FDA until four years following the date that the reference product was first approved by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first approved. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity, and potency of their product. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. In addition, complexities associated with the larger, and often more complex, structures of biological products such as cell and gene products we are developing, as well as the processes by which such products are manufactured, pose significant hurdles to implementation of the abbreviated approval pathway that are still being worked out by the FDA.
We believe that any of our product candidates approved as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our product candidates to be reference products for competing products, potentially creating the opportunity for competition sooner than anticipated. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.
Jurisdictions in addition to the United States have established abbreviated pathways for regulatory approval of biological products that are biosimilar to earlier approved reference products. For example, the European Union has had an established regulatory pathway for biosimilars since 2004. However, biosimilars can only be authorized once the period of data exclusivity on the reference biological medicine has expired.
The increased likelihood of biosimilar competition has increased the risk of loss of innovators’ market exclusivity. Due to this risk, and uncertainties regarding patent protection, if our clinical candidates are approved for
marketing, it is not possible to predict the length of market exclusivity for any particular product with certainty based solely on the expiration of the relevant patent(s) or the current forms of regulatory exclusivity. It is also not possible to predict changes in United States regulatory law that might reduce biological product regulatory exclusivity. The loss of market exclusivity for a product would likely materially and negatively affect revenues and we may not generate adequate or sufficient revenues from them or be able to reach or sustain profitability.
Preclinical and clinical development involve a lengthy and expensive process with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our current product candidates or any future product candidates.
All of our product candidates are in preclinical development and their risk of failure is high. It is impossible to predict when or if any of our discovery or product candidates will receive regulatory approval. To obtain the requisite regulatory approvals to commercialize any product candidates, we must demonstrate through extensive preclinical studies and lengthy, complex, and expensive clinical trials that our product candidates are safe and effective in humans. Clinical testing can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process.
The results of preclinical studies and early clinical trials or early cohorts of our clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials or later cohorts of our clinical trials. Our initial clinical trials will begin with relatively small cohorts before expanding in size in subsequent cohorts. The initial cohorts of early-stage clinical trials often involve enrollment of a small number of patients and may not be as predictive as trials with larger cohorts. Additionally, if safety issues arise in an early cohort, we may be delayed or prevented from subsequently expanding into larger trial cohorts. We may be unable to establish clinical endpoints that applicable regulatory authorities would consider clinically meaningful, and a clinical trial can fail at any stage of testing. Differences in trial design between early-stage clinical trials and later-stage clinical trials make it difficult to extrapolate the results of earlier clinical trials to later clinical trials.
Moreover, clinical data is often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in clinical trials have nonetheless failed to obtain marketing approval of their products. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or unfavorable safety profiles, notwithstanding promising results in earlier trials. There is typically a high rate of failure of product candidates proceeding through clinical trials. Most product candidates that commence clinical trials are never approved as products and there can be no assurance that any of our future clinical trials will ultimately be successful or support clinical development of our current or any of our future product candidates.
We may experience delays in initiating or completing clinical trials. We also may experience numerous unforeseen events during, or as a result of, any future clinical trials that we could conduct that could delay or prevent our ability to receive marketing approval or commercialize our lead product candidates or any future product candidates, including:
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regulators or institutional review boards, or IRBs, the FDA, or ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;
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we may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and prospective CROs as the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
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clinical trial sites deviating from trial protocol or dropping out of a trial;
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clinical trials of any product candidates may fail to show safety or efficacy, produce negative or inconclusive results and we may decide, or regulators may require us, to conduct additional preclinical studies or clinical trials or we may decide to abandon product development programs;
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the number of subjects required for clinical trials of any product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, or subjects may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate;
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our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the clinical trial protocol or drop out of the trial, which may require that we add new clinical trial sites or investigators;
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we may elect to, or regulators, IRBs, or ethics committees may require that we or our investigators, suspend or terminate clinical research or trials for various reasons, including noncompliance with regulatory requirements or a finding that the participants in our trials are being exposed to unacceptable health risks;
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the cost of clinical trials of any of our product candidates may be greater than we anticipate;
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the quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be inadequate to initiate or complete a given clinical trial;
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our inability to manufacture sufficient quantities of our product candidates for use in clinical trials;
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reports from clinical testing of other therapies may raise safety or efficacy concerns about our product candidates;
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our failure to establish an appropriate safety profile for a product candidate based on clinical or preclinical data for such product candidate as well as data emerging from other studies or trials in the same class as our product candidate; and
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the FDA or applicable foreign regulatory agencies may require us to submit additional data such as long-term toxicology studies, or impose other requirements before permitting us to initiate a clinical trial.
Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the number and location of clinical sites we enroll, the proximity of patients to clinical sites, the eligibility and exclusion criteria for the trial, the design of the clinical trial, the inability to obtain and maintain patient consents, the risk that enrolled participants will drop out before completion, competing clinical trials, and clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs or therapeutic biologics that may be approved for the indications being investigated by us. Furthermore, we expect to rely on our collaborators, CROs, and clinical trial sites to ensure the proper and timely conduct of our future clinical trials, including the patient enrollment process, and we have limited influence over their performance. Additionally, we could encounter delays if treating physicians encounter unresolved ethical issues associated with enrolling patients in future clinical trials of our product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles.
We could also encounter delays if a clinical trial is suspended or terminated by us, the IRBs of the institutions in which such trials are being conducted, or the FDA or other regulatory authorities, or if a clinical trial is recommended for suspension or termination by the Data Safety Monitoring Board for such trial. A suspension or termination may be imposed due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions, or lack of adequate funding to continue the clinical trial. Clinical studies may also be delayed or terminated as a result of ambiguous or negative interim results. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. Further, the FDA or other regulatory authorities may disagree with our clinical trial design and our interpretation of data from clinical trials, or may change the requirements for approval even after they have reviewed and commented on the design for our clinical trials.
Our product development costs will increase if we experience delays in clinical testing or marketing approvals. We do not know whether any of our clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant clinical trial delays also could shorten any periods during which we may
have the exclusive right to commercialize our product candidates and may allow our competitors to bring products to market before we do, potentially impairing our ability to successfully commercialize our product candidates and harming our business and results of operations. Any delays in our clinical development programs may harm our business, financial condition, and results of operations significantly.
As an organization, we have no experience designing or implementing clinical trials. Failure to adequately design a trial, or incorrect assumptions about the design of the trial, could adversely affect the ability to initiate the trial, enroll patients, complete the trial, or obtain regulatory approval on the basis of the trial results, as well as lead to increased or unexpected costs.
The design and implementation of clinical trials is a complex process. While the employees who will implement our clinical trials have experience in the field, we, as an organization, have no experience designing and no experience implementing clinical trials, and we may not successfully or cost-effectively design and implement clinical trials that achieve our desired clinical endpoints efficiently, or at all. A clinical trial that is not well designed may delay or even prevent initiation of the trial, can lead to increased difficulty in enrolling patients, may make it more difficult to obtain regulatory approval for the product candidate on the basis of the study results, or, even if a product candidate is approved, could make it more difficult to commercialize the product successfully or obtain reimbursement from third-party payors. Additionally, a trial that is not well-designed could be inefficient or more expensive than it otherwise would have been, or we may incorrectly estimate the costs to implement the clinical trial, which could lead to a shortfall in funding.
Interim, topline, or preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data becomes available or as we make changes to our manufacturing processes and are subject to audit and verification procedures that could result in material changes in the final data.
From time to time, we may publicly disclose interim, topline, or preliminary data from our preclinical studies and clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. Further, modifications or improvements to our manufacturing processes for a therapy may result in changes to the characteristics or behavior of the product candidate that could cause our product candidates to perform differently and affect the results of our ongoing clinical trials. As a result, the topline results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data has been received and fully evaluated. Topline data also remains subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data is available.
Preliminary or interim data from clinical trials is subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects. Additionally, disclosure of preliminary or interim data by us or by our competitors could result in volatility in the price of our common stock.
Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions, or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate, and our company in general. If the interim, topline, or preliminary data that we report differs from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, any of our potential product candidates may be harmed, which could harm our business, operating results, prospects, or financial condition.
We may not be able to file our INDs to commence clinical trials on the timelines we expect, and even if we are able to, the FDA may not permit us to proceed.
We expect our pipeline to yield multiple INDs, including INDs for our CNTY-101, CNTY-103, and CNTY-102 product candidates from our iPSC-derived allogeneic cell therapy platforms. We cannot be sure that submission
of an IND will result in the FDA allowing testing and clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate such clinical trials. The manufacturing of our product candidates remains an emerging and evolving field. Accordingly, we expect chemistry, manufacturing and control related topics, including product specifications, will be a focus of IND reviews, which may delay the clearance of INDs. Additionally, even if such regulatory authorities agree with the design and implementation of the clinical trials set forth in an IND or clinical trial application, or CTA, we cannot guarantee that such regulatory authorities will not change their requirements in the future.
We are pursuing multiple programs and product candidates in our novel cell therapy development pipeline using an approach that is designed to enable rapid incorporation of new product features. If we elect to incorporate these new features into next-generation product candidates, this may render our existing product candidates obsolete, and we may devote our limited resources in pursuit of a particular program for which there is a greater potential for success and fail to capitalize on development opportunities or product candidates including those which may be more advanced in development.
We focus on the development of programmed cellular immunotherapies for patients with cancer, including off-the-shelf NK- and T-cell product candidates derived from clonal master engineered iPSC lines. Because our iPSC-derived allogeneic cell therapy platforms are designed to enable rapid incorporation of novel functional product features in an evolving clinical setting, we may elect to incorporate these discoveries into next-generation product candidates that render our existing product candidates, including product candidates under clinical development, obsolete. Additionally, because we have limited financial and personnel resources, we may elect or be required to abandon or delay the pursuit of opportunities with existing or future product candidates, including those that may be more advanced in development than those we ultimately elect to pursue. Due to these factors, our spending on current and future research and development programs and product candidates and the scientific innovation arising from these expenditures may not yield commercially viable product candidates.
We intend to study our product candidates in patient populations with significant comorbidities that may result in deaths or serious adverse events or unacceptable side effects and require us to abandon or limit our clinical development activities.
Patients we intend to treat with our product candidates may also receive chemotherapy, radiation, and/or other cell therapy treatments in the course of treatment of their disease, and may therefore experience side effects or adverse events, including death, that are unrelated to our product candidates. While these side effects or adverse events may be unrelated to our product candidates, they may still affect the success of our clinical studies. The inclusion of critically ill patients in our clinical studies may result in deaths or other adverse medical events due to underlying disease or to other therapies or medications that such patients may receive. Any of these events could prevent us from advancing our product candidates through clinical development, and from obtaining regulatory approval, and would impair our ability to commercialize our product candidates. Any inability to advance our existing product candidates or any other product candidate through clinical development would have a material adverse effect on our business.
We may experience difficulties identifying and enrolling patients in our clinical trials. Difficulty in enrolling patients could delay or prevent clinical trials of CNTY-101 or our other product candidates.
Identifying and qualifying patients to participate in clinical trials of CNTY-101 is critical to our success. The timing of our clinical trials depends in part on the speed at which we can recruit patients to participate in testing CNTY-101, and we may experience delays in our clinical trials if we encounter difficulties in enrollment. The eligibility criteria of our clinical trials may limit the pool of available study participants as it will require patients to have specific characteristics that we can measure to ensure their disease is either severe enough or not too advanced to include them in a clinical trial. The process of finding and diagnosing patients may prove costly. We also may not be able to identify, recruit, and enroll a sufficient number of appropriate patients to complete our clinical trials because of demographic criteria for prospective patients, the perceived risks and benefits of the product candidate under study, the proximity and availability of clinical trial sites for prospective patients, and the patient referral practices of physicians. The availability and efficacy of competing therapies and clinical trials can also adversely impact enrollment. If patients are unwilling to participate in our trials for any reason, the
timeline for recruiting patients, conducting trials, and obtaining regulatory approval of potential products may be delayed, the commercial prospects of CNTY-101 or our other product candidates will be harmed, and our ability to generate product revenue from any of these product candidates could be delayed or prevented. Furthermore, our inability to enroll a sufficient number of patients for our clinical trials could result in significant delays or may require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs and jeopardize our ability to achieve our clinical development timeline and goals, including the dates by which we will commence, complete, and receive results from clinical trials. Enrollment delays in our clinical trials may also jeopardize our ability to commence sales of and generate revenues from CNTY-101 or our other product candidates. Any of these occurrences may harm our business, financial condition, and prospects significantly.
CNTY-101 and our other product candidates may cause adverse events or undesirable side effects that could delay or prevent its regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.
Cell therapy is still a relatively new approach to disease treatment and adverse side effects could develop. There also is the potential risk of delayed adverse events following exposure to cell therapy products due to persistent biologic activity of the genetic material or other components of products used to carry the genetic material.
We are collecting data about CNTY-101 in preclinical studies and will continue to do so in clinical trials, if and when they begin. To date, we have only evaluated CNTY-101 in preclinical mouse models and we therefore do not know the side effect profile of our products in humans. Accordingly, we may experience unexpected side effects and/or higher levels of known side effects in clinical trials, including adverse events known in cell therapies. These include the potential for, among others, cytokine release syndrome, or CRS, and neurotoxicity, or immune effector cell-associated neurotoxicity syndrome. B-cell directed therapies may also demonstrate infusion reactions/hypersensitivity, serious infections, prolonged cytopenias, hypogammaglobulinemia/B-cell aplasia, and secondary malignancies.
Any adverse events or undesirable side effects caused by, or other unexpected properties of, CNTY-101 or our other product candidates could cause us, any future collaborators, an IRB, or ethics committee or regulatory authorities to interrupt, delay, or halt clinical trials of our product candidates and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities. It is possible that as we progress CNTY-101 or our other product candidates through preclinical and clinical development, or as the use of CNTY-101 or our other product candidates become more widespread if it receives regulatory approval, illnesses, injuries, discomforts, and other adverse events that were not observed in preclinical studies or clinical trials, as well as conditions that did not occur or went undetected, will be reported by patients. If such side effects become known later in development or after approval, such findings may harm our business, financial condition, and prospects significantly. Further, if a serious safety issue is identified in connection with the use of CNTY-101 or our other product candidates commercially or in third-party clinical trials elsewhere, such issues may adversely affect the development potential of CNTY-101 or our other product candidates or result in regulatory authorities restricting our ability to develop or commercialize CNTY-101 or our other product candidates.
Further, if CNTY-101 or any of our other product candidates were to receive regulatory approval and we or others identify undesirable side effects caused by the product (or any other product) after the approval, a number of potentially significant negative consequences could result, including:
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regulatory authorities may request that we recall or withdraw the product from the market or may limit the approval of the product through labeling or other means;
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regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication or a precaution;
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we may be required to change the way the product is distributed or administered, conduct additional clinical trials, or change the labeling of the product;
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we may decide to recall or remove the product from the marketplace;
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we could be sued and/or held liable for injury caused to individuals exposed to or taking our product candidates;
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damage to the public perception of the safety of CNTY-101 or our other product candidates; and
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our reputation may suffer.
Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidate and could substantially increase the costs of commercializing our product candidates and significantly impact our ability to successfully commercialize our product candidates and generate revenues, all of which would materially adversely affect our business, financial condition, and results of operations.
Public opinion and scrutiny of cell-based immuno-oncology therapies for treating cancer, or negative clinical trial results from our cell-based therapy competitors, may impact public perception of our company and product candidates, or impair our ability to conduct our business.
Our iPSC-derived allogeneic cell therapy platforms utilize a relatively novel technology involving the genetic modification of iPSC’s and utilization of those modified cells in other individuals, and no iNK cell-based immunotherapy has been approved to date. Public perception may be influenced by claims, such as claims that cell-based immunotherapy is unsafe, unethical, or immoral and, consequently, our approach may not gain the acceptance of the public or the medical community. Negative public reaction to cell-based immunotherapy in general, or negative clinical trial results from our cell-based therapy competitors, could result in greater government regulation and stricter labeling requirements of cell-based immunotherapy products, including any of our product candidates, and could cause a decrease in the demand for any products we may develop. Adverse public attitudes may adversely impact our ability to enroll clinical trials. More restrictive government regulations or negative public opinion could have an adverse effect on our business or financial condition and may delay or impair the development and commercialization of our product candidates or demand for any products we may develop.
Our research and development activities could be affected or delayed as a result of possible restrictions on animal testing.
Certain laws and regulations require us to test our product candidates on animals before initiating clinical trials involving humans. Animal testing activities have been the subject of controversy and adverse publicity. Animal rights groups and other organizations and individuals have attempted to stop animal testing activities by lobbying for legislation and regulation in these areas and by disrupting these activities through protests and other means. To the extent the activities of these groups are successful, our research and development activities may be interrupted, delayed, or become more expensive.
If we do not achieve our projected development goals in the time frames we announce and expect, the commercialization of our products may be delayed.
From time to time, we estimate the timing of the accomplishment of various scientific, clinical, regulatory, manufacturing and other product development goals, which we sometimes refer to as milestones. These milestones may include the commencement or completion of preclinical studies and clinical trials and the submission of regulatory filings, including IND submissions. From time to time, we may publicly announce the expected timing of some of these milestones. All of these milestones are, and will be, based on a variety of assumptions. The actual timing of these milestones can vary significantly compared to our estimates, in some cases for reasons beyond our control. We may experience numerous unforeseen events during, or as a result of, any future clinical trials that we conduct that could delay or prevent our ability to receive marketing approval or commercialize our product candidates.
Changes in regulatory requirements, guidance from the FDA and other regulatory authorities, or unanticipated events during our clinical trials of CNTY-101 or our other product candidates may result in changes to preclinical studies or clinical trials or additional preclinical or clinical trial requirements, which could result in increased costs to us and could delay our development timeline.
Regulatory requirements governing biologic drug products, including cell therapy products, are still evolving and it is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for CNTY-101 or our other product candidates. Changes in regulatory requirements, FDA guidance or guidance from other
regulatory agencies, or unanticipated events during our preclinical studies or clinical trials may force us to terminate or adjust our development program.
In addition, the clinical trial requirements of the FDA and foreign regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty, intended use, and market of such product candidates. The regulatory approval process for novel product candidates such as ours can be more expensive and take longer than for other, better known or more extensively studied product candidates. The FDA, or the applicable regulatory authorities, may impose additional preclinical or clinical trial requirements. Amendments to clinical trial protocols would require resubmission to the FDA, or the applicable regulatory authorities as well as IRBs and ethics committees for review and approval, which may adversely impact the cost, timing, or successful completion of a clinical trial. If we experience delays completing, or if we terminate, any of our clinical trials, or if we are required to conduct additional preclinical or clinical trials, the commercial prospects for CNTY-101 or our other product candidates may be harmed and our ability to generate product revenue will be delayed, and it would materially adversely affect our business, financial condition, and results of operations.
In order to market any product outside of the United States, we must comply with numerous and varying regulatory requirements of other countries regarding biologic development and commercialization. The approval process varies from country to country and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.
Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain, or deploy key leadership and other personnel, or otherwise prevent new or modified products from being advanced, developed, cleared or approved, or commercialized in a timely manner or at all, which could negatively impact our business.
The ability of the FDA to review and approve new products or regulatory submissions can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events, such as the ongoing COVID-19 pandemic, that may otherwise affect the FDA’s ability to perform routine functions. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for new biologics or modifications to cleared or approved biologics to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, including for 35 days beginning on December 22, 2018, the United States government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities.
Separately, in response to the COVID-19 pandemic, in March 2020, the FDA announced its intention to postpone most inspections of foreign manufacturing facilities, and on March 18, 2020, the FDA temporarily postponed routine surveillance inspections of domestic manufacturing facilities. Subsequently, on July 10, 2020, the FDA announced its intention to resume certain on-site inspections of domestic manufacturing facilities subject to a risk-based prioritization system. The FDA intends to use this risk-based assessment system to identify the categories of regulatory activity that can occur within a given geographic area, ranging from mission critical inspections to resumption of all regulatory activities. Regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic. If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
We rely, and expect to continue to rely, on third parties to conduct, supervise, and monitor our preclinical studies, and we will rely on third parties to conduct, supervise, and monitor future clinical trials for our product candidates.
We rely on third-party CROs, study sites, and others to conduct, supervise, and monitor our preclinical studies for our product candidates and we expect to rely on third parties to similarly conduct, supervise, and monitor any future clinical trials for our product candidates. We expect to continue to rely on third parties, such as CROs, clinical data management organizations, medical institutions, and clinical investigators, to conduct our preclinical studies, and intend to rely on third parties in connection with the commencement of future clinical trials of our product candidates. Although we have agreements with these third parties governing their activities, we have limited influence over their actual performance and control only certain aspects of their activities. The failure of these third parties to successfully carry out their contractual duties or meet expected deadlines, including as a result of the impact of the COVID-19 pandemic, could substantially harm our business because we may be delayed in completing or unable to complete the studies required to support future approval of CNTY-101 and our other product candidates, or we may not obtain marketing approval for, or commercialize, CNTY-101 and our other product candidates in a timely manner or at all. Moreover, these agreements might terminate for a variety of reasons, including a failure to perform by the third parties. If we need to enter into alternative arrangements, our product development activities would be delayed and our business, financial condition, results of operations, and prospects may be materially harmed.
Our reliance on these third parties for development activities reduces our control over these activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and our reliance on third parties does not relieve us of our regulatory responsibilities. For example, we will remain responsible for ensuring that each of our preclinical trials and future clinical trials is conducted in accordance with the general investigational plan and protocols for such trial. We must also ensure that our preclinical and future clinical trials are conducted in accordance with cGLP regulations, as appropriate. Moreover, the FDA and comparable foreign regulatory authorities require us to comply with cGCPs for conducting, recording, and reporting the results of clinical trials to ensure that data and reported results are credible and accurate and that the rights, integrity, and confidentiality of trial participants are protected. Regulatory authorities enforce these requirements through periodic inspections of trial sponsors, clinical investigators, and trial sites. If we or any of our third parties fail to comply with applicable cGCPs or other regulatory requirements, we or they may be subject to enforcement or other legal actions, the data generated in our preclinical trials and future clinical trials may be deemed unreliable and the FDA, or comparable foreign regulatory authorities may require us to perform additional studies.
In addition, we will be required to report certain financial interests of our third-party investigators if these relationships exceed certain financial thresholds or meet other criteria. The FDA or comparable foreign regulatory authorities may question the integrity of the data from those clinical trials conducted by investigators who may have conflicts of interest.
We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials will comply with the applicable regulatory requirements. In addition, our clinical trials must be conducted with product candidates that were produced under cGMP regulations. Failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process. We also are required to register certain clinical trials and post the results of certain completed clinical trials on a government-sponsored database, www.clinicaltrials.gov, within specified timeframes. Failure to do so can result in enforcement actions and adverse publicity.
The third parties with which we work may also have relationships with other entities, some of which may be our competitors, for whom they may also be conducting trials or other therapeutic development activities that could harm our competitive position. In addition, such third parties are not our employees, and except for remedies available to us under our agreements with such third parties we cannot control whether or not they devote sufficient time and resources to our ongoing developmental and preclinical programs. If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or conduct our preclinical studies or
future clinical trials in accordance with regulatory requirements or our stated protocols, if these parties are adversely impacted by the COVID-19 pandemic limiting or materially affecting their ability to carry out their contractual duties, if they need to be replaced or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our protocols, regulatory requirements or for other reasons, our preclinical and future clinical trials may be repeated, extended, delayed, or terminated; we may not be able to obtain, or may be delayed in obtaining, marketing approvals for CNTY-101 and our other product candidates; we may not be able to, or may be delayed in our efforts to, successfully commercialize CNTY-101 or our other product candidates; or we or they may be subject to regulatory enforcement actions. As a result, our results of operations and the commercial prospects for CNTY-101 and our other candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed. To the extent we are unable to successfully identify and manage the performance of third-party service providers in the future, our business, financial condition, results of operations, and prospects may be materially harmed.
If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative providers or to do so on commercially reasonable terms. Switching or adding additional third parties involves additional cost and requires management’s time and focus. In addition, there is a natural transition period when a new third party commences work. As a result, delays could occur, which could compromise our ability to meet our desired development timelines.
We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
Because we have limited financial and managerial resources, we focus on research programs, therapeutic platforms, and product candidates that we identify for specific indications. As a result, we may forego or delay our pursuit of opportunities with other therapeutic platforms or product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs, therapeutic platforms, and product candidates for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights, including intellectual property rights, to that product candidate through collaboration, licensing, or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights.
We may explore strategic collaborations that may never materialize or we may be required to relinquish important rights to and control over the development and commercialization of our product candidates to any future collaborators.
Our business strategy includes leveraging our strategic partnership with FCDI, and may include additional future partnerships for manufacturing, product development, product commercialization, or other strategic objectives. As a result, we may in the future determine to collaborate with additional companies for development and potential commercialization of one or more therapeutic products. At the current time however, we cannot predict what form such a strategic collaboration might take. We are likely to face significant competition in seeking appropriate strategic collaborators, and strategic collaborations can be complicated and time-consuming to negotiate and document.
We may not be able to negotiate strategic collaborations on acceptable terms, if at all. Our ability to reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the development of a product candidate, reduce or delay one or more of our other development programs, delay our potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to fund and undertake development or commercialization activities
on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations and do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our product candidates or bring them to market or continue to develop our technology platforms and our business may be materially and adversely affected.
If and when we collaborate with a third party for development and commercialization of a product candidate, we can expect to relinquish some or all of the control over the future success of that product candidate to the third party. We are unable to predict when, if ever, we will enter into any strategic partnerships because of the numerous risks and uncertainties associated with establishing them, including:
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expenditure of substantial operational, financial and management resources;
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dilutive issuances of our securities;
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substantial actual or contingent liabilities; and
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termination or expiration of the arrangement, which would delay the development and may increase the cost of developing our product candidates.
Strategic partners may also delay clinical trials, experience financial difficulties, provide insufficient funding, terminate a clinical trial, or abandon a product candidate, which could negatively impact our development efforts. Additionally, strategic partners may not properly maintain, enforce, or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation, any of which could adversely affect our business, financial position, and operations.
If our collaborations do not result in the successful development and commercialization of products or if one of our collaborators terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration. All of the risks relating to product development, regulatory approval, and commercialization described in this prospectus also apply to the activities of our program collaborators. Additionally, subject to its contractual obligations to us, if one of our collaborators is involved in a business combination, the collaborator may deemphasize or terminate the development or commercialization of any product candidate licensed to it by us. If our collaborator terminates its agreement with us, it may find it more difficult to attract new collaborators.
Risks related to manufacturing
The manufacture and distribution of our iPSC-derived cell product candidates is complex and subject to a multitude of risks. These risks could substantially increase our costs and limit the clinical and commercial supply of our product candidates.
The manufacture and supply of our product candidates involve novel processes that are more complex than those required for most drugs, biologics and other cellular immunotherapies and, accordingly, present significant challenges and are subject to multiple risks. These complex processes include reprogramming human somatic cells to obtain iPSCs, genetically engineering these iPSCs, and differentiating the iPSCs to obtain the desired product candidate. As a result of the complexities in manufacturing biologics and distributing cell therapies, the cost to manufacture and distribute biologics and cell therapies in general, and our cell product candidates in particular, is generally higher than traditional small molecule chemical compounds. In addition, our cost of goods development is at an early stage. The actual cost to manufacture and process our product candidates could be greater than we expect and could materially and adversely affect the commercial viability of our product candidates.
We have no direct experience in the manufacture of cell-based therapies. We are still developing with third parties optimized and reproducible manufacturing processes for clinical and commercial-scale manufacturing of our product candidates, and none of our manufacturing processes have been validated for commercial production
of our product candidates. In addition, we are still optimizing our protocols for the supply and transport of our product candidates for distribution to clinical trial sites. Although we are working to develop reproducible and commercially viable manufacturing processes for our product candidates, and effective protocols for the supply and transport of our product candidates, doing so is a difficult and uncertain task.
We may make changes as we continue to develop and refine the manufacturing and distribution processes for our product candidates for clinical trials and commercialization, and we cannot be sure that even minor changes in these processes will not cause our product candidates to perform differently and affect the results of our ongoing and planned clinical trials or the performance of the product once commercialized. In some circumstances, changes in our manufacturing operations, including to our protocols, processes, materials, or facilities used, may require us to perform additional preclinical or comparability studies, or to collect additional clinical data from patients prior to undertaking additional clinical studies or filing for regulatory approval for a product candidate. These requirements may lead to delays in our clinical development and commercialization plans for our product candidates, and may increase our development costs substantially.
Cell-based therapies depend on the availability of reagents and specialized materials and equipment which in each case are required to be acceptable to the FDA and foreign regulatory agencies, and such reagents, materials, and equipment may not be available to us on acceptable terms or at all. We rely on third-party suppliers for various components, materials, and equipment required for the manufacture of our product candidates and do not have supply arrangements for certain of these components.
Manufacturing our product candidates requires many reagents and other specialty materials and equipment, some of which are manufactured or supplied by small companies with limited resources and experience to support commercial biologics production. To date, we and our clinical cell processing facilities and CMOs have purchased equipment, materials, and disposables, such as automated cell washing devices, automated cell warming units, commercially available media, and cell transfer and wash sets, used for the manufacture of our existing product candidates from third-party suppliers. Some of these suppliers may not have the capacity to support commercial products manufactured under cGMP by biopharmaceutical firms or may otherwise be ill-equipped to support our needs. Reagents and other key materials from these suppliers may have inconsistent attributes and introduce variability into our manufactured product candidates, which may contribute to variable patient outcomes and possible adverse events. We rely on the general commercial availability of materials required for the manufacture of our product candidates, and do not have supply contracts with many of these suppliers and may not be able to obtain supply contracts with them on acceptable terms or at all. Even if we are able to enter into such contracts, we may be limited to a sole third party for the supply of certain required components, including our pharmacologic modulators and components for our cell processing media. As a result of the COVID-19 pandemic, the business and operations of our suppliers may be disrupted or delayed, and we in turn may experience disruptions or delays in our supply chain. An inability to continue to source product from any of these suppliers, which could be due to the impacts of the COVID-19 pandemic, regulatory actions, or requirements affecting the supplier, adverse financial or other strategic developments experienced by a supplier, labor disputes or shortages, unexpected demands, or quality issues, could adversely affect our ability to satisfy demand for our product candidates, which could adversely and materially affect our product sales and operating results or our ability to conduct clinical trials, either of which could significantly harm our business.
If we are required to change suppliers, or modify the components, equipment, materials, or disposables used for the manufacture of our product candidates, we may be required to change our manufacturing operations or clinical trial protocols or to provide additional data to regulatory authorities in order to use any alternative components, equipment, materials, or disposables, any of which could set back, delay, or increase the costs required to complete our clinical development and commercialization of our product candidates. Additionally, any such change or modification may adversely affect the safety, efficacy, stability, or potency of our product candidates, and could adversely affect our clinical development of our product candidates and harm our business.
We currently rely on third parties for the manufacture of our product candidates for development, however, we intend to operate our own manufacturing facility in the future for the production of certain of our product candidates.
We currently do not operate manufacturing facilities and rely on FCDI for the manufacture of our product candidates and CMOs for the manufacture of related raw materials for clinical and preclinical development. If we
are unable to successfully construct our own manufacturing facilities, we expect to rely on third parties for commercial manufacture if any of our product candidates receive marketing approval. We have partnered with FCDI for the manufacture and supply of our product candidates for future clinical development, as well as to establish commercial supplies of our product candidates, if approved. If either of our Manufacturing Agreement or Master Collaboration Agreement with FCDI terminates, and if we need to enter into alternative arrangements, our product development activities would be delayed and our business, financial condition, results of operations, and prospects may be materially harmed. See “Business--Licensing, partnerships and collaboration—Fujifilm Cellular Dynamics, Inc.—Manufacturing and Supply Agreement” and “Business—Licensing, partnerships and collaboration—Fujifilm Cellular Dynamics, Inc.—Master Collaboration Agreement” for a description of our Manufacturing Agreement and Master Collaboration Agreement with FCDI. We are investing in the construction of our own 53,000 square foot cell therapy manufacturing facility in Branchburg, New Jersey, but there can be no assurance our manufacturing facility will become operational on schedule or at all.
The facilities used by us, FCDI, and any other manufacturers with which we may collaborate must be approved by the FDA pursuant to inspections that will be conducted after we submit a BLA to the FDA. For manufacturing facilities in which we do not operate, we do not control the manufacturing process of, and are completely dependent on, CMOs for compliance with cGMP requirements for the manufacture of biologic products. If these CMOs cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or others, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. In addition, we have no control over the ability of CMOs to maintain adequate quality control, quality assurance, and qualified personnel. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved. Our failure, or the failure of our CMO, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, seizures or recalls of product candidates or products, operating restrictions, and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates.
Our or a CMO’s failure to execute on our manufacturing requirements, to do so on commercially reasonable terms and comply with cGMP could adversely affect our business in a number of ways, including:
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an inability to initiate or continue clinical trials of CNTY-101 or our other product candidates under development;
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delay in submitting regulatory applications, or receiving marketing approvals, for our product candidates;
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subjecting third-party manufacturing facilities or our manufacturing facilities to additional inspections by regulatory authorities;
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requirements to cease development or to recall batches of our product candidates; and
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in the event of approval to market and commercialize CNTY-101 or our other product candidates, an inability to meet commercial demands for CNTY-101 or our other product candidates.
Any performance failure on the part of us or our existing or future CMOs could delay clinical development or marketing approval, and any related remedial measures may be costly or time-consuming to implement. If our current CMOs cannot perform as agreed, we may be required to replace such manufacturers and we may be unable to replace them on a timely basis or at all.
Our current and anticipated future dependence upon CMOs for the manufacture of our product candidates or products may adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a timely and competitive basis.
Delays in commissioning and receiving regulatory approvals for our manufacturing facilities could delay our development plans and thereby limit our ability to generate revenues.
We believe that internal cGMP manufacturing is important to facilitate clinical product supply, lower the risk of manufacturing disruptions, and enable more cost-effective manufacturing. We believe our Branchburg, New Jersey
facility, once complete, will allow us to supply certain of our product candidates needed for our early-stage clinical trials and preclinical studies. The design, construction, qualification, and regulatory approvals for such facilities require substantial capital and technical expertise and any delay could limit our development activities and our opportunities for growth, or negatively impact our financial results.
Furthermore, our manufacturing facility will be subject to ongoing, periodic inspection by the FDA and other comparable regulatory agencies to ensure compliance with cGMP. Our failure to follow and document our adherence to these regulations or other regulatory requirements may lead to significant delays in the availability of products for clinical use or may result in the termination of or a hold on a clinical study. Failure to comply with applicable regulations could also result in sanctions being imposed on us, including fines, injunctions, civil penalties, a requirement to suspend or put on hold one or more of our clinical trials, failure of regulatory authorities to grant marketing approval of our product candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates, operating restrictions, and criminal prosecutions, any of which could materially adversely affect our business, financial condition, results of operations, and growth prospects.
We also may encounter problems with the following:
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complying with regulations regarding donor traceability, manufacturing, release of product candidates and other requirements from regulatory authorities outside the United States;
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achieving adequate or clinical-grade materials that meet regulatory agency standards or specifications with consistent and acceptable production yield and costs;
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bacterial, fungal, or viral contamination in our manufacturing facility; and
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shortages of qualified personnel, raw materials, or key contractors.
Our product candidates, if approved by applicable regulatory authorities, may require significant commercial supply to meet market demand. In these cases, we may need to increase, or “scale up,” the production process by a significant factor over the initial level of production. If we fail to develop sufficient manufacturing capacity and experience, whether internally or with a third party, are delayed in doing so, or fail to manufacture our product candidates economically or on reasonable scale or volumes, or in accordance with cGMP, or if the cost of this scale-up is not economically feasible, our development programs and commercialization of any approved products will be materially adversely affected and we may not be able to produce our product candidates in a sufficient quantity to meet future demand and our business, financial condition, results of operations, and growth prospects may be materially adversely affected.
We are dependent on third parties to store our CAR-iNK and CAR-iT cells and master and working cell banks of the engineered iPSC cells.
The CAR-iNK and CAR-iT cells and the master and working cell banks of the engineered iPSC cells are stored in freezers at third-party biorepositories and will also be stored in our freezers at our production facility if and when it becomes operational. If these materials are damaged at these facilities, including by the loss or malfunction of these freezers or our back-up power systems, as well as by damage from fire, power loss or other natural disasters, we would need to establish replacement CAR-iNK and CAR-iT cells and master and working cell banks of the engineered iPSC cells, which would impact clinical supply and delay patient treatment. If we are unable to establish replacement materials, we could incur significant additional expenses and liability to patients whose treatment is delayed, and our business could suffer.
Risks related to commercialization of our product candidates
If we are unable to successfully commercialize CNTY-101 or any of our other product candidates for which we receive regulatory approval, or experience significant delays in doing so, our business will be materially harmed.
If we are successful in obtaining marketing approval from applicable regulatory authorities for CNTY-101 or any of our other product candidates, our ability to generate revenues from such product candidates will depend on our success in:
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launching commercial sales of our product candidates, whether alone or in collaboration with others;
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receiving an approved label with claims that are necessary or desirable for successful marketing, and that does not contain safety or other limitations that would impede our ability to market our product candidates;
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creating market demand for our product candidates through marketing, sales, and promotion activities;
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hiring, training, and deploying a sales force or contracting with third parties to commercialize our product candidates;
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manufacturing, either on our own or through third parties, product candidates in sufficient quantities and at acceptable quality and cost to meet commercial demand at launch and thereafter;
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establishing and maintaining agreements with wholesalers, distributors, and group purchasing organizations on commercially reasonable terms;
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creating partnerships with, or offering licenses to, third parties to promote and sell product candidates in foreign markets where we receive marketing approval;
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obtaining, maintaining, protecting, and enforcing patent and trade secret protection and regulatory exclusivity for our product candidates;
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achieving market acceptance of our product candidates by patients, the medical community, and third-party payors;
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achieving appropriate reimbursement for our product candidates;
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effectively competing with other therapies; and
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maintaining an acceptable tolerability profile of our product candidates following launch.
To the extent we are not able to do any of the foregoing, our business, financial condition, results of operations, and prospects will be materially harmed.
We face significant competition, and if our competitors develop product candidates more rapidly than we do or their product candidates are more effective, our ability to develop and successfully commercialize products may be adversely affected.
The biopharmaceutical and pharmaceutical industries are characterized by rapid innovation, intense and dynamic competition and a strong emphasis on proprietary and novel products and product candidates. While we believe that our technology, scientific knowledge, and experience in the field of cellular immunotherapy provide us with competitive advantages, we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biopharmaceutical companies, academic institutions, governmental agencies, and public and private research institutions, as well as standard-of-care treatments, and new products undergoing development and combinations of existing and new therapies. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies, including combinations thereof, that may become available in the future. We compete with these organizations to recruit management, scientists, and clinical development personnel, which could negatively affect our level of expertise and our ability to execute our business plan. We will also face competition in establishing clinical trial sites, enrolling subjects for clinical trials, and in identifying and in-licensing new product candidates. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
We are developing off-the-shelf cell therapies by differentiating engineered iPSC into NK-, T-, or other immune cells for the treatment of various cancers. While we believe our genetically-engineered immune effector cell therapies derived from iPSC are highly differentiated, a number of companies are currently focused on the development of cellular immunotherapies for the treatment of cancer. In addition, because reprogramming technology and gene editing technology are available on a non-exclusive basis, the number of companies developing iPSC-derived products and products using gene editing technology is expected to increase, which will
increase competitive pressure on us. Moreover, the reprogramming technology licensed to us from FCDI and the gene editing technology licensed to us from Inscripta, Inc. are each licensed to us on a non-exclusive basis, and therefore third parties may obtain licenses to the same technology to compete with us.
Many of our competitors have significantly greater financial, technical, manufacturing, marketing, sales, and supply resources or experience than we do. If we successfully obtain approval for any product candidate, we will face competition based on many different factors, including the safety and effectiveness of our products, the ease with which our products can be administered and the extent to which patients accept relatively new routes of administration, the timing and scope of regulatory approvals for these products, the availability and cost of manufacturing, marketing and sales capabilities, price, reimbursement coverage, and patent position. Competing products could present superior treatment alternatives, including by being more effective, safer, more convenient, less expensive, or marketed and sold more effectively than any products we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. Competitive products may make any products we develop obsolete or noncompetitive before we recover the expense of developing and commercializing our product candidates. If we are unable to compete effectively, our opportunity to generate revenue from the sale of our products we may develop, if approved, could be adversely affected.
We expect to face uncertainty regarding the pricing of our existing product candidates and any other product candidates that we may develop.
Due to the novel nature of our product candidates, we face significant uncertainty as to the pricing of any such products for which we may receive marketing approval. While we anticipate that pricing for any product candidates that we develop will be relatively high due to their anticipated use in the prevention or treatment of life-threatening diseases where therapeutic options are limited, the biopharmaceutical industry has recently experienced significant pricing pressures, including in the area of orphan drug products. In particular, drug pricing and other healthcare costs continue to be subject to intense political and societal pressures, which we anticipate will continue and escalate on a global basis. These pressures may result in harm to our business and reputation, cause our stock price to decline or experience periods of volatility, and adversely affect results of operations and our ability to raise funds.
In addition, we expect to experience pricing pressures in connection with the pricing of any of our product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription medicines, medical devices and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the successful commercialization of new products. Further, the adoption and implementation of any future governmental cost containment or other health reform initiative may result in additional downward pressure on the price that we may receive for any approved product.
The insurance coverage and reimbursement status of newly-approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for new products could limit our product revenues.
Our ability to commercialize any of our product candidates successfully will depend in part on the extent to which reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers, and other organizations. In the United States, the principal decisions about reimbursement for new therapies are typically made by Centers for Medicare and Medicaid Services, or CMS, an agency within the United States Department of Health and Human Services. CMS decides whether and to what extent a new therapy will be covered and reimbursed under Medicare, and private payors tend to follow CMS determinations to a substantial degree. The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford expensive treatments, such as cellular immunotherapy. There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products by government and third-party payors. In particular, there is no body of established practices and precedents
for reimbursement of cellular immunotherapies, and it is difficult to predict what the regulatory authority or private payor will decide with respect to reimbursement levels for novel products such as ours. Our products may not qualify for coverage or direct reimbursement, or may be subject to limited reimbursement. If reimbursement or insurance coverage is not available, or is available only to limited levels, we may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be sufficient to allow us to establish or maintain pricing to generate income.
In addition, reimbursement agencies in foreign jurisdictions may be more conservative than those in the United States. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenues and profits. Moreover, increasing efforts by governmental and third-party payors, in the United States and abroad, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for new products approved, and as a result, they may not cover or provide adequate payment for our product candidates. Failure to obtain or maintain adequate reimbursement for any products for which we receive marketing approval will adversely affect our ability to achieve commercial success, and could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products, and our overall financial condition.
Even if we obtain regulatory and marketing approval for a product candidate, our product candidates will remain subject to regulatory oversight.
Even if we receive marketing and regulatory approval for CNTY-101 or any of our other product candidates, regulatory authorities may still impose significant restrictions on the indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies. CNTY-101 and our other product candidates will also be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, and submission of safety and other post-market information. The FDA has significant post-market authority, including, for example, the authority to require labeling changes based on new safety information and to require post-market studies or clinical trials to evaluate serious safety risks related to the use of a biologic. Any regulatory approvals that we receive for CNTY-101 or our other product candidates may also be subject to a risk evaluation and mitigation strategy, or REMS, limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including post-approval clinical trials, and surveillance to monitor the quality, safety, and efficacy of the product, all of which could lead to lower sales volume and revenue. For example, the holder of an approved BLA is obligated to monitor and report adverse events and any failure of a product to meet the specifications in the BLA. The holder of an approved BLA also must submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling, or manufacturing process. Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws.
In addition, product manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP requirements and adherence to commitments made in the BLA or foreign marketing application. If we, or a regulatory authority, discover(s) previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured or disagrees with the promotion, marketing or labeling of that product, a regulatory authority may impose restrictions relative to that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.
If we or our contractors fail to comply with applicable regulatory requirements following approval of CNTY-101 or our other product candidates, a regulatory authority may:
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issue a warning letter asserting that we are in violation of the law;
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request voluntary product recalls;
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seek an injunction or impose administrative, civil, or criminal penalties or monetary fines;
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suspend or withdraw regulatory approval;
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suspend any ongoing clinical trials;
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refuse to approve a pending BLA or comparable foreign marketing application (or any supplements thereto);
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restrict the marketing or manufacturing of the product;
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seize or detain the product or otherwise require the withdrawal of the product from the market;
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refuse to permit the import or export of product candidates; or
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refuse to allow us to enter into supply contracts, including government contracts.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize CNTY-101 or our other product candidates and adversely affect our business, financial condition, results of operations, and prospects.
Even if we receive marketing approval for CNTY-101 or our other product candidates, we may not achieve broad market acceptance.
The commercial success of CNTY-101 or our other product candidates, if developed and approved for marketing by the FDA or comparable foreign regulatory authority, will depend upon the awareness and acceptance of CNTY-101 or such other product candidate among the medical community, including physicians, patients, advocacy groups, and healthcare payors. Market acceptance of our product candidates, if approved, will depend on a number of factors, including, among others:
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the prevalence and severity of any adverse side effects associated with our product candidates;
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limitations or warnings contained in the labeling approved for our product candidates by the FDA or comparable foreign regulatory authority, such as a “black box” warning;
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availability of alternative treatments, including any competitive therapies in development that could be approved or commercially launched prior to approval of our product candidates;
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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
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the strength of marketing and distribution support and timing of market introduction of competitive products;
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pricing;
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payor acceptance;
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the impact of any future changes to the United States healthcare system;
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the effectiveness of our sales and marketing strategies; and
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the likelihood that the FDA may require development of a REMS, as a condition of approval or post-approval or may not agree with our proposed REMS or may impose additional requirements that limit the promotion, advertising, distribution, or sales of our product candidates.
If CNTY-101 or any of our other product candidates are approved but do not achieve an adequate level of acceptance by patients, advocacy groups, physicians and payors, we may not generate sufficient revenue to become or remain profitable and our business, financial condition, and results of operations could be materially adversely affected. Our efforts to educate the medical community and third-party payors about the benefits of CNTY-101 and our other product candidates may require significant resources and may never be successful.
Even if we receive marketing approval for CNTY-101 or our other product candidates in the United States, we may never receive regulatory approval to market CNTY-101 or our other product candidates outside of the United States.
In order to market any product outside of the United States, we must establish and comply with the numerous and varying safety, efficacy, and other regulatory requirements of other jurisdictions, including potential additional
clinical trials and/or preclinical studies. Approval procedures vary among jurisdictions and can involve additional testing and additional administrative review periods. The time required to obtain approvals in other jurisdictions might differ from that required to obtain FDA approval. The marketing approval processes in other jurisdictions may implicate all of the risks detailed above regarding FDA approval in the United States as well as other risks. In particular, in many jurisdictions outside of the United States, products must receive pricing and reimbursement approval before the product can be commercialized. Obtaining this approval can result in substantial delays in bringing products to market in such jurisdictions. Marketing approval in one jurisdiction does not necessarily ensure marketing approval in another, but a failure or delay in obtaining marketing approval in one country may have a negative effect on the regulatory process or commercial activities in others. Failure to obtain marketing approval in other jurisdictions or any delay or other setback in obtaining such approval would impair our ability to market a product candidate in such foreign markets. Any such impairment would reduce the size of our potential market, which could have a material adverse impact on our business, financial condition, results of operations, and prospects.
We may be unable to establish effective marketing, sales and distribution capabilities or enter into agreements with third parties to market and sell CNTY-101 or our other product candidates, if approved.
We currently do not have a commercial infrastructure for the marketing, sale, and distribution of CNTY-101, or our other product candidates. If CNTY-101 or our other product candidates receive marketing approval, we intend to commercialize such product candidates in the United States and potentially in other geographies. In order to commercialize our products, we must build our marketing, sales, and distribution capabilities or make arrangements with third parties to perform these services. We may not be successful in doing so. Should we decide to move forward in developing our own marketing capabilities, we may incur expenses prior to product launch or even approval in order to recruit a sales force and develop a marketing and sales infrastructure. If a commercial launch is delayed as a result of the FDA’s or comparable foreign regulatory authority’s requirements or for other reasons, we would incur these expenses prior to being able to realize any revenue from sales of CNTY-101 and our other product candidates. Even if we are able to effectively hire a sales force and develop a marketing and sales infrastructure, our sales force and marketing teams may not be successful in commercializing CNTY-101 or our other product candidates. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.
We may also or alternatively decide to collaborate with third-party marketing and sales organizations to commercialize any approved product candidates in the United States, in which event, our ability to generate product revenues may be limited. To the extent we rely on third parties to commercialize any products for which we obtain regulatory approval, we may receive less revenues than if we commercialized these products ourselves, which could materially harm our prospects. In addition, we would have less control over the sales efforts of any other third parties involved in our commercialization efforts, and could be held liable if they failed to comply with applicable legal or regulatory requirements.
We have no prior experience in the marketing, sale, and distribution of biopharmaceutical products, and there are significant risks involved in building and managing a commercial infrastructure. The establishment and development of commercial capabilities, including compliance plans, to market any products we may develop will be expensive and time-consuming and could delay any product launch, and we may not be able to successfully develop this capability. We will have to compete with other biopharmaceutical and pharmaceutical companies to recruit, hire, train, manage, and retain marketing and sales personnel, which is expensive and time-consuming and could delay any product launch. Developing our sales capabilities may also divert resources and management attention away from product development.
In the event we are unable to develop a marketing and sales infrastructure, we may not be able to commercialize CNTY-101 or our other product candidates in the United States or elsewhere, which could limit our ability to generate product revenues and materially harm our business, financial condition, results of operations, and prospects.
If the market opportunities for our products are smaller than we believe they are, our revenue may be adversely affected, and our business may suffer.
Cancer therapies are sometimes characterized as first-line, second-line, or third-line, and the FDA often approves new therapies initially only for third-line use. When cancer is detected early enough, first-line therapy, usually chemotherapy, hormone therapy, surgery, radiation therapy, or a combination of these, is sometimes adequate to cure the cancer or prolong life without a cure. Second- and third-line therapies are administered to patients when prior therapy is not effective. Initial planned clinical trials are expected to enroll patients who have received other available therapies in order to first evaluate whether the product is safe and whether there is any activity. We do not know at this time whether CNTY-101 or any of our other product candidates will be safe for use in humans or whether they will demonstrate any anti-cancer activity. Subsequently, we plan to conduct additional clinical trials depending on the activity we note in the initial clinical trials. If the activity is sufficient, we may initially seek approval of any product candidates we develop as a therapy for patients who have received one or more prior treatments. Subsequently, for those products that prove to be sufficiently beneficial, if any, we would expect to seek approval potentially in earlier lines of therapy, but there is no guarantee that product candidates we develop, even if approved for later lines of therapy, would be approved for earlier lines of therapy, and, prior to any such approvals, we may have to conduct additional clinical trials.
We focus our research and product development on differentiating engineered iPSC into NK-, T-, or other immune cells for the treatment of various cancers. Our projections of both the number of people who have these cancers, as well as the subset of people with these cancers who have the potential to benefit from treatment with our product candidates, are based on beliefs and estimates. These estimates have been derived from a variety of sources, including the scientific literature, surveys of clinics, patient foundations or market research, and may prove to be incorrect. Further, new trials may change the estimated incidence or prevalence of such cancers. The total addressable market across all of our product candidates will ultimately depend upon, among other things, the diagnosis criteria included in the final label for each of our product candidates approved for sale for these indications, the availability of alternative treatments and the safety, convenience, cost, and efficacy of our product candidates relative to such alternative treatments, acceptance by the medical community and patient access, drug and biologic pricing, and reimbursement. The number of patients in the United States and other major markets and elsewhere may turn out to be lower than expected, patients may not be otherwise amenable to treatment with our products, or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect our results of operations and our business.
Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.
Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results. These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to:
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the timing and cost of, and level of investment in, research, development, regulatory approval, and commercialization activities relating to CNTY-101 and our other product candidates, which may change from time to time;
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coverage and reimbursement policies with respect to CNTY-101 and our other product candidates, if approved, and potential future drugs or biologics that compete with our products;
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the cost of manufacturing CNTY-101 and our other product candidates, which may vary depending on the quantity of production and the terms of our agreements with CMOs;
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the timing and amount of the milestone or other payments we must make to the licensors and other third parties from whom we have in-licensed or acquired our product candidates;
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the level of demand for any approved products, which may vary significantly;
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future accounting pronouncements or changes in our accounting policies; and
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any other change in the competitive landscape of our industry, including consolidation among our competitors or partners.
The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on our past results as an indication of our future performance.
This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated revenue or earnings guidance we may provide.
Risks related to employee matters, managing growth and other risks related to our business
We are dependent on the services of our management and other clinical and scientific personnel, and if we are not able to retain these individuals or recruit additional management or clinical and scientific personnel, our business will suffer.
Our success depends in part on our continued ability to attract, retain, and motivate highly qualified management, clinical, and scientific personnel, many of whom have been instrumental for us and have substantial experience with our iPSC-derived allogeneic cell therapy platforms, underlying technologies, and related product candidates. Given the specialized nature of our iPSC-derived allogeneic cell therapy platforms and the fact that ours is a novel and emerging field, there is an inherent scarcity of experienced personnel in this field. As we continue developing our product candidates in our pipeline, we will require personnel with medical, scientific, or technical qualifications specific to each program.
We are highly dependent upon our senior management, particularly Osvaldo Flores, Ph.D., our Chief Executive Officer, as well as our senior scientists and other members of our executive team. The loss of services of any of these individuals could delay or prevent the successful development of our product pipeline, initiation or completion of our planned clinical trials, or the commercialization of CNTY-101 and our other product candidates. We have executed employment agreements or offer letters with each member of our senior management team, these agreements are terminable at will with or without notice and, therefore, we may not be able to retain their services as expected. We do not currently maintain “key person” life insurance on the lives of our executives or any of our employees. This lack of insurance means that we may not have adequate compensation for the loss of the services of these individuals.
Our research and development programs, clinical operations, and sales and marketing efforts depend on our ability to attract and retain highly skilled scientists, engineers, and sales professionals. The competition for qualified personnel in the biotechnology and pharmaceutical industries is intense, and we have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications on acceptable terms, or at all. Many of the companies with which we compete for experienced personnel have greater resources than we do, and any of our employees may terminate their employment with us at any time. If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached legal obligations, resulting in a diversion of our time and resources, and potentially, damages. In addition, job candidates and existing employees often consider the value of the stock awards they receive in connection with their employment. If the perceived benefits of our stock awards decline, it may harm our ability to recruit and retain highly skilled employees. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects would be harmed.
We will need to increase the size and capabilities of our organization, and we may experience difficulties in managing our growth.
As of April 30, 2021, we had 107 employees and consultants and most of our employees are full-time. As our development and commercialization plans and strategies develop, and as we transition into operating as a public company, we must add a significant number of additional managerial, operational, financial, and other personnel. Future growth will impose significant added responsibilities on members of management, including:
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identifying, recruiting, integrating, maintaining, and motivating additional employees;
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managing our internal development efforts effectively, including the clinical and FDA or other comparable authority review process for CNTY-101 and our other product candidates, while complying with our contractual obligations to contractors and other third parties; and
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improving our operational, financial, and management controls, reporting systems, and procedures.
Our future financial performance and our ability to commercialize CNTY-101 and our other product candidates, if approved, will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities. In addition, we expect to incur additional costs in hiring, training, and retaining such additional personnel.
If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks necessary to further develop and commercialize CNTY-101 and our other product candidates and, accordingly, may not achieve our research, development, and commercialization goals.
The COVID-19 pandemic, or a similar pandemic, epidemic, or outbreak of an infectious disease, may materially and adversely affect our business and our financial results and could cause a disruption to the development of our product candidates.
Public health crises, such as pandemics or similar outbreaks, could adversely impact our business. A novel virus, severe acute respiratory syndrome coronavirus 2, or SARS-CpV-2 or coronavirus, which causes COVID-19 has spread to most countries across the world, including all 50 states within the United States and Canadian Provinces, including Philadelphia, Pennsylvania, Washington, and Hamilton, Ontario where our operations are located, and Madison, Wisconsin, where the manufacturing site for our product candidates is located. The coronavirus pandemic is evolving and has led to the implementation of various responses, including government-imposed quarantines, travel restrictions, and other public health safety measures. The extent to which the coronavirus impacts our operations or those of our consultants and collaborators, including FCDI, will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that will emerge concerning the severity of the coronavirus, new strains or mutations of the coronavirus, and the actions to contain the coronavirus or treat its impact, among others. In response to the spread of COVID-19, we have closed our executive offices with our administrative employees continuing their work outside of our offices and limited the number of staff in any given research and development laboratory and have taken other precautionary measures as well, including the periodic testing of our employees. We have experienced modest delays in our discovery and development activities as a result of the COVID-19 pandemic, primarily due to temporary and partial shutdowns at certain of our CROs and academic institutions that have since resumed operations, and due to the Pennsylvania, Washington, and Ontario stay-at-home orders.
Potential disruptions to our preclinical development efforts include, but are not limited to:
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delays or disruptions in preclinical experiments and IND-enabling studies due to restrictions of on-site staff, limited or no access to animal facilities, and unforeseen circumstances at contract research organizations (CROs) and vendors;
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limitations on employee or other resources that would otherwise be focused on the conduct of our preclinical work, including because of sickness of employees or their families, the desire of employees to avoid travel or
contact with large groups of people, an increased reliance on working from home, school closures, or mass transit disruptions; and
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delays in necessary interactions with regulators, ethics committees, and other important agencies and contractors.
We have not yet commenced clinical trial activities for any of our product candidates. If we commence clinical trials for one or more of our product candidates, potential disruptions of those clinical activities as a result of COVID-19 or similar pandemics include, but are not limited to the interruption of key clinical trial activities, enrolling patients in clinical trials, interruption of, or delays in receiving, supplies of our product candidates, regulatory delays, changes in regulations as part of a response to the COVID-19 pandemic, and additional delays, difficulties, or interruptions as a result of current or future shutdowns.
The COVID-19 global pandemic continues to rapidly evolve. Although many countries, including certain countries in Europe and the United States, have re-opened, rises in new cases have caused certain countries to re-initiate restrictions. The extent to which the outbreak may affect our preclinical studies, clinical trials, business, financial condition, and results of operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, the availability of vaccines, and actions to contain the outbreak or treat its impact. Additionally, we are unable to predict if a different pandemic could have similar or different impacts on our business, financial condition, or share price. Future developments in these and other areas present material uncertainty and risk with respect to our clinical trials, business, financial condition, and results of operations.
We have incurred indebtedness, and we may incur additional indebtedness, which could adversely affect our business.
As of April 30, 2021, we had an outstanding balance of $10.0 million under our Loan and Security Agreement with Hercules Capital, Inc., or the Loan Agreement. Our indebtedness could have important consequences to our stockholders. For example, it:
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increases our vulnerability to adverse general economic and industry conditions;
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limits our flexibility in planning for, or reacting to, changes in our business or the industries in which we operate by restricting our ability to make acquisitions, investments or divestments, or take other corporate actions quickly; and
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limits our ability to obtain additional financing or refinancing in the future for working capital, clinical trials, research and development, or other purposes.
Any of the above-listed factors could materially adversely affect our business, financial condition, results of operations, and cash flows. The Loan Agreement also contains certain financial and other covenants, including limitations on, among other things, additional indebtedness, out licensing, paying dividends in certain circumstances, and making certain acquisitions and investments. Any failure to comply with the terms, covenants and conditions of the Loan Agreement may limit our ability to draw upon additional tranches of term loans and may result in an event of default under such agreement, which could have a material adverse effect on our business, financial condition, and results of operations.
We are subject to various foreign, federal, and state healthcare and privacy laws and regulations, and our failure to comply with these laws and regulations could harm our results of operations and financial condition.
Our business operations and current and future arrangements with investigators, healthcare professionals, consultants, third-party payors, and customers expose us to broadly applicable foreign, federal and state fraud and abuse, and other healthcare and privacy laws and regulations. These laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, market, sell, and distribute any products for which we obtain marketing approval. Such laws include:
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the federal Anti-Kickback Statute, which prohibits, among other things, persons, or entities from knowingly and willfully soliciting, offering, receiving, or providing any remuneration (including any kickback, bribe, or certain rebates), directly or indirectly, overtly or covertly, in cash or in-kind, in return for, either the referral of an individual or the purchase, lease, or order, or arranging for or recommending the purchase, lease, or order of any good, facility, item or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it in order to have committed a violation. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act;
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the federal false claims and civil monetary penalties laws, including the civil False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making or causing to be made a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government;
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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for, healthcare benefits, items, or services. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;
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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their implementing regulations, also impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information without appropriate authorization by covered entities subject to the rule, such as health plans, healthcare clearinghouses, and certain healthcare providers as well as their business associates that perform certain services for or on their behalf involving the use or disclosure of individually identifiable health information;
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the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program (with certain exceptions) to report annually to the CMS information related to payments and other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors) and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members;
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the Foreign Corrupt Practices Act, or FCPA, which prohibits companies and their intermediaries from making, or offering or promising to make improper payments to non-United States officials for the purpose of obtaining or retaining business or otherwise seeking favorable treatment; and
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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to our business practices, including but not limited to, research, distribution, sales, and marketing arrangements and claims involving healthcare items or services reimbursed by non- governmental third-party payors, including private insurers, or by the patients themselves; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require drug and biologic manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities; state and local laws that require the registration of pharmaceutical sales representatives; state and foreign laws governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA; state and foreign governments
that have enacted or proposed requirements regarding the collection, retention, distribution, use, security, sharing, transfer, storage, and other processing of personally identifiable information and other data relating to individuals (including the EU General Data Protection Regulation 2016/679, or GDPR, and the California Consumer Protection Act, or CCPA), and federal and state consumer protection laws are being applied to enforce regulations related to the online collection, use, and dissemination of data, thus complicating compliance efforts.
Ensuring that our internal operations and business arrangements with third parties comply with applicable healthcare laws and regulations involves substantial costs. It is possible that governmental authorities will conclude that our business practices, including any consulting and advisory board arrangements with physicians and other healthcare providers, do not comply with current or future statutes, regulations, agency guidance, or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of the laws described above or any other governmental laws and regulations that may apply to us, we may be subject to significant penalties, including civil, criminal, and administrative penalties, damages, fines, exclusion from United States government funded healthcare programs, such as Medicare and Medicaid, or similar programs in other countries or jurisdictions, disgorgement, individual imprisonment, contractual damages, reputational harm, additional reporting requirements, and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws, diminished profits, and the curtailment or restructuring of our operations. Further, defending against any such actions can be costly, time-consuming, and may require significant financial and personnel resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired. If any of the physicians or other providers or entities with whom we expect to do business are found to not be in compliance with applicable laws, they may be subject to criminal, civil, or administrative sanctions, including exclusion from government funded healthcare programs and imprisonment. If any of the above occur, it could adversely affect our ability to operate our business and our results of operations.
Healthcare legislation, including potentially unfavorable pricing regulations or other healthcare reform initiatives, may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates.
The commercial potential for our approved products, if any, could be affected by changes in healthcare spending and policy in the United States and abroad. We operate in a highly regulated industry. New laws, regulations, or judicial decisions, or new interpretations of existing laws, regulations or decisions, related to healthcare availability, the method of delivery or payment for healthcare products, and services could adversely affect our business, operations, and financial condition. The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that may affect our ability to profitably sell our products and product candidates, if approved. The United States government, state legislatures, and foreign governments also have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement, and requirements for substitution of generic products for branded prescription drugs and biologics.
The ACA was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry, and impose additional health policy reforms. There have been significant ongoing administrative, executive, and legislative efforts to modify or eliminate the ACA. For example, the Tax Cuts and Jobs Act, enacted on December 22, 2017, repealed the shared responsibility payment for individuals who fail to maintain minimum essential coverage under section 5000A of the Code, commonly referred to as the individual mandate. The Trump administration issued executive orders which sought to reduce burdens associated with the ACA and modified how it was implemented. Other legislative changes have been proposed and adopted since passage of the ACA. The ACA has also been subject to challenges in the courts. On December 14, 2018, a Texas U.S. District Court Judge ruled that the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by the United States Congress, or Congress. On December 18, 2019, the Fifth Circuit U.S. Court of Appeals held that the individual mandate is unconstitutional
and remanded the case to the Texas District Court to reconsider its earlier invalidation of the entire ACA. An appeal was taken to the U.S. Supreme Court which heard oral arguments in the case on November 10, 2020. A ruling is expected in 2021.
Further changes to and under the ACA remain possible, although the new Biden administration has signaled that it plans to build on the ACA and expand the number of people who are eligible for subsidies under it. President Biden indicated that he intends to use executive orders to undo changes to the ACA made by the Trump administration and would advocate for legislation to build on the ACA. It is unknown what form any such changes or any law proposed to replace the ACA would take, and how or whether it may affect our business in the future. We expect that changes to the ACA, the Medicare and Medicaid programs, changes allowing the federal government to directly negotiate drug and biologic prices, and changes stemming from other healthcare reform measures, especially with regard to healthcare access, financing, or other legislation in individual states, could have a material adverse effect on the healthcare industry.
The Budget Control Act of 2011 has resulted in reductions in spending on certain government programs, including aggregate reductions to Medicare payments to healthcare providers of up to 2.0% per fiscal year. These reductions have been extended until 2030 unless additional Congressional action is taken.
Any reduction in reimbursement from Medicare, Medicaid, or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain and maintain profitability of our product and product candidates, if approved.
We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we or our collaborators are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we or our collaborators are not able to maintain regulatory compliance, CNTY-101 or any future product candidates may lose any marketing approval that may have been obtained and we may not achieve or sustain profitability, which would materially adversely affect our business, financial condition, and results of operations.
If we fail to maintain proper and effective internal controls over financial reporting our ability to produce accurate and timely financial statements could be impaired.
We are required to maintain internal controls over financial reporting. Commencing with our fiscal year ending the year after this offering is completed, we must perform system and process design evaluation and testing of the effectiveness of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Annual Report on Form 10-K for that year, as required by Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. This will require that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts. Prior to this offering, we have never been required to test our internal controls within a specified period and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner. In addition, if we identify material weaknesses in our internal control over financial reporting in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business.
If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, if our independent registered public accounting firm determines that we have a material weakness or a significant deficiency in our internal control over financial reporting, or we are unable to maintain proper and effective internal controls over financial reporting, we may not be able to produce timely and accurate financial statements. As a result, our investors could lose confidence in our reported financial information, the market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities.
We believe that any internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. We may discover
weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements. Our internal control over financial reporting will not prevent or detect all errors and all fraud. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.
These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. For example, our directors or executive officers could inadvertently fail to disclose a new relationship or arrangement causing us to fail to make a required related party transaction disclosure. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and may not be detected.
We, or our CMOs or suppliers, may use potent chemical agents and hazardous materials, and any claims relating to improper handling, storage or disposal of these materials could be time-consuming or costly.
We, or our CMOs or suppliers, including FCDI, use biological materials, potent chemical agents and may use hazardous materials, including chemicals and biological agents and compounds that could be dangerous to human health and safety of the environment. The operations of our CMOs and suppliers also produce hazardous waste products. Federal, state, and local laws and regulations govern the use, generation, manufacture, storage, handling, and disposal of these materials and wastes. Compliance with applicable environmental laws and regulations may be expensive, and current or future environmental laws and regulations may impair our product development efforts.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations, which have tended to become more stringent over time. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties, or other sanctions or liabilities, which could materially adversely affect our business, financial condition, results of operations, and prospects.
If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our products.
We are exposed to potential product liability and professional indemnity risks that are inherent in the research, development, manufacturing, marketing, and use of pharmaceutical products. While we currently have no product candidates that have commenced clinical trials or been approved for commercial sale, the future use of product candidates by us in clinical trials, and the sale of any approved products in the future, may expose us to liability claims. For example, we may be sued if CNTY-101 and our other product candidates allegedly cause injury or are found to be otherwise unsuitable during product testing, manufacturing, marketing. or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product candidate, negligence, strict liability, and a breach of warranties. Claims may be brought against us by clinical trial participants, patients, or others using, administering or selling products that may be approved in the future. Claims could also be asserted under state consumer protection acts.
If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit or cease the commercialization of our products. Even a successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:
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decreased demand for our products;
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injury to our reputation and significant negative media attention;
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withdrawal of clinical trial participants and inability to continue clinical trials;
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initiation of investigations by regulators;
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costs to defend the related litigation;
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a diversion of management’s time and our resources;
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substantial monetary awards to trial participants or patients;
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product recalls, withdrawals or labeling, marketing, or promotional restrictions;
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significant negative financial impact;
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exhaustion of any available insurance and our capital resources;
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the inability to commercialize CNTY-101 or our other product candidates; and
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a decline in our stock price.
We currently hold product liability coverage in an amount we consider reasonable. We may need to increase our insurance coverage as we expand our clinical trials or if we commence commercialization of CNTY-101 or our other product candidates. Insurance coverage is increasingly expensive. Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of CNTY-101 or our other product candidates. Although we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies will also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. We may have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.
We may be unable to adequately protect our or our vendors’ information systems from cyberattacks or other incidents, which could result in the disclosure of confidential or proprietary information, including personal data, damage our reputation, and subject us to significant financial and legal exposure.
We rely on information technology systems that we or our third-party providers operate to process, transmit, and store electronic information in our day-to-day operations. In connection with our product discovery efforts, we may collect and use a variety of personal data, such as names, mailing addresses, email addresses, phone numbers, and clinical trial information. Despite our implementation of security measures, our internal computer systems, and those of our CROs, CMOs, information technology suppliers, and other contractors and consultants are vulnerable to damage from computer viruses, cyberattacks, and other unauthorized access, natural disasters, terrorism, war, and telecommunication and electrical failures. Additionally, our security measures or those of our vendors could be breached as a result of employee theft, exfiltration, misuse, malfeasance, or unintentional events. A successful cyberattack or other data security incident could result in the theft or destruction of intellectual property, data, or other misappropriation of assets, or otherwise compromise our confidential or proprietary information and disrupt our operations. Cyberattacks could include wrongful conduct by hostile foreign governments, industrial espionage, wire fraud, and other forms of cyber fraud, the deployment of harmful malware, ransomware, denial-of-service, social engineering fraud, or other means to threaten data security, confidentiality, integrity and availability. A successful cyberattack could cause serious negative consequences for us, including, without limitation, the disruption of operations, the misappropriation of confidential business information, including financial information, trade secrets, financial loss, and the disclosure of corporate strategic plans. Although we devote resources to protect our information systems, we realize that cyberattacks are a threat, and there can be no assurance that our efforts will prevent information security breaches that would result in business, legal, financial, or reputational harm to us, or would have a material adverse effect on our results of operations and financial condition. Any failure to prevent or mitigate security breaches or improper access to, use of, or disclosure of our clinical data or patients’ personal data could result in significant liability under state (e.g., state breach notification laws), federal (e.g., HIPAA, as amended by HITECH), and international law (e.g., the GDPR) and may cause a material adverse impact to our reputation, affect our ability to conduct new studies and potentially disrupt our business.
We rely on our third-party providers to implement effective security measures and identify and correct for any such failures, deficiencies or breaches. If we or our third-party providers fail to maintain or protect our information technology systems and data integrity effectively or fail to anticipate, plan for, or manage significant disruptions to our information technology systems, we or our third-party providers could have difficulty preventing, detecting, and controlling such cyberattacks and any such attacks could result in the losses described above as well as disputes with physicians, patients and our partners, regulatory sanctions, or penalties, increases in operating expenses, expenses or lost revenues or other adverse consequences, any of which could have a material adverse effect on our business, results of operations, financial condition, prospects, and cash flows. Any failure by such third parties to prevent or mitigate security breaches or improper access to or disclosure of such information could have similarly adverse consequences for us. If we are unable to prevent or mitigate the impact of such security or data privacy breaches, we could be exposed to litigation and governmental investigations, which could lead to a potential disruption to our business.
We also cannot be certain that our existing insurance coverage will cover any claims against us relating to any security incident or breach, will be available in sufficient amounts to cover the potentially significant losses that may result from a security incident or breach, will continue to be available on acceptable terms or at all or that the insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation, business, financial condition, and results of operations.
Failure to comply with current or future federal, state, and foreign laws and regulations and industry standards relating to privacy and data protection laws could lead to government enforcement actions (which could include civil or criminal penalties), private litigation, and/or adverse publicity and could negatively affect our operating results and business.
We or our collaborators may be subject to federal, state, and foreign data privacy and security laws and regulations. In the United States, numerous federal and state laws and regulations, including federal health information privacy laws, state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws, govern the collection, use, disclosure, storage, transfer, protection, and other processing of health-related and other personal information could apply to our operations or the operations of our collaborators. Many state legislatures have adopted legislation that regulates how businesses operate online, including measures relating to privacy, data security, and data breaches, and laws in all 50 states require businesses to provide notice to customers whose personally identifiable information has been disclosed as a result of a data breach. Such laws are not consistent, and compliance in the event of a widespread data breach is costly. By way of example, the CCPA, which went into effect on January 1, 2020, creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling certain personal data. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. The CCPA may increase our compliance costs and potential liability, and many similar laws have been proposed at the federal level and in other states. Additionally, a new privacy law, the California Privacy Rights Act, or the CPRA, was approved by California voters in the election of November 3, 2020. The CPRA, which will take effect in most material respects on January 1, 2023, modifies the CCPA significantly, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in an effort to comply.
Foreign data protection laws, including the GDPR, may also apply to health-related and other personal information obtained outside of the United States. The GDPR went into effect in the EU in May 2018 and introduced strict requirements for processing the personal data of European Union data subjects. Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater. Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the European Union and the United States remains uncertain. For example, in 2016, the
European Union and United States agreed to a transfer framework for data transferred from the European Union to the United States called the Privacy Shield, but the Privacy Shield was invalidated in July 2020 by the Court of Justice of the European Union. Further, the vote in the United Kingdom in favor of exiting the European Union, referred to as Brexit, has created uncertainty with regard to data protection regulation in the United Kingdom. The United Kingdom has transposed the GDPR into domestic law with a United Kingdom version of the GDPR that took effect in January 2021, which could expose us to two parallel regimes, each of which potentially authorizes similar fines and other potentially divergent enforcement actions for violations. In addition, it is still unclear whether transfer of data from the European Economic Area to the United Kingdom will remain lawful under the GDPR. On December 24, 2020, the United Kingdom and European Union entered into a Trade and Cooperation Agreement. The Trade and Cooperation Agreement provides for a transitional period during which the United Kingdom will be treated like an European Union member state in relation to processing and transfers of personal data until June 30, 2021. This may be extended. After such period, the United Kingdom will be a “third country” under the GDPR unless the European Commission adopts an adequacy decision in respect of transfers of personal data to the United Kingdom.
Compliance with United States and foreign data protection laws and regulations could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose data, or in some cases, impact our ability to operate in certain jurisdictions. Failure by us or our collaborators to comply with United States and foreign data protection laws and regulations could result in government enforcement actions (which could include civil or criminal penalties), private litigation, and/or adverse publicity and could negatively affect our operating results and business. Moreover, clinical trial subjects about whom we or our potential collaborators obtain information, as well as the providers who share this information with us, may contractually limit our ability to use and disclose the information. Claims that we have violated individuals’ privacy rights, failed to comply with data protection laws or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend, could result in adverse publicity and could have a material adverse effect on our business, financial condition, results of operations, and prospects.
Our employees and independent contractors, including principal investigators, CROs, consultants, and vendors, may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
We are exposed to the risk that our employees and independent contractors, including principal investigators, CROs, consultants, and vendors may engage in misconduct or other illegal activity. Misconduct by these parties could include intentional, reckless, and/or negligent conduct or disclosure of unauthorized activities to us that violate: (1) the laws and regulations of the FDA and other similar regulatory requirements, including those laws that require the reporting of true, complete, and accurate information to such authorities, (2) manufacturing standards, including cGMP requirements, (3) federal and state data privacy, security, fraud and abuse, and other healthcare laws and regulations in the United States and abroad or (4) laws that require the true, complete, and accurate reporting of financial information or data. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials, the creation of fraudulent data in our preclinical studies or clinical trials, or illegal misappropriation of drug or biologic product, which could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. In addition, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and financial results, including, without limitation, the imposition of significant civil, criminal, and administrative penalties, damages, monetary fines, disgorgements, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, individual imprisonment, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements and oversight if we become subject to a corporate integrity
agreement, or similar agreement to resolve allegations of noncompliance with these laws, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Risks related to our intellectual property
We do not currently own any issued patents or non-provisional patent applications relating to our product candidates.
Given the early stage of development of our product candidates, our patent portfolio is similarly at a very early stage. In particular, we do not own any issued patents or non-provisional patent applications, and we have not filed any patent applications related to our product candidates other than CNTY-101. If we do not obtain meaningful patent coverage for our product candidates, their respective components, formulations, combination therapies, methods used to manufacture them, and methods of treatment, competitors may be able to erode or negate any competitive advantage we may have, which would likely harm our business and ability to achieve profitability. To establish our proprietary position, we have filed provisional patent applications in the United States related to CNTY-101 and other aspects of our technology. However, United States provisional patent applications are not eligible to become issued patents unless and until, among other things, we file a non-provisional patent application within 12 months of filing of one or more of our related provisional patent applications. With regard to such United States provisional patent applications, if we do not timely file any non-provisional patent applications, we may lose our priority date with respect to our provisional patent applications and any patent protection on the inventions disclosed in our provisional patent applications. While we intend to timely file non-provisional patent applications relating to our provisional patent applications, we cannot predict whether any such patent applications will result in the issuance of patents that provide us with any competitive advantage. If we are unable to secure or maintain patent protection with respect to our antibody technology and any proprietary products and technology we develop, our business, financial condition, results of operations, and prospects could be materially harmed.
If any of our license agreements with FCDI or our other licensors, including iCELL Inc. and the Governing Council of the University of Toronto and McMaster University, are terminated, we could lose our rights to key components enabling our iPSC-derived allogeneic cell therapy platforms.
Our commercial success will depend in part on the maintenance of our license agreements. In September 2018, we entered into an exclusive license with FCDI, pursuant to which we have received an exclusive license to certain patents and know-how related to the differentiation of iPSC cells into immune-effector cells in the field of cancer immunotherapeutics, or the Differentiation License, and a non-exclusive license for the rights to certain patents and know-how related to the reprogramming of human somatic cells to iPSCs in the field of cancer immunotherapeutics, or the Reprogramming License, and together with the Differentiation License, the FCDI Licenses. A critical aspect to manufacturing our product candidates involves the reprogramming of certain cells into iPSCs and the differentiation of iPSCs into immune cells. We utilize technology licensed from FCDI to reprogram cells to become iPSCs and to differentiate the iPSCs to generate different immune cell types including NK cells and T cells. By utilizing this licensed technology, we are currently capable of achieving fully functional iNK cells from iPSCs in approximately 30 days.
We have also entered into an exclusive sublicense, or the iCELL Sublicense, with iCELL Inc., or iCELL, for certain patents related to an immune function reconstruction method using multipotent stem cells and the method for producing antigen specific T-cells, and acquired a license agreement from Empirica Therapeutics, or the Empirica License, pursuant to which we receive an exclusive license from the Governing Council of the University of Toronto and the McMaster University under certain patents and antibody sequences and related intellectual property rights and know-how to, among other things, reproduce, manufacture and commercialize certain CD-133 related antibody and antibody sequence-derived technology.
The FCDI Licenses and certain of our other license agreements, including the iCELL Sublicense and Empirica License, impose, and future license agreements may impose, various diligence, milestone payment, royalty, and other obligations on us. If we fail to comply with our obligations under the FCDI Licenses, our other license
agreements, or any future license agreements with any party, or we are subject to a bankruptcy, the licensor may have the right to terminate the license, in which event we would not be able to develop products covered by such license.
If, for any reason, the FCDI Licenses or any of our other license agreements are terminated or we otherwise lose the rights under such agreements, it would adversely affect our business. If we breach any material obligations under the FCDI Licenses or any of our other license agreements, FCDI or the applicable licensor may have the right to terminate our license, which could result in us being unable to develop, manufacture, or sell our product candidates that incorporate the intellectual property subject to such license. If these in-licenses are terminated, or if the underlying patents fail to provide the intended exclusivity, competitors would have the freedom to seek regulatory approval of, and to market, products identical to ours. In addition, we may seek to obtain additional licenses from our licensors and, in connection with obtaining such licenses, we may agree to amend our existing licenses in a manner that may be more favorable to the licensors, including by agreeing to terms that could enable third parties (potentially including our competitors) to receive licenses to a portion of the intellectual property that is subject to our existing licenses. Any of these events could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects, and we may be required to identify and license replacement technology from third parties, which may not be available on reasonable terms or at all.
For a more complete description of the FCDI Licenses and our other licenses, please see the section titled “Business—Licensing, Partnerships and Collaborations” in this prospectus.
We may not be successful in obtaining or maintaining necessary intellectual property rights in the future for the development of CNTY-101 and our other product candidates.
We may in the future enter into additional license agreements with third parties for other intellectual property rights or assets to advance our research or allow commercialization of CNTY-101 and our other product candidates, and we cannot provide any assurances that third-party patents do not exist which might be enforced against CNTY-101 and our other product candidates in the absence of such a license. We may fail to obtain any of these licenses on commercially reasonable terms, if at all. Even if we are able to obtain a license, it may be non-exclusive or may not provide exclusive rights to use such intellectual property and technology in all relevant fields of use and in all territories, thereby giving our competitors access to the same technologies licensed to us. In that event, we may be required to expend significant time and resources to develop or license replacement technology, which may not be feasible on a technical or commercial basis. If we are unable to do so, we may be unable to develop or commercialize the affected product candidates, which could materially harm our business and the third parties owning such intellectual property rights could seek either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation. Licensing of intellectual property is of critical importance to our business and involves complex legal, business, and scientific issues. Disputes may arise between us and our licensors regarding intellectual property subject to a license agreement, including:
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the scope of rights granted under the license agreement and other interpretation-related issues, the resolution of which could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement;
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whether and the extent to which our technology and processes infringe, misappropriate, or otherwise violate intellectual property of the licensor that is not subject to the licensing agreement;
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our right to sublicense patents and other intellectual property rights to third parties;
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our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of CNTY-101 and our other product candidates, and what activities satisfy those diligence obligations;
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our right to transfer or assign the license; and
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the ownership of inventions, know-how, and other intellectual property resulting from the joint creation or use of intellectual property by our licensors and us and our partners.
If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may not be able to successfully develop and commercialize the affected product candidates, which would have a material adverse effect on our business.
In addition, certain of our agreements may limit or delay our ability to consummate certain transactions, may impact the value of those transactions, or may limit our ability to pursue certain activities. For example, if we choose to sublicense or assign to any third parties our rights under our existing license agreements with respect to any licensed product, we may be required to pay a specified percentage of all revenue to be received in connection with such transaction.
Under one of the FCDI Licenses and certain other in-licenses under which we sublicense certain rights related to our technology, we rely on FCDI and our other sublicensors to comply with their obligations under their upstream license agreements where we may have no relationship with the original licensor of such rights. If our sublicensors fail to comply with their obligations under their upstream license agreements, and the upstream license agreements are consequently terminated, such termination may result in the termination of our sublicenses and loss of such rights.
For a more complete description of the FCDI Licenses, please see the section titled “Business—License Agreements” in this prospectus.
Our success depends on our ability to obtain, maintain, protect, and enforce our intellectual property and our proprietary technologies.
Our commercial success depends in part on our ability to obtain, maintain, protect, and enforce our intellectual property and proprietary technologies, including patent protection and trade secret protection for CNTY-101 and our other product candidates, proprietary technologies and their uses as well as our ability to operate without infringing, misappropriating, or otherwise violating the intellectual property or proprietary rights of others. If we are unable to obtain, maintain, protect, or enforce our intellectual property rights or if our intellectual property rights are inadequate for our technology or our product candidates, our competitive position could be harmed, which could have a material adverse impact on our business, results of operations, financial conditions, and prospects. Although we have filed provisional patent applications with respect to CNTY-101 and other aspects of our product technology, our patent portfolio is in an earlier stage of prosecution, and we have not filed any patent applications related to our product candidates other than CNTY-101. We do not own any issued patents related to CNTY-101 and our other product candidates. Our patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless, and until, patents are issued from such applications, and then only to the extent the issued claims cover the technology. There can be no assurance that our patent applications will result in patents being issued or that issued patents will afford sufficient protection against competitors with similar technology, nor can there be any assurance that the patents if issued will not be infringed, misappropriated, violated, designed around or invalidated by third parties. Even issued patents may later be found invalid or unenforceable or may be modified or revoked in proceedings instituted by third parties before various patent offices or in courts. The degree of future protection for our intellectual property and proprietary rights is uncertain. Only limited protection may be available and may not adequately obtain, maintain, protect, and enforce our rights or permit us to gain or keep any competitive advantage. These uncertainties and/or limitations in our ability to properly obtain, maintain, protect, and enforce the intellectual property rights relating to CNTY-101 and our other product candidates could have a material adverse effect on our financial condition and results of operations.
Because CNTY-101 is our lead product candidate, and because our other product candidates are based on similar technology, if we are unable to obtain patent protection for CNTY-101, our other product candidates in our pipeline could be significantly impaired, which could materially adversely affect our business, financial conditions, results of operations, and growth prospects.
We cannot be certain that the claims in our pending patent applications will be considered patentable by the United States Patent and Trademark Office, or USPTO, courts in the United States or by the patent offices and courts
in foreign countries, nor can we be certain that claims that may ultimately issue from our patent applications will not be found invalid or unenforceable if challenged. If we are unable to obtain or maintain patent protection with respect to our product candidates, our business, financial condition, results of operations, and prospects could be materially harmed.
The patent application process is subject to numerous risks and uncertainties, and there can be no assurance that we or any of our potential future collaborators will be successful in protecting CNTY-101 and our other product candidates by obtaining and defending patents. These risks and uncertainties include the following:
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the USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment, and other provisions during the patent process, the noncompliance with which can result in abandonment or lapse of a patent or patent application, and partial or complete loss of patent rights in the relevant jurisdiction;
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patent applications may not result in any patents being issued;
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patents may be challenged, invalidated, modified, revoked, circumvented, found to be unenforceable, or otherwise may not provide any competitive advantage;
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our competitors, many of whom have substantially greater resources than we do and many of whom have made significant investments in competing technologies, may seek or may have already obtained patents that will limit, interfere with or block our ability to make, use, and sell CNTY-101 and our other product candidates;
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there may be significant pressure on the United States government and international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns; and
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countries other than the United States may have patent laws less favorable to patentees than those upheld by United States courts, allowing foreign competitors a better opportunity to create, develop, and market competing products.
The patent prosecution process is also expensive and time-consuming, and we may not be able to file, prosecute, maintain, enforce, or license all necessary or desirable patent applications at a reasonable cost or in a timely manner or in all jurisdictions where protection may be commercially advantageous. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, in some circumstances, we do not have the right to control the preparation, filing, and prosecution of patent applications, or to maintain the patents, directed to technology that we license from third parties. We may also require the cooperation of our licensor in order to enforce the licensed patent rights, and such cooperation may not be provided. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. We cannot be certain that patent prosecution and maintenance activities by our licensors have been or will be conducted in compliance with applicable laws and regulations, which may affect the validity and enforceability of such patents or any patents that may issue from such applications. If they fail to do so, this could cause us to lose rights in any applicable intellectual property that we in-license, and as a result our ability to develop and commercialize products or product candidates may be adversely affected and we may be unable to prevent competitors from making, using, and selling competing products.
In addition, although we enter into non-disclosure and confidentiality agreements with parties who have access to patentable aspects of our research and development output, such as our employees, outside scientific collaborators, CROs, CMOs, consultants, advisors, and other third parties, any of these parties may breach such agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection. In addition, publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to make the inventions claimed in our licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions.
If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical product candidates would be adversely affected.
The patent position of biopharmaceutical companies generally is highly uncertain, involves complex legal and factual questions, and has been the subject of much litigation in recent years. As a result, the issuance, scope, validity, enforceability, and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our product candidates or which effectively prevent others from commercializing competitive product candidates.
Moreover, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Even if patent applications we own or license currently or in the future issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us, or otherwise provide us with any competitive advantage. Any patents that we own or in-license may be challenged or circumvented by third parties or may be narrowed or invalidated as a result of challenges by third parties. Consequently, we do not know whether CNTY-101 and our other product candidates will be protectable or remain protected by valid and enforceable patents. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing, misappropriating, or violating manner which could materially adversely affect our business, financial condition, results of operations and prospects.
The issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability, and our patents may not cover CNTY-101 and our other product candidates or may be challenged in the courts or patent offices in the United States and abroad. We may be subject to a third-party pre-issuance submission of prior art to the USPTO, or become involved in opposition, derivation, revocation, reexamination, post-grant review, or PGR, and inter partes review, or IPR, or other similar proceedings in the USPTO or foreign patent offices challenging our patent rights. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we or our predecessors and the patent examiner were unaware during prosecution. There is no assurance that all potentially relevant prior art relating to our patents and patent applications or those of our licensors has been found. There is also no assurance that there is not prior art of which we, our predecessors or licensors are aware, but which we do not believe affects the validity or enforceability of a claim in our patents and patent applications or those of our licensors, which may, nonetheless, ultimately be found to affect the validity or enforceability of a claim. An adverse determination in any such submission, proceeding, or litigation could reduce the scope of, or invalidate or render unenforceable, our patent rights, allow third parties to commercialize CNTY-101 and our other product candidates and compete directly with us, without payment to us. Moreover, we, or one of our licensors, may have to participate in interference proceedings declared by the USPTO to determine priority of invention or in post-grant challenge proceedings, such as oppositions in a foreign patent office, that challenge priority of invention or other features of patentability. Such challenges may result in loss of patent rights, loss of exclusivity or in patent claims being narrowed, invalidated or held unenforceable, which could limit our or our licensors’ ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of CNTY-101 and our other product candidates. Such proceedings also may result in substantial costs and require significant time from our scientists and management, even if the eventual outcome is favorable to us. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop, or commercialize current or future product candidates.
The patent protection and patent prosecution for some of our product candidates may be dependent on third parties.
We or our licensors may fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them. Therefore, we may miss potential opportunities to strengthen our patent position. It is possible that defects of form in the preparation or filing of our patents or patent applications may exist, or may arise in the future, for example, with respect to
proper priority claims, inventorship, claim scope, or requests for patent term adjustments. If we or our licensors, whether current or future, fail to establish, maintain, or protect such patents and other intellectual property rights, such rights may be reduced or eliminated. If our licensors are not fully cooperative or disagree with us as to the prosecution, maintenance, or enforcement of any patent rights, such patent rights could be compromised. If there are material defects in the form, preparation, prosecution, or enforcement of our patents or patent applications, such patents may be invalid and/or unenforceable, and such applications may never result in valid, enforceable patents. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.
As a licensee of third parties, we rely on third parties to file and prosecute patent applications and maintain patents and otherwise protect the licensed intellectual property under some of our license agreements. We have not had and do not have primary control over these activities for certain of our patents or patent applications and other intellectual property rights. We cannot be certain that such activities by third parties have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents or other intellectual property rights. Pursuant to the terms of the license agreements with some of our licensors, the licensors may have the right to control enforcement of our licensed patents or defense of any claims asserting the invalidity of these patents and even if we are permitted to pursue such enforcement or defense, we will require the cooperation of our licensors. We cannot be certain that our licensors will allocate sufficient resources or prioritize their or our enforcement of such patents or defense of such claims to protect our interests in the licensed patents. Even if we are not a party to these legal actions, an adverse outcome could harm our business because it might prevent us from continuing to license intellectual property that we may need to operate our business. If any of our licensors or any of our future licensors or future collaborators fail to appropriately prosecute and maintain patent protection for patents covering CNTY-101 and our other product candidates, our ability to develop and commercialize those product candidates may be adversely affected and we may not be able to prevent competitors from making, using, and selling competing products.
In addition, even where we have the right to control patent prosecution of patents and patent applications we have acquired or licensed from third parties, we may still be adversely affected or prejudiced by actions or inactions of our predecessors or licensors and their counsel that took place prior to us assuming control over patent prosecution.
Our technology acquired or licensed from various third parties may be subject to retained rights. Our predecessors or licensors often retain certain rights under their agreements with us, including the right to use the underlying technology for non-commercial academic and research use, to publish general scientific findings from research related to the technology, and to make customary scientific and scholarly disclosures of information relating to the technology. It is difficult to monitor whether our predecessors or licensors limit their use of the technology to these uses, and we could incur substantial expenses to enforce our rights to our licensed technology in the event of misuse.
In addition, the research resulting in certain of our in-licensed patent rights and technology was funded in part by the United States government. As a result, the government may have certain rights, or march-in rights, to such patent rights and technology. When new technologies are developed with government funding, the government generally obtains certain rights in any resulting patents, including a nonexclusive license authorizing the government to use the invention for noncommercial purposes. These rights may permit the government to disclose our confidential information to third parties and to exercise march-in rights to use or allow third parties to use our licensed technology. The United States government also has the right to take title to these inventions if the applicable licensor fails to disclose the invention to the government or fails to file an application to register the intellectual property within specified time limits. The government can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application of the government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to United States industry. In addition, our rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions in the United States. Any exercise
by the government of such rights could harm our competitive position, business, financial condition, results of operations, and prospects.
If we are limited in our ability to utilize acquired or licensed technologies, or if we lose our rights to critical in-licensed technology, we may be unable to successfully develop, out-license, market, and sell our products, which could prevent or delay new product introductions. Our business strategy depends on the successful development of licensed and acquired technologies into commercial products. Therefore, any limitations on our ability to utilize these technologies may impair our ability to develop, out-license, or market and sell CNTY-101 and our other product candidates.
Intellectual property rights do not necessarily address all potential threats to our competitive advantage.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business or permit us to maintain our competitive advantage. For example:
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others may be able to develop products that are similar to CNTY-101 and our other product candidates but that are not covered by the claims of the patents that we own or license;
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we or our licensors or predecessors might not have been the first to make the inventions covered by the issued patents or patent application that we own or license;
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we or our licensors or predecessors might not have been the first to file patent applications covering certain of our inventions;
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others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing, misappropriating, or otherwise violating our intellectual property rights;
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it is possible that our pending patent applications will not lead to issued patents;
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issued patents that we own or license may be held invalid or unenforceable, as a result of legal challenges by our competitors;
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our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;
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we may not develop additional proprietary technologies that are patentable; and
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the patents of others may have an adverse effect on our business.
Should any of these events occur, it could significantly harm our business, results of operations, and prospects.
Our commercial success depends significantly on our ability to operate without infringing, misappropriating, or otherwise violating the patents and other intellectual property and proprietary rights of third parties. Claims by third parties that we infringe, misappropriate, or violate their intellectual property or proprietary rights may result in liability for damages or prevent or delay our development and commercialization efforts.
Our commercial success depends in part on avoiding infringement, misappropriation, or other violation of the patents, intellectual property, or proprietary rights of third parties. However, our research, development, and commercialization activities may be subject to claims that we infringe, misappropriate, or otherwise violate patents or other intellectual property rights owned or controlled by third parties. Other entities may have or obtain patents or other intellectual property or proprietary rights that could limit our ability to make, use, sell, offer for sale, or import CNTY-101 or our other product candidates that may be approved in the future, or impair our competitive position. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biopharmaceutical industry, including patent infringement lawsuits, oppositions, reexaminations, IPR proceedings, and PGR proceedings before the USPTO and/or foreign patent offices. Numerous third-party United States and foreign issued patents and pending patent applications exist in the fields in which we are developing product candidates, including patents and patent
applications held by our competitors. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture, or methods for treatment related to the use or manufacture of CNTY-101 and our other product candidates.
As the biopharmaceutical industry expands and more patents are issued, the risk increases that CNTY-101 and our other product candidates may be subject to claims of infringement, misappropriation, or other violation of the patent rights of third parties. Because patent applications are maintained as confidential for a certain period of time, until the relevant application is published we may be unaware of third-party patents that may be infringed by commercialization of CNTY-101 and our other product candidates, and we cannot be certain that we were the first to file a patent application related to CNTY-101 and our other product candidates. Moreover, because patent applications can take many years to issue, there may be currently-pending patent applications that may later result in issued patents that CNTY-101 and our other product candidates may infringe. In addition, identification of third-party patent rights that may be relevant to our technology is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases, and the difficulty in assessing the meaning of patent claims. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon, misappropriates, or otherwise violates these patents. Any claims asserted by third parties would be time-consuming and could:
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result in costly litigation that may cause negative publicity;
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divert the time and attention of our technical personnel and management;
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cause development delays;
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prevent us from commercializing CNTY-101 and our other product candidates until the asserted patent expires or is held finally invalid or not infringed in a court of law;
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require us to develop non-infringing technology, which may not be possible on a cost-effective basis;
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subject us to significant liability to third parties; or
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require us to enter into royalty or licensing agreements, which may not be available on commercially reasonable terms, or at all, or which might be non-exclusive, which could result in our competitors gaining access to the same technology.
Third parties may hold intellectual property or proprietary rights that could prevent CNTY-101 and our other product candidates from being marketed. Any patent-related legal action against us claiming damages and seeking to enjoin activities relating to CNTY-101 and our other product candidates or processes could subject us to potential liability for damages, including treble damages if we were determined to willfully infringe, and require us to obtain a license to manufacture or develop CNTY-101 and our other product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. We cannot predict whether we would prevail in any such actions or that any license required under any of these patents would be made available on commercially acceptable terms, if at all. Moreover, even if we or our future strategic partners were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. In addition, we cannot be certain that we could redesign CNTY-101 and our other product candidates or processes to avoid infringement, if necessary. Accordingly, an adverse determination in a judicial or administrative proceeding, or the failure to obtain necessary licenses, could prevent us from developing and commercializing CNTY-101 and our other product candidates, which could harm our business, financial condition, and operating results.
Parties making claims against us may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability
to raise additional funds or otherwise have a material adverse effect on our business, results of operations, financial condition and prospects.
During the course of any intellectual property litigation, there could be public announcements of the initiation of the litigation as well as results of hearings, rulings on motions, and other interim proceedings in the litigation. If securities analysts or investors regard these announcements as negative, the perceived value of our existing products, programs, or intellectual property could be diminished. Accordingly, the market price of shares of our common stock may decline. Such announcements could also harm our reputation or the market for our future products, which could have a material adverse effect on our business.
The intellectual property landscape around gene-editing technology is highly dynamic, and third parties may initiate and prevail in legal proceedings alleging that we are infringing, misappropriating, or otherwise violating their intellectual property rights.
The field of gene-editing, especially in the area of CRISPR technology, is still in its infancy, and no such products have reached the market. Further, the ownership of intellectual property rights relating to CRISPR technology is not fully established. Accordingly, we may not be able to secure all the necessary rights to practice the technology. Due to the intense research and development that is taking place by several companies, including us and our competitors, in this field, the intellectual property landscape is in flux, and it may remain uncertain for the coming years. There may be significant intellectual property related litigation and proceedings relating to intellectual property and proprietary rights in the future. Our commercial success depends upon our ability and the ability of our collaborators to develop, manufacture, market, and sell any product candidates that we may develop and use our proprietary technologies without infringing, misappropriating, or otherwise violating the intellectual property and proprietary rights of third parties. The biopharmaceutical and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights relating to CRISPR. For example, certain patents are currently subject to Interference Proceedings before the USPTO and Opposition Proceedings before the European Patent Office, or EPO. It is uncertain when and how the USPTO, as well as the EPO, will decide in the various proceedings, and the decisions of the respective patent offices may significantly affect the scope or may deny the validity of the respective patents involved in these proceedings. We may in the future become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to CRISPR technology and any product candidates we may develop. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit. If we are unable to prove that these patents are invalid or unenforceable or not infringed and we are not able to obtain or maintain a license on commercially reasonable terms, or at all, such third parties could potentially assert infringement claims against us, which could have a material adverse effect on the conduct of our business. If we are found to infringe, misappropriate, or violate such third-party patents, we and our partners may be required to pay damages, cease commercialization of the infringing technology, including our use of gene-editing technology, or obtain a license from such third parties, which may not be available on commercially reasonable terms or at all.
We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming, and unsuccessful. Further, our issued patents could be found invalid or unenforceable if challenged in court.
Competitors may infringe, misappropriate, or violate our intellectual property rights or those of our licensors. To prevent infringement, misappropriation, violation, or unauthorized use, we and/or our licensors may be required to file claims, which can be expensive and time-consuming. In addition, in a patent infringement proceeding, a court may decide that a patent we own or license is not valid, is unenforceable and/or is not infringed. If we or any of our licensors or potential future collaborators were to initiate legal proceedings against a third party to enforce a patent directed at CNTY-101 and our other product candidates, the defendant could counterclaim that our patent is invalid and/or unenforceable in whole or in part. In patent litigation, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge include an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, written description,
or non-enablement. Grounds for an unenforceability assertion could include an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO or made a misleading statement during prosecution.
If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on such product candidate. In addition, if the breadth or strength of protection provided by our patents and patent applications or those of our licensors is threatened, it could dissuade companies from collaborating with us to license, develop, or commercialize current or future product candidates. Such a loss of patent protection would have a material adverse impact on our business.
In addition, we may in the future choose to challenge the patentability of claims in a third-party’s patent by requesting that the USPTO review the patent claims in re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). We have challenged and may in the future choose to challenge third party patents in patent opposition proceedings in the EPO or another foreign patent office. Even if successful, the costs of these opposition proceedings could be substantial, and may consume our time or other resources. If we fail to obtain a favorable result at the USPTO, EPO, or other patent office we may be exposed to litigation by the third party alleging that the relevant patent may be infringed by our product candidates.
Even if resolved in our favor, litigation, or other legal proceedings relating to our intellectual property rights may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing, or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise our ability to compete in the marketplace.
During the course of any intellectual property litigation, there could be public announcements of the initiation of the litigation as well as results of hearings, rulings on motions, and other interim proceedings in the litigation. If securities analysts or investors regard these announcements as negative, the perceived value of our existing products, programs, or intellectual property could be diminished. Accordingly, the market price of shares of our common stock may decline. Such announcements could also harm our reputation or the market for our future products, which could have a material adverse effect on our business.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or other legal proceedings relating to our intellectual property rights, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation or other proceedings.
Changes in United States patent law, or laws in other countries, could diminish the value of patents in general, thereby impairing our ability to protect CNTY-101 and our other product candidates.
As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involve a high degree of technological and legal complexity. Therefore, obtaining and enforcing biopharmaceutical patents is costly, time-consuming, and inherently uncertain. Changes in either the patent laws or in the interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property and may increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. We cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents. In addition, Congress or other foreign legislative bodies may pass patent reform legislation that is unfavorable to us.
For example, the U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain
situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by Congress, the United States federal courts, the USPTO, or similar authorities in foreign jurisdictions, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents we might obtain in the future.
We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.
We may also be subject to claims that former employees or other third parties have an ownership interest in our patents or other intellectual property. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we or our licensors fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or the exclusive right to use, our owned or in-licensed patents. If we or our licensors are unsuccessful in any interference proceeding or other priority or inventorship dispute, we may be required to obtain and maintain licenses from third parties, including parties involved in any such interference proceedings or other priority or inventorship disputes. Such licenses may not be available on commercially reasonable terms or at all, or may be non-exclusive or of a diminished scope. If we are unable to obtain and maintain such licenses, we may need to cease the development, manufacture, and commercialization of one or more of the product candidates we may develop. The loss of exclusivity or the narrowing of our owned and licensed patent claims could limit our ability to stop others from using or commercializing similar or identical technology and products. Any of the foregoing could result in a material adverse effect on our business, financial condition, results of operations, or prospects. Even if we are successful in an interference proceeding or other similar priority or inventorship disputes, it could result in substantial costs and be a distraction to management and other employees. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and distraction to management and other employees.
In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. Such claims could have a material adverse effect on our business, financial condition, results of operations, and prospects.
Patent terms may be inadequate to protect our competitive position on CNTY-101 and our other product candidates for an adequate amount of time.
Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest United States non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering CNTY-101 and our other product candidates are obtained, once the patent life has expired, we may be open to competition from competitive products. Given the amount of time required for the development, testing, and regulatory review of product candidates, patents protecting CNTY-101 and our other product candidates might expire before or shortly after such candidates are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
If we do not obtain patent term extension for CNTY-101 and our other product candidates, our business may be materially harmed.
Depending upon the timing, duration, and specifics of FDA marketing approval of CNTY-101 and our other product candidates, one or more of our United States patents may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Action of 1984, or Hatch-Waxman Act. The Hatch-Waxman Act permits a patent restoration term of up to five years as compensation for patent term lost during
product development and the FDA regulatory review process. A maximum of one patent may be extended per FDA approved product as compensation for the patent term lost during the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and only those claims covering such approved drug product, a method for using it or a method for manufacturing it may be extended. Patent term extension may also be available in certain foreign countries upon regulatory approval of our product candidates. However, we may not be granted an extension because of, for example, failing to apply prior to expiration of relevant patents or otherwise failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines or failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. In addition, we may be reliant on third-party licensors and collaborators in applying for such patent term extensions and we may not be able to obtain their cooperation. If we are unable to obtain patent term extension or restoration or the term of any such extension is less than we request, our competitors may obtain approval of competing products following our patent expiration, and our revenue could be reduced, possibly materially. Further, if this occurs, our competitors may take advantage of our investment in development and trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case.
We may not be able to protect our intellectual property rights throughout the world.
Although we have licenses to issued patents and pending patent applications in the United States and certain other countries, filing, prosecuting, and defending patents in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States or from selling or importing products made using our inventions in the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but enforcement is not as strong as that in the United States. These products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of many foreign countries do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our intellectual property and proprietary rights. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations, and prospects may be adversely affected.
Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment, and other requirements imposed by regulations and governmental patent agencies, and our patent protection could be reduced or eliminated for noncompliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees, and various other governmental fees on patents and/or applications will be due to the USPTO and various foreign patent offices at various points over the lifetime of any patents we ultimately obtain and/or applications we file. We have systems in place to remind us to pay these fees, and we rely on third parties to pay these fees when due. Additionally, the USPTO and various foreign patent offices require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with rules applicable to the particular jurisdiction. In some cases, we are also dependent on our licensors to take the necessary action to comply with these requirements with respect to our licensed intellectual property. However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If such an event were to occur, potential competitors might be able to enter the market with similar or identical products or technology, which could have a material adverse effect on our business.
If we are unable to protect the confidentiality of our trade secrets, our business, and competitive position would be harmed.
In addition, we rely on the protection of our trade secrets, including unpatented know-how, technology, and other proprietary information to maintain our competitive position. Although we have taken steps to protect our trade secrets and unpatented know-how, including entering into confidentiality agreements with third parties, and confidential information and inventions agreements with employees, consultants, and advisors, we cannot provide any assurances that all such agreements have been duly executed, and any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Trade secrets and know-how can be difficult to protect. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets.
Because we currently rely on other third parties to manufacture our product candidates and to perform quality testing, we must, at times, share our proprietary technology and confidential information, including trade secrets, with them. We seek to protect our proprietary technology and other trade secrets, in part, by entering into confidentiality agreements, consulting agreements, or other similar agreements with our advisors, employees, consultants, and other third parties prior to beginning research or disclosing proprietary information and other trade secrets. These agreements typically limit the rights of the third parties to use or disclose our confidential information, proprietary information, and other trade secrets. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are intentionally or inadvertently incorporated into the technology of others or are disclosed or used in violation of these agreements.
Moreover, third parties may still obtain this information or may come upon this or similar information independently, and we would have no right to prevent them from using that technology or information to compete with us. If any of these events occur or if we otherwise lose protection for our trade secrets, the value of this information may be greatly reduced and our competitive position would be harmed. If we do not apply for patent protection prior to such publication or if we cannot otherwise maintain the confidentiality of our proprietary technology and other confidential information, then our ability to obtain patent protection or to protect our trade secret information may be jeopardized.
We may be subject to claims that we have wrongfully hired an employee from a competitor or that we or our employees have wrongfully used or disclosed alleged confidential information or trade secrets of their former employers.
As is common in the biopharmaceutical industry, in addition to our employees, we engage the services of consultants to assist us in the development of CNTY-101 and our other product candidates. Many of these
consultants, and many of our employees, were previously employed at, or may have previously provided or may be currently providing consulting services to, other biopharmaceutical companies including our competitors or potential competitors. We may become subject to claims that we, our employees or a consultant inadvertently or otherwise used or disclosed trade secrets or other information proprietary to their former employers or their former or current clients. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could adversely affect our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to our management team and other employees.
Risks related to our common stock and this offering
An active, liquid, and orderly market for our common stock may not develop or be sustained.
Prior to this offering, there has been no public market for our common stock. Although we have applied to have our common stock listed on the Nasdaq Global Market, or Nasdaq, an active trading market for our common stock may never develop or be sustained following this offering. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other businesses or technologies using our shares as consideration, which, in turn, could materially adversely affect our business.
If, after listing, we fail to satisfy the continued listing requirements of the Nasdaq, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our common stock. Such a delisting would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future noncompliance with Nasdaq’s listing requirements.
The trading price of the shares of our common stock could be highly volatile, and purchasers of our common stock could incur substantial losses.
Our stock price is likely to be volatile. The stock market in general and the market for stock of biopharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their common stock at or above the initial public offering price. The market price for our common stock may be influenced by those factors discussed in this “Risk factors” section and many others, including:
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the commencement, enrollment, or results of our current and future preclinical studies and clinical trials, and the results of trials of our competitors or those of other companies in our market sector;
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regulatory approval of our product candidates, or limitations to specific label indications or patient populations for its use, or changes or delays in the regulatory review process;
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regulatory developments in the United States and foreign countries;
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changes in the structure of healthcare payment systems, especially in light of current reforms to the United States healthcare system;
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the success or failure of our efforts to acquire, license, or develop additional product candidates;
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innovations or new products developed by us or our competitors;
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announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital commitments;
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manufacturing, supply or distribution delays or shortages;
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any changes to our relationship with FCDI, any manufacturers, suppliers, licensors, future collaborators, or other strategic partners;
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achievement of expected product sales and profitability;
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variations in our financial results or those of companies that are perceived to be similar to us;
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market conditions in the biopharmaceutical sector and issuance of securities analysts’ reports or recommendations;
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trading volume of our common stock;
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an inability to obtain additional funding;
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sales of our stock by insiders and stockholders;
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general economic, industry, and market conditions, or other events or factors, many of which are beyond our control;
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additions or departures of key personnel; and
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intellectual property, product liability, or other litigation against us.
In addition, in the past, stockholders have initiated class action lawsuits against biopharmaceutical companies following periods of volatility in the market prices of these companies’ stock. Such litigation, if instituted against us, could cause us to incur substantial costs and divert management’s attention and resources, which could have a material adverse effect on our business, financial condition, and results of operations.
We may allocate the net proceeds from this offering in ways that you and other stockholders may not agree.
Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes described in the section titled “Use of proceeds.” Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. Our management might not apply our net proceeds in ways that ultimately increase the value of your investment, and the failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in short- and intermediate-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the United States government. These investments may not yield a favorable return to our stockholders. If we do not invest or apply the net proceeds from this offering in ways that enhance stockholder value, we may fail to achieve expected results, which could cause our stock price to decline.
You will suffer immediate and substantial dilution in the net tangible book value of the common stock you purchase.
Investors purchasing shares of our common stock in this offering will pay a price per share that substantially exceeds the pro forma as adjusted net tangible book value per share of our common stock. As a result, investors purchasing common stock in this offering will incur immediate dilution of $ per share, representing the difference between our assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and our pro forma as adjusted net tangible book value per share as of , 2021. To the extent outstanding options to purchase shares of our common stock are exercised, new investors may incur further dilution. For more information on the dilution you may experience as a result of investing in this offering, see the section of this prospectus entitled “Dilution.”
We do not currently intend to pay dividends on our common stock, and, consequently, your ability to achieve a return on your investment will depend on appreciation, if any, in the price of our common stock.
We have never declared or paid any cash dividend on our common stock. We currently anticipate that we will retain future earnings for the development, operation, and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. In addition, the terms of any future debt agreements may preclude us from paying dividends. Any return to stockholders will therefore be limited to the
appreciation of their stock. There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which stockholders have purchased their shares.
Sales of a substantial number of shares of our common stock by our existing stockholders in the public market could cause our stock price to fall.
Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur could significantly reduce the market price of our common stock and impair our ability to raise adequate capital through the sale of additional equity securities.
Based on shares of common stock outstanding as of , 2021, upon the closing of this offering, we will have outstanding a total of shares of common stock after this offering, assuming no exercise of the underwriters’ option to purchase additional shares and no exercise of outstanding options. Of these shares, only shares of common stock sold in this offering by us, plus any shares sold upon exercise of the underwriters’ option to purchase additional shares, will be freely tradable, without restriction, in the public market immediately following this offering, unless they are purchased by one of our affiliates.
Our directors and executive officers and holders of substantially all of our outstanding securities have entered into lock-up agreements with the underwriters pursuant to which they may not, with limited exceptions, for a period of 180 days from the date of this prospectus, offer, sell or otherwise transfer or dispose of any of our securities, without the prior written consent of J.P. Morgan Securities LLC, BofA Securities, Inc., SVB Leerink LLC, and Piper Sandler & Co. The underwriters may permit our officers, directors, and other stockholders and the holders of our outstanding options who are subject to the lock-up agreements to sell shares prior to the expiration of the lock-up agreements, subject to limitations. See “Underwriting.” Sales of these shares, or perceptions that they will be sold, could cause the trading price of our common stock to decline. After the lock-up agreements expire, up to an additional shares of common stock will be eligible for sale in the public market of which shares are held by directors, executive officers, and other affiliates and will be subject to volume limitations under Rule 144 under the Securities Act of 1933, as amended, or the Securities Act.
In addition, as of , 2021, up to shares of common stock that are either subject to outstanding options or reserved for future issuance under our employee benefit plans will become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, the lock-up agreements, Rule 144 under the Securities Act, or Rule 144, and Rule 701 under the Securities Act, or Rule 701. If these additional shares of common stock are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline.
After this offering, the holders of shares of our outstanding common stock, or approximately % of our total outstanding common stock as of , 2021, will be entitled to rights with respect to the registration of their shares under the Securities Act, subject to vesting and the 180-day lock-up agreements described above. See “Description of capital stock—Registration rights.” Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by affiliates, as defined in Rule 144. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our common stock.
Our executive officers, directors, principal stockholders, and their affiliates will continue to exercise significant control over our company after this offering, which will limit your ability to influence corporate matters and could delay or prevent a change in corporate control.
Immediately following the closing of this offering, and disregarding any shares of common stock that they purchase in this offering, the existing holdings of our executive officers, directors, principal stockholders, and their affiliates, including entities affiliated with Bayer, FCDI, and Versant Ventures, or Versant, will represent beneficial ownership, in the aggregate, of approximately % of our outstanding common stock, assuming no exercise of the underwriters’ option to purchase additional shares of common stock in this offering and assuming we issue the number of shares of common stock as set forth on the cover page of this prospectus. As a result, these stockholders, if they act together, will be able to influence our management and affairs and control the outcome of matters submitted to our stockholders for approval, including the election of directors and any sale, merger, consolidation, or sale of all or substantially all of our assets. These stockholders acquired their shares of common stock for substantially less than the price of the shares of common stock being acquired in this offering, and these stockholders may have interests, with respect to their common stock, that are different from those of
investors in this offering and the concentration of voting power among these stockholders may have an adverse effect on the price of our common stock. In addition, this concentration of ownership might adversely affect the market price of our common stock by:
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delaying, deferring or preventing a change of control of us;
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impeding a merger, consolidation, takeover or other business combination involving us; or
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discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.
See “Principal stockholders” in this prospectus for more information regarding the ownership of our outstanding common stock by our executive officers, directors, principal stockholders, and their affiliates.
We are an emerging growth company and a “smaller reporting company”, and the reduced disclosure requirements applicable to emerging growth companies and “smaller reporting companies” may make our common stock less attractive to investors.
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act, or JOBS Act, and may remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of the closing of this offering. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenues exceed $1.07 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. The reduced disclosure and other requirements that we may take advantage of include:
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presenting only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s discussion and analysis of financial condition and results of operations” disclosure in this prospectus;
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not being required to have our registered independent public accounting firm attest to management’s assessment of our internal control over financial reporting;
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presenting reduced disclosure about our executive compensation arrangements;
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not being required to hold non-binding advisory votes on executive compensation or golden parachute arrangements; and
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extended transition periods for complying with new or revised accounting standards.
We have taken advantage of reduced reporting burdens in this prospectus. In particular, in this prospectus, we have provided only two years of audited financial statements and have not included all of the executive compensation related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be reduced or more volatile. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies.
We are also a “smaller reporting company,” meaning that the market value of our stock held by nonaffiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.
As a public company, and particularly after we are no longer an emerging growth company or smaller reporting company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act and rules subsequently implemented by the Securities and Exchange Commission, or the SEC, and The Nasdaq Stock Market LLC, or Nasdaq, impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to comply with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.
Pursuant to Section 404 of the Sarbanes-Oxley Act, we will be required to furnish a report by our management on our internal control over financial reporting, including an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. However, while we remain an emerging growth company or a smaller reporting company with less than $100 million in annual revenue, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. We could be an emerging growth company for up to five years. To achieve compliance with Section 404 of the Sarbanes-Oxley Act within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that neither we nor our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404 of the Sarbanes-Oxley Act. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
If securities or industry analysts do not publish research or reports or publish unfavorable research or reports about our business, our stock price and trading volume could decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us, our business, our market, or our competitors. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our stock would be negatively impacted. In the event we obtain securities or industry analyst coverage, if one or more of the analysts who covers us downgrades our stock, our stock price would likely decline. If one or more of these analysts ceases to cover us or fails to regularly publish reports on us, interest in our stock could decrease, which could cause our stock price or trading volume to decline.
Provisions in our corporate charter documents and under Delaware law could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our current management.
Provisions in our second amended and restated certificate of incorporation and our amended and restated bylaws to be in effect immediately prior to the closing of this offering may discourage, delay or prevent, a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. As our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. These provisions provide, among other things, that:
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our board of directors has the exclusive right to expand the size of our board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
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our board of directors is divided into three classes, Class I, Class II, and Class III, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;
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our stockholders may not act by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
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a special meeting of stockholders may be called only by the chair of our board of directors, our chief executive officer (or president, in the absence of a chief executive officer), or a majority of our board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
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our second amended and restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
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our board of directors may alter certain provisions of our amended and restated bylaws without obtaining stockholder approval;
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the approval of the holders of at least two-thirds of our shares entitled to vote at an election of our board of directors is required to adopt, amend, or repeal our amended and restated bylaws or repeal the provisions of our second amended and restated certificate of incorporation regarding the election and removal of directors;
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stockholders must provide advance notice and additional disclosures to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain voting control of our shares; and
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our board of directors is authorized to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the General Corporation Law of the State of Delaware, or DGCL, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
Our second amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our second amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine; provided, that, this provision would not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, or the Exchange Act. Furthermore, our amended and restated certificate of incorporation will also provide that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers, and other employees. By agreeing to this provision, however, stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder. Furthermore, the enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable. If a court were to find the choice of forum
provisions in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.
We could be subject to securities class action litigation.
In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biopharmaceutical and pharmaceutical companies have experienced significant stock price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.
Special note regarding forward-looking statements
This prospectus contains forward-looking statements concerning our business, operations and financial performance, as well as our plans, objectives and expectations for our business operations and financial performance and condition. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. In addition, statements that “we believe” or similar statements reflect our beliefs and opinions on the relevant subject. These forward-looking statements include, but are not limited to, statements about:
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our ability to raise additional capital to fund our operations and continue the development of our current and future product candidates;
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the preclinical nature of our business and our ability to successfully advance our current and future product candidates through development activities, preclinical studies, and clinical trials;
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our ability to generate revenue from future product sales and our ability to achieve and maintain profitability;
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the accuracy of our projections and estimates regarding our expenses, capital requirements, cash utilization, and need for additional financing;
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the expected uses of the net proceeds from this offering;
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the extent to which the COVID-19 pandemic and measures taken to contain its spread ultimately impact our business, including development activities, preclinical studies, and future clinical trials;
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our dependence on the success of our product candidates, in particular CNTY-101, CNTY-103, and CNTY-102;
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the novelty of our approach to immuno-oncology treatment of cancer, utilizing CAR-iNK and CAR-iT cells, and the challenges we will face due to the novel nature of such technology;
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the success of competing therapies that are or become available;
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our reliance on the maintenance of our collaborative relationship with FCDI for access to key differentiation and reprogramming technology for the manufacturing and development of our product candidates;
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the initiation, progress, success, cost, and timing of our development activities, preclinical studies and future clinical trials;
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the timing of our future IND applications and the likelihood of, and our ability to obtain and maintain, regulatory clearance of such IND applications for our product candidates;
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the timing, scope and likelihood of regulatory filings and approvals, including final regulatory approval of our product candidates;
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our reliance on FCDI to be the exclusive manufacturer of certain product candidates, and our ability to manufacture our own product candidates in the future, and the timing and costs of such manufacturing activities;
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the performance of third parties in connection with the development of our product candidates, including third parties conducting our future clinical trials as well as third-party suppliers and manufacturers;
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our ability to attract and retain strategic collaborators with development, regulatory, and commercialization expertise;
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the public opinion and scrutiny of cell-based immuno-oncology therapies for treating cancer and its potential impact on public perception of our company and product candidates;
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our ability to successfully commercialize our product candidates and develop sales and marketing capabilities, if our product candidates are approved;
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the size and growth of the potential markets for our product candidates and our ability to serve those markets;
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regulatory developments and approval pathways in the United States and foreign countries for our product candidates;
•
the potential scope and value of our intellectual property and proprietary rights;
•
our ability, and the ability of our licensors, to obtain, maintain, defend, and enforce intellectual property and proprietary rights protecting our product candidates, and our ability to develop and commercialize our product candidates without infringing, misappropriating, or otherwise violating the intellectual property or proprietary rights of third parties;
•
our ability to recruit and retain key members of management and other clinical and scientific personnel;
•
developments relating to our competitors and our industry; and
•
other risks and uncertainties, including those described or incorporated by reference under the caption “Risk factors” in this prospectus.
We have based these forward-looking statements largely on our current expectations, estimates, forecasts, and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the section titled “Risk factors” and elsewhere in this prospectus for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this prospectus by these cautionary statements.
Market and industry data
This prospectus contains estimates and other statistical data made by independent parties relating to our industry and the markets in which we operate, including estimates and statistical data about our market position, market opportunity, the incidence of certain medical conditions and other industry data. These data, to the extent they contain estimates or projections, involve a number of assumptions and limitations and are inherently imprecise, and you are cautioned not to give undue weight to such estimates or projections. Based on our industry experience, we believe that such data is reliable, the conclusions contained in the publications and reports are reasonable and the third-party information included in this prospectus and in our estimates is accurate and complete.
Use of proceeds
We estimate that the net proceeds to us from this offering will be approximately $ million (or approximately $ million if the underwriters exercise in full their option to purchase up to additional shares of common stock), based on an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the net proceeds from this offering by approximately $ million, assuming that the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of 1.0 million shares of common stock offered by us would increase or decrease, as applicable, the net proceeds to us by approximately $ million, assuming the assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
The principal purposes of this offering are to obtain additional capital to support our operations, to create a public market for our common stock and to facilitate our future access to the public equity markets. We currently expect to use the net proceeds from this offering, together with our existing cash and cash equivalents, as follows:
•
Approximately $ million to fund pre-clinical activities and clinical preparation activities for CNTY-101 through completion of our IND submission, initiation of our planned Phase 1 clinical trial, and receipt of initial safety and pharmacokinetic, or PK, data;
•
Approximately $ million to fund pre-clinical activities for CNTY-103, CNTY-102, and CNTY-104 through completion of our IND submission for each of CNTY-103, CNTY-102, and CNTY-104;
•
Approximately $ to continue developing manufacturing capabilities for our product candidates, including the construction of our manufacturing facility in Branchburg, New Jersey;
•
Approximately $ to fund our internal research and development capabilities and to advance new product candidates; and
•
The remainder for working capital and other general corporate purposes, including the additional costs associated with being a public company.
We may use a portion of the net proceeds from this offering to in-license, acquire, or invest in complementary businesses, technologies, products or assets. However, we have no current commitments to do so.
Based on our planned use of the net proceeds, we estimate such funds, together with our existing cash and cash equivalents, will be sufficient for us to fund our operating expenses and capital expenditure requirements into the quarter of 20 . We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
Our expected use of net proceeds from this offering represents our current intentions based upon our present plans and business condition. As of the date of this prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the closing of this offering, or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual use of the net proceeds will vary depending on numerous factors, including our ability to obtain additional financing, the progress, cost, and results of our preclinical and clinical development programs, and whether we are able to enter into future licensing or collaboration arrangements. We may find it necessary or advisable to use the net proceeds for other purposes, and our management will have broad discretion in the application of the net proceeds, and investors will be relying on our judgment regarding the application of the net proceeds from this offering.
The expected net proceeds of this offering will not be sufficient for us to fund any of our product candidates through regulatory approval, and we will need to raise substantial additional capital to complete the development and commercialization of our product candidates.
Pending their use, we plan to invest the net proceeds from this offering in short- and medium-term, interest-bearing obligations, investment-grade instruments, certificates of deposit, or direct or guaranteed obligations of the United States government.
Dividend policy
We have never declared or paid cash dividends on our capital stock and our ability to pay cash dividends is currently restricted by the terms of our Loan and Security Agreement with Hercules Capital, Inc. We do not currently intend to pay any cash dividends on our capital stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and expansion of our business. Any future determination related to dividend policy will be made at the discretion of our board of directors, subject to applicable laws, and will depend upon, among other factors, our results of operations, financial condition, contractual restrictions, and capital requirements.
Capitalization
The following table sets forth our cash, cash equivalents, short term investments and our capitalization as of March 31, 2021:
•
on an actual basis;
•
on a pro forma basis to give effect to the completion of (i) the filing and effectiveness of our second amended and restated certificate of incorporation immediately prior to the closing of this offering, and (ii) the conversion of all outstanding shares of our convertible preferred stock into an aggregate of shares of common stock upon the closing of this offering; and
•
on a pro forma as adjusted basis to give effect to the pro forma adjustments described above and to give further effect to the issuance and sale of shares of our common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
The pro forma as adjusted information set forth in the table below is illustrative only and will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table together with the sections of this prospectus captioned “Selected financial and other data,” “Use of proceeds,” “Management’s discussion and analysis of financial condition and results of operations,” “Description of capital stock” and our financial statements and related notes included elsewhere in this prospectus.
|
(in thousands, except share and per share amounts)
|
|
|
Actual
|
|
|
Pro Forma
|
|
|
Adjusted(1)
|
|
|
Cash, cash equivalents and short-term investments
|
|
|
|
$
|
182,942
|
|
|
|
|
$
|
182,942
|
|
|
|
|
$
|
|
|
|
|
Long-term debt
|
|
|
|
|
9,711
|
|
|
|
|
|
9,711
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A preferred stock, $0.0001 par value: 35,000,000 shares
|
|
|
|
|
34,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
authorized, issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as
adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series B preferred stock, $0.0001 par value: 26,143,790 shares
authorized, issued and outstanding, actual; no shares authorized,
issued or outstanding, pro forma and pro forma as adjusted
|
|
|
|
|
144,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series C preferred stock, $0.0001 par value: 24,721,999 shares
authorized, issued and outstanding, actual; no shares authorized,
issued or outstanding, pro forma and pro forma as adjusted
|
|
|
|
|
159,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value, 125,236,190 shares authorized;
19,732,637 shares issued and outstanding, actual;
shares authorized and shares issued and outstanding
pro forma; shares authorized and shares
issued and outstanding pro forma as adjusted
|
|
|
|
|
3
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
|
|
219,156
|
|
|
|
|
|
558,536
|
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
|
|
|
(310,690)
|
|
|
|
|
|
(310,690)
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss
|
|
|
|
|
(26)
|
|
|
|
|
|
(26)
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
|
|
$
|
257,543
|
|
|
|
|
$
|
257,543
|
|
|
|
|
$
|
|
|
|
|
|
(1) A $1.00 increase (decrease) in the assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, total stockholders’ equity, and total capitalization by $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. An increase (decrease) of 1.0 million shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, total stockholders’ deficit, and total capitalization by $ million, assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
The number of shares of our common stock to be outstanding after this offering reflected in the table above is based on 110,247,171 shares of common stock outstanding as of March 31, 2021 (which includes 4,648,745 shares outstanding that are subject to forfeiture or our right to repurchase as of such date), which gives effect to the pro forma transactions described above and excludes:
•
8,603,052 shares of our common stock issuable upon the exercise of stock options as of March 31, 2021, at a weighted-average exercise price of $0.73 per share;
•
40,540 shares of our common stock issuable upon the exercise of warrants to purchase common stock, at a weighted-average exercise price of $5.55 per share;
•
6,169,655 shares of our common stock reserved for issuance pursuant to future awards as of March 31, 2021 under the 2018 Plan;
•
shares of our common stock reserved for future issuance under the 2021 Plan which will become effective upon the effectiveness of the Registration Statement of which this prospectus forms a part, as well as any future increases in the number of shares of our common stock reserved for future issuance pursuant to the 2021 Plan; and
•
shares of our common stock reserved for future issuance under our Employee Stock Purchase Plan, or ESPP, will become effective upon the effectiveness of the Registration Statement of which this prospectus forms a part, as well as any future increases in the number of shares of common stock reserved for issuance under the ESPP.
Dilution
If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock after this offering. The data in this section are derived from our balance sheet as of March 31, 2021.
Our historical net tangible book value (deficit) as of March 31, 2021 was $ million, or $ per share of our common stock. Our historical net tangible book value (deficit) represents our total tangible assets less total liabilities and convertible preferred stock. Historical net tangible book value (deficit) per share is our historical net tangible book value (deficit) divided by the number of shares of our common stock outstanding as of March 31, 2021.
Our pro forma net tangible book value as of March 31, 2021, before giving effect to this offering, was $ million, or $ per share. Pro forma net tangible book value, before the issuance and sale of shares in this offering, gives effect to the conversion of all outstanding shares of our convertible preferred stock into an aggregate of shares of common stock upon the closing of this offering.
Pro forma net tangible book value per share represents pro forma net tangible book value divided by the total number of shares outstanding as of March 31, 2021 after giving effect to the pro forma adjustments described above.
Net tangible book value dilution per share to new investors represents the difference between the amount per share paid by purchasers of common stock in this offering and the pro forma as adjusted net tangible book value per share of our common stock immediately following the closing of this offering. After giving effect to the pro forma transactions described above and the sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of March 31, 2021 would have been $ million, or $ per share. This represents an immediate increase in pro forma as adjusted net tangible book value of $ per share to our existing stockholders and an immediate dilution of $ per share to new investors participating in this offering. The following table illustrates this dilution on a per share basis:
|
|
Assumed initial public offering price per share
|
|
|
|
|
|
|
$
|
|
|
|
|
|
Historical net tangible book value (deficit) per share as of March 31, 2021
|
|
|
|
|
|
|
$
|
|
|
|
|
|
Pro forma increase in net tangible book value per share as of March 31, 2021 attributable to
the pro forma transactions described above
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net tangible book value per share as of March 31, 2021 before giving effect to this offering
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in pro forma net tangible book value per share attributable to new investors participating in this offering
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma as adjusted net tangible book value per share immediately after this offering
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilution per share to new investors participating in this offering
|
|
|
|
|
|
|
$
|
|
|
|
|
|
Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, our pro forma as adjusted net tangible book value per share after this offering by $ per share and the dilution per share to new investors participating in this offering by $ per share, assuming that the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, an increase of 1.0 million in the number of shares of common stock offered by us would increase the pro forma as adjusted net tangible book value after this offering by $ per share and decrease the dilution per share to new investors participating in this offering by $ per share, and a decrease of 1.0 million shares of common stock offered by us would decrease the pro forma as adjusted net tangible book value by $ per share,
and increase the dilution per share to new investors in this offering by $ per share, assuming that the assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
If the underwriters exercise in full their option to purchase additional shares of common stock from us, the pro forma as adjusted net tangible book value per share after giving effect to this offering at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, would be $ per share, representing an immediate increase to existing stockholders of $ per share, and dilution to new investors participating in this offering of $ per share.
The following table summarizes the pro forma as adjusted basis described above, the differences between the number of shares purchased from us, the total consideration paid and the average price per share paid to us by existing stockholders and by investors purchasing shares in this offering at the assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, before deducting underwriting discounts and commissions and estimated offering expenses payable by us:
|
|
|
|
Shares purchased
|
|
|
Total consideration
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
Average price
per share
|
|
|
Existing stockholders
|
|
|
|
|
|
|
|
%
|
|
|
|
|
$
|
|
|
|
|
|
|
%
|
|
|
|
|
$
|
|
|
|
|
New investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
100%
|
|
|
|
|
$
|
|
|
|
|
|
|
100%
|
|
|
|
|
|
|
|
|
If the underwriters exercise in full their option to purchase additional shares in full, our existing stockholders would own % and our new investors would own % of the total number of shares of our common stock outstanding upon the closing of this offering.
The foregoing discussion and tables above (other than the historical net tangible book value (deficit) calculation) are based on 110,247,171 shares of common stock outstanding as of March 31, 2021 (which includes 4,648,745 shares outstanding that are subject to forfeiture or our right to repurchase as of such date), which gives effect to the pro forma transaction described above and excludes:
•
8,603,052 shares of our common stock issuable upon the exercise of stock options as of March 31, 2021, at a weighted-average exercise price of $0.73 per share;
•
40,540 shares of our common stock issuable upon the exercise of warrants to purchase common stock, at a weighted-average exercise price of $5.55 per share;
•
6,169,655 shares of our common stock reserved for issuance pursuant to future awards as of March 31, 2021 under the 2018 Plan;
•
shares of our common stock reserved for future issuance under the 2021 Plan which will become effective upon the effectiveness of the Registration Statement of which this prospectus forms a part, as well as any future increases in the number of shares of our common stock reserved for future issuance pursuant to the 2021 Plan; and
•
shares of our common stock reserved for future issuance under the ESPP will become effective upon the effectiveness of the Registration Statement of which this prospectus forms a part, as well as any future increases in the number of shares of common stock reserved for issuance under the ESPP.
To the extent that any outstanding options are exercised, new options or other equity awards are issued under our equity incentive plans, or we issue additional shares in the future, there will be further dilution to new investors participating in this offering.
Selected consolidated financial data
The following tables set forth our selected consolidated financial data for the periods and as of the dates indicated. The year ended December 31, 2020 and the period of June 21, 2019 through December 31, 2019 are referred to herein as Successor and the period of January 1, 2019 through June 20, 2019 is referred to herein as Predecessor. We have derived the selected consolidated statements of operations data for the Year Ended December 31, 2020 (Successor), the period from June 21, 2019 through December 31, 2019 (Successor) and the period from January 1, 2019 through June 20, 2019 (Predecessor), and the selected consolidated balance sheet data as of December 31, 2020 and 2019 (Successor) from our audited consolidated financial statements and related notes included elsewhere in this prospectus. For interim periods, we have derived our selected statements of operations data for the three months ended March 31, 2021 and 2020 and the selected balance sheet data as of March 31, 2021 from our unaudited condensed financial statements and related notes included elsewhere in this prospectus. The unaudited condensed financial statements were prepared on a basis consistent with our audited financial statements and include, in management’s opinion, all adjustments, consisting only of normal recurring adjustments that we consider necessary for a fair presentation of the financial information set forth in those statements. Our historical results are not necessarily indicative of the results that may be expected in the future. You should read the following consolidated financial data together with our audited consolidated financial statements and our unaudited condensed consolidated financial statements, and the related notes included elsewhere in this prospectus and the information in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
|
|
|
|
March 31,
|
|
|
December 31,
2020
|
|
|
Successor
Period from
June 21, 2019
(Inception) to
December 31,
2019
|
|
|
Predecessor
Period from
January 1,
2019 to
June 20,
2019
|
|
|
(in thousands, except share and per share data)
|
|
|
2021
|
|
|
2020
|
|
|
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
$
|
15,374
|
|
|
|
|
$
|
7,943
|
|
|
|
|
$
|
39,681
|
|
|
|
|
$
|
10,107
|
|
|
|
|
$
|
4,159
|
|
|
|
General and administrative
|
|
|
|
|
2,688
|
|
|
|
|
|
2,050
|
|
|
|
|
|
9,495
|
|
|
|
|
|
3,622
|
|
|
|
|
|
2,145
|
|
|
|
Write off of in-process research and development asset
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4,722
|
|
|
|
|
|
225,946
|
|
|
|
|
|
—
|
|
|
|
Total operating expenses
|
|
|
|
|
18,062
|
|
|
|
|
|
9,993
|
|
|
|
|
|
53,898
|
|
|
|
|
|
239,675
|
|
|
|
|
|
6,304
|
|
|
|
Loss from operations
|
|
|
|
|
(18,062)
|
|
|
|
|
|
(9,993)
|
|
|
|
|
|
(53,898)
|
|
|
|
|
|
(239,675)
|
|
|
|
|
|
(6,304)
|
|
|
|
Interest expense
|
|
|
|
|
(314)
|
|
|
|
|
|
—
|
|
|
|
|
|
(381)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Other income, net
|
|
|
|
|
28
|
|
|
|
|
|
320
|
|
|
|
|
|
704
|
|
|
|
|
|
908
|
|
|
|
|
|
302
|
|
|
|
Net loss
|
|
|
|
$
|
(18,348)
|
|
|
|
|
$
|
(9,673)
|
|
|
|
|
$
|
(53,575)
|
|
|
|
|
$
|
(238,767)
|
|
|
|
|
$
|
(6,002)
|
|
|
|
Net loss per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted(1)
|
|
|
|
$
|
(0.95)
|
|
|
|
|
$
|
(0.51)
|
|
|
|
|
$
|
(2.85)
|
|
|
|
|
$
|
(12.68)
|
|
|
|
|
$
|
(0.40)
|
|
|
|
Weighted average common shares outstanding Basic and Diluted(1)
|
|
|
|
|
19,278,887
|
|
|
|
|
|
18,825,136
|
|
|
|
|
|
18,825,136
|
|
|
|
|
|
18,825,136
|
|
|
|
|
|
15,029,240
|
|
|
|
Pro forma net loss per share attributable to common stockholders – basic and diluted (unaudited)(2)
|
|
|
|
$
|
(0.17)
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.51)
|
|
|
|
|
|
Pro forma weighted-average number of common shares – basic and diluted (unaudited)(2)
|
|
|
|
|
105,144,676
|
|
|
|
|
|
|
|
|
|
|
|
104,690,925
|
|
|
|
|
|
|
(1) See Note 15 of our audited consolidated financial statements and Note 13 of our unaudited condensed consolidated financial statements included elsewhere in this prospectus for an explanation of the calculations of our basic and diluted net loss per share, and the weighted-average number of shares outstanding used in the computation of the per share amounts.
(2) See the subsection titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Unaudited Pro Forma Information” for an explanation of the calculations of our basic and diluted pro forma net loss per share, and the weighted-average number of shares outstanding used in the computation of the per share amounts.
|
|
|
|
March 31,
2021
|
|
|
December 31,
|
|
|
(in thousands)
|
|
|
2020
|
|
|
2019
|
|
|
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
79,483
|
|
|
|
|
$
|
27,211
|
|
|
|
|
$
|
44,064
|
|
|
|
Working capital(1)
|
|
|
|
|
172,387
|
|
|
|
|
|
66,685
|
|
|
|
|
|
81,128
|
|
|
|
Total assets
|
|
|
|
|
286,055
|
|
|
|
|
|
106,776
|
|
|
|
|
|
90,896
|
|
|
|
Convertible preferred stock
|
|
|
|
|
339,389
|
|
|
|
|
|
179,761
|
|
|
|
|
|
179,761
|
|
|
|
Accumulated deficit
|
|
|
|
|
(310,690)
|
|
|
|
|
|
(292,342)
|
|
|
|
|
|
(238,767)
|
|
|
|
Total stockholders’ deficit
|
|
|
|
|
(91,557)
|
|
|
|
|
|
(106,412)
|
|
|
|
|
|
(91,859)
|
|
|
(1) We define working capital as current assets less current liabilities. See our audited consolidated financial statements and the related notes included elsewhere in this prospectus for further details regarding our current assets and current liabilities.
Management’s discussion and analysis of financial condition and results of operations
You should read the following discussion and analysis of our consolidated financial condition and results of operations together with the section titled “Selected consolidated financial data,” and our audited consolidated financial statements and unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this prospectus. The year ended December 31, 2020 and the period of June 21, 2019 through December 31, 2019 are referred to herein as Successor. The period of January 1, 2019 through June 20, 2019 is referred to herein as Predecessor. This discussion and analysis and other parts of this prospectus contain forward-looking statements based upon current beliefs, plans and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements regarding our intentions, plans, objectives and expectations for our business. Our actual results and the timing of selected events could differ materially from those described in or implied by these forward-looking statements as a result of several factors, including those set forth in the section titled “Risk factors.” See also the section titled “Special note regarding forward-looking statements.”
Overview
We are an innovative biotechnology company developing transformative allogeneic cell therapies to create products for the treatment of both solid tumor and hematological malignancies with significant unmet medical need. We have created a comprehensive allogeneic cell therapy platform that includes industry-leading iPSC differentiation know-how to generate immune effector cells from iPSCs, or iPSC derived cells, clustered regularly interspaced short palindromic repeats, or CRISPR, mediated precision gene editing that allows us to incorporate multiple transgenes and remove target genes intended to optimize cell product performance, sophisticated protein engineering capabilities to develop proprietary next generation CARs, Allo-EvasionTM technology to prevent rejection of our cell products by the host immune system, and cutting edge manufacturing capabilities intended to minimize product development and supply risk. We believe that these vertically integrated capabilities will allow us to further expand our existing pipeline and develop therapeutics from iPSC-derived natural killer cells, or iNK cells, or iNK, and iPSC-derived T cells, or iT cells, or iT, that may provide enhanced clinical outcomes compared to available therapeutic options. Our vision is to become a premier cell therapy company by developing and ultimately commercializing allogeneic cell therapies that dramatically and positively transform the lives of patients suffering from life-threatening cancers. To achieve our vision, we have assembled a world-class team whose members collectively have decades of experience in cell therapy and drug development, manufacturing and commercialization.
We were formed in 2018 as Prior Century. In 2019, in connection with our investment from Bayer, Prior Century contributed substantially all of its operating assets and cash to a newly formed entity, the LLC Entity. We refer to this transaction as the 2019 Reorganization. The 2019 Reorganization was accounted for as an asset acquisition under US Generally Accepted Accounting Principles, and as a result we recorded a one-time non-cash charge in the amount of $225.9 million which represented the fair value of the contributed in-process research and development of Prior Century. The IPR&D asset acquired was Prior Century’s comprehensive allogeneic cell therapy platform.
Until February 2021, our business was operated through the LLC Entity. In February 2021, in connection with the Series C Financing, the LLC Entity converted from a Delaware limited liability company to a Delaware C corporation. Upon completion of this conversion, Prior Century, whose only significant asset was its equity investment in LLC, merged with the C corporation, and in connection therewith the C corporation changed its name to “Century Therapeutics, Inc.” We refer to these transactions as the 2021 Reorganization.
Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, conducting discovery and research activities, filing patent applications, identifying potential product candidates and preparing to initiate and conduct clinical trials, undertaking preclinical studies and in-licensing intellectual property. All of our programs are currently in the development stage, and we do not have any products
approved for sale. Since our inception, we have incurred net losses each year. We had an accumulated deficit of $310.7 million as of March 31, 2021. Substantially all of our losses have resulted from expenses incurred in connection with our research and development programs, the acquisition of in-process research and development and from general and administrative costs associated with our operations. Included in our accumulated deficit, as noted above, is a non-cash expense of $225.9 million related to the fair value of the in-process research and development of Prior Century.
To date, we have funded our operations from the issuance and sale of our preferred stock and have not generated any revenues. Since our inception, we have raised approximately $340 million in net proceeds from sales of our equity securities. As of March 31, 2021, we had cash, and cash equivalents of $79.5 million and marketable securities of $166.6 million. Based on our current business plans, we believe that the net proceeds from this offering, together with our existing cash, cash equivalents and marketable securities, will be sufficient for us to fund our operating expenses and capital expenditures requirements for the next months from the date of this filing. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
We anticipate that our expenses and operating losses will increase substantially over the foreseeable future. The expected increase in expenses will be driven in large part by our ongoing activities, if and as we:
•
continue to advance our iPSC cell therapy platforms;
•
continuing preclinical development of, and initiate clinical development of CNTY-101 and our other product candidates;
•
seek to discover and develop additional product candidates;
•
establish and validate our own clinical-scale cGMP facilities;
•
seek regulatory approvals for any of our other product candidates that successfully complete clinical trials;
•
maintain, expand, protect, and enforce our intellectual property portfolio;
•
acquire or in-license other product candidates and technologies;
•
incur additional costs associated with operating as a public company, which will require us to add operational, financial and management information systems and personnel, including personnel to support our drug development, any future commercialization efforts and our transition to a public company; and
•
increase our employee headcount and related expenses to support these activities.
We are also investing early in building our capabilities in key areas of manufacturing sciences and operations, including development of our iPSC cell therapy platforms, product characterization, and process analytics from the time candidates are in early research phases. Our investments also include scaled research solutions, scaled infrastructure, and novel technologies intended to improve efficiency, characterization, and scalability of manufacturing.
We anticipate that we will need to raise additional financing in the future to fund our operations, including funding for preclinical studies, clinical trials and the commercialization of any approved product candidates. We intend to use the proceeds from this offering to, among other uses, fund research and development of our product candidates and development programs, including our pre-clinical and clinical development of CNTY-101, CNTY-103, CNTY-102, and CNTY-104. Until such time, if ever, as we can generate significant product revenue, we expect to finance our operations with our existing cash and cash equivalents, marketable securities, the net proceeds from this offering, any future equity or debt financings, and upfront and milestone and royalties payments, if any, received under future licenses or collaborations. We may not be able to raise additional capital on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would be adversely affected. Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability.
The global COVID-19 pandemic continues to evolve rapidly, and we will continue to monitor it closely. The extent of the impact of the COVID-19 pandemic on our business, operations, and clinical development timelines and plans remains uncertain and will depend on certain developments, including the duration and spread of the outbreak and its impact on our clinical trial enrollment, trial sites, CROs, contract manufacturing organizations, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel. We have experienced modest delays in our discovery and development activities as a result of the COVID-19 pandemic, primarily due to temporary and partial shutdowns at certain of our CROs and academic institutions that have since resumed operations, and due to the Pennsylvania, and Washington stay-at-home orders where our operations are located. However, to the extent possible, we are conducting business as usual, with necessary or advisable modifications to employee travel and most of our non-laboratory employees working remotely. We will continue to actively monitor the situation related to COVID-19 and may take further actions that alter our operations, including those that may be required by federal, state, or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business. The extent to which the outbreak may affect our preclinical studies, clinical trials, business, financial condition, and results of operations will depend on future developments, which are highly uncertain and cannot be predicted at this time.
License and collaboration agreements
Fujifilm Cellular Dynamics, Inc. (FCDI)
On September 18, 2018, we entered into the Differentiation License with FCDI. The Differentiation License, as amended, provides us with an exclusive license under certain patents and know-how related to human iPSC consisting of cells that are or are modifications of NK cells, T cells, dendritic cells and macrophages derived from human iPSC. In consideration for the Differentiation License, Prior Century issued 7,500,000 shares of common stock to FCDI, which were exchanged for 7,500,000 shares of common stock in connection with the Reorganization. Prior Century recorded acquired research and development expense of $75 thousand in 2018 based on the fair market value of Prior Century common stock of $0.01 per share.
Also on September 18, 2018, we entered into the non-exclusive Reprogramming License with FCDI. The Reprogramming License, as amended, provides us with a non-exclusive license under certain patents and know-how related to the reprogramming of human somatic cells to iPSCs and provide us access to iPSC lines for clinical use. Under the Reprogramming License, we are required to make certain developmental and regulatory milestone payments as well as royalty payments upon commercialization in the low single digits. The potential development and regulatory milestone payments to be paid by us to FCDI are approximately $6 million per licensed product. In connection with the Reprogramming License, we entered into the Master Collaboration Agreement with FCDI pursuant to which we agreed to fund research and development work at FCDI pursuant to a research plan, or, as amended, the Collaboration Agreement.
On October 21, 2019, we entered into the Collaboration Agreement with FCDI, whereby FCDI provides certain services to us to develop and manufacture iPSCs and immune cells derived therefrom. Under the terms of the Collaboration Agreement, as amended, FCDI will provide services in accordance with the approved research plan and related research budget. The research plan covers the period from the date of execution of the Collaboration Agreement through March 31, 2022, with the related research budget of approximately $30.4 million.
During the period ended March 31, 2021, under the terms of the Reprogramming License and the Collaboration Agreement, the Company made payments of $3.2 million and incurred research and development expenses of $2.8 million and legal fees of $21 thousand recorded within general and administrative expenses within its consolidated statements of operations. As of March 31, 2021, there were $1.4 million of payables recorded within accounts payable on the consolidated balance sheets related to the Collaboration Agreement.
During the Successor period ended December 31, 2020, under the terms of the Reprogramming License and the Collaboration Agreement, the Company made payments of $5.3 million and incurred research and development expenses of $9.0 million and legal fees of $52 thousand recorded within general and administrative expenses
within its consolidated statements of operations. As of December 31, 2020, there were $1.8 million of payables recorded within accounts payable on the consolidated balance sheets related to the Collaboration Agreement.
During the Successor period June 21, 2019 through December 31, 2019, under the terms of the Reprogramming License and the Collaboration Agreement, we made payments of $4.8 million, of which $2.1 million is classified in prepaid expenses and other current assets as of December 31, 2019. During the Successor period June 21, 2019 through December 31, 2019, under the terms of the Reprogramming License and the Collaboration Agreement, we incurred research and development operating expenses of $3.1 million and legal fees of $0.1 million recorded within general and administrative expenses.
During the Predecessor period January 1, 2019 through June 20, 2019, under the terms of the Reprogramming License and the Collaboration Agreement, we incurred research and development operating expenses of $1.6 million. There were no payments made during the Predecessor period January 1, 2019 through June 20, 2019.
As of March 31, 2021, we incurred $17.1 million of the $30.4 million budget under the Collaboration Agreement.
We also have entered into a sublicense agreement with iCELL Inc. and a master services agreement with Distributed Bio, Inc. See Note 11 to our consolidated financial statements included elsewhere in this prospectus.
Empirica acquisition
On June 9, 2020, we acquired certain assets of Empirica Therapeutics, or Empirica, a privately-held early-stage biotechnology company focused on the development of adoptive immunotherapies against the most aggressive and treatment-resistant forms of cancers, including glioblastoma and brain metastasis for a total purchase price of $4.7 million.
The transaction was accounted for as an asset acquisition of IPR&D. Total consideration in the acquisition was $4.7 million, consisting of cash consideration of $4.5 million and transaction expenses of $0.2 million. In addition to the purchase price, $1.5 million was deposited in escrow, or the Escrow Deposit, whereby release of the Escrow Deposit is subject to the terms of a promissory note, which provides for the funds to be released in equal installments over a three-year period related to continuing services by former Empirica shareholders who are employed by the Company. The Escrow Deposit is recognized as an asset and the promissory note is post-acquisition compensation expense, which will be accrued over the term of the promissory note. We recorded $0.4 million and $0.3 million compensation in research and development expense for the three months ended March 31, 2021 and the year ended December 31, 2020, respectively. For further details regarding this acquisition, see Note 4 to our audited consolidated financial statements included elsewhere in this prospectus.
Components of operating results
Operating expenses
Research and development
To date, research and development expenses have related primarily to discovery and development of our iPSC cell therapy platform technology and product candidates and acquired in-process research and development. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are recorded as prepaid expenses until the goods or services are received.
Research and development expenses consist of personnel-related costs, including salaries, and benefits, stock compensation expense, external research and development expenses incurred under arrangements with third parties, laboratory supplies, costs to acquire and license technologies facility and other allocated expenses, including rent, depreciation, and allocated overhead costs, and other research and development expenses.
We deploy our employee and infrastructure resources across multiple research and development programs for developing our iPSC cell therapy platforms, identifying and developing product candidates, and establishing manufacturing capabilities. Due to the number of ongoing projects and our ability to use resources across several projects, the vast majority of our research and development costs are not recorded on a program-specific basis. These include costs for personnel, laboratory, and other indirect facility and operating costs.
Research and development activities account for a significant portion of our operating expenses. We anticipate that our research and development expenses will increase for the foreseeable future as we expand our research and development efforts including expanding the capabilities of our iPSC cell therapy platforms, identifying product candidates, completing preclinical studies and commencing clinical trials, seeking regulatory approval of our product candidates, and incurring costs to acquire and license technologies aligned with our goal of translating iPSCs to therapies. A change in the outcome of any of these variables could mean a significant change in the costs and timing associated with the development of our product candidates.
General and administrative
General and administrative expenses consist of personnel-related costs, including salaries, benefits, and non-cash stock-based compensation, for our employees in executive, legal, finance, human resources, information technology, and other administrative functions, legal fees, consulting fees, recruiting costs, and facility costs not otherwise included in research and development expenses. Legal fees include those related to corporate and patent matters.
We anticipate that our general and administrative expenses will increase over the foreseeable future to support our continued research and development activities, operations generally, future business development opportunities, consulting fees, as well as due to the increased costs of operating as a public company.
Write-off of in-process research and development
Acquired in-process research and development assets are charged to expense at the acquisition date. In-process research and development charges in 2020 and 2019 relate to the acquisition of Prior Century’s and Empirica’s assets, respectively.
Interest expense
Interest expense relates to interest incurred on the Loan Agreement we entered into with Hercules in September 2020, as well as amortization of the related deferred financing cost (see Note 9 to our audited consolidated financial statements included elsewhere in this prospectus for additional information).
Other income, net
Interest income, net consists of interest earned on our cash, cash equivalents and investment balance.
Income taxes
Until February 25, 2021, we were organized as a limited liability company, which is considered a passthrough entity for federal and state income tax purposes. As such, any taxable income or loss realized by the Company for the year ended December 31, 2020 was allocated to the members in accordance with their respective membership interest and reported on their individual tax returns. Subsequent to the conversion of the LLC entity to a C-Corp on February 25, 2021, we have incurred losses and recorded a full valuation allowance on all of our net deferred tax assets. Therefore, no provisions or benefit for income taxes is necessary in the accompanying consolidated financial statements.
Results of operations
Comparison of the three months ended March 31, 2021 and 2020
The following table summarizes our results of operations for the periods presented:
|
(in thousands)
|
|
|
Three months ended
March 31, 2021
|
|
|
Three months ended
March 31, 2020
|
|
|
Change
|
|
|
Operating expenses:
|
|
|
|
|
|
Research and development
|
|
|
|
$
|
15,374
|
|
|
|
|
$
|
7,943
|
|
|
|
|
$
|
7,431
|
|
|
|
General and administrative
|
|
|
|
|
2,688
|
|
|
|
|
|
2,050
|
|
|
|
|
|
638
|
|
|
|
Total operating expenses
|
|
|
|
|
18,062
|
|
|
|
|
|
9,993
|
|
|
|
|
|
8,069
|
|
|
|
Loss from operations
|
|
|
|
|
(18,062)
|
|
|
|
|
|
(9,993)
|
|
|
|
|
|
(8,069)
|
|
|
|
Interest expense
|
|
|
|
|
(314)
|
|
|
|
|
|
—
|
|
|
|
|
|
(314)
|
|
|
|
Other income, net
|
|
|
|
|
28
|
|
|
|
|
|
320
|
|
|
|
|
|
(292)
|
|
|
|
Net loss
|
|
|
|
$
|
(18,348)
|
|
|
|
|
$
|
(9,673)
|
|
|
|
|
$
|
(8,675)
|
|
|
|
|
Research and development expenses
The following table summarizes the components of our research and development expenses for the periods presented:
|
(in thousands)
|
|
|
Three months ended
March 31, 2021
|
|
|
Three months ended
March 31, 2020
|
|
|
Change
|
|
|
Personnel and related costs
|
|
|
|
$
|
4,789
|
|
|
|
|
$
|
2,588
|
|
|
|
|
$
|
2,201
|
|
|
|
Facility and other allocated costs
|
|
|
|
|
2,075
|
|
|
|
|
|
668
|
|
|
|
|
|
1,407
|
|
|
|
Research and laboratory
|
|
|
|
|
4,260
|
|
|
|
|
|
1,621
|
|
|
|
|
|
2,639
|
|
|
|
Collaborations
|
|
|
|
|
2,906
|
|
|
|
|
|
2,877
|
|
|
|
|
|
29
|
|
|
|
Consulting
|
|
|
|
|
691
|
|
|
|
|
|
57
|
|
|
|
|
|
634
|
|
|
|
Other
|
|
|
|
|
653
|
|
|
|
|
|
132
|
|
|
|
|
|
521
|
|
|
|
Total research and development expense
|
|
|
|
$
|
15,374
|
|
|
|
|
$
|
7,943
|
|
|
|
|
$
|
7,431
|
|
|
|
|
Research and development expenses were $15.4 million for the three months ended March 31, 2021 and $7.9 million for the three months ended March 31, 2020. The increase of $7.4 million was primarily due to:
•
an increase in personnel-related expenses of $2.2 million, which was primarily attributable to an increase in headcount to expand our research and development capabilities;
•
an increase of $1.4 million of facility and other allocated costs, including rent and allocated overhead costs as a result of an expansion of our geographic footprint for office and lab space;
•
an increase of $2.6 million in research and laboratory costs, including laboratory supplies, preclinical studies, and other external research expenses;
•
an increase of $0.6 million of consulting costs primarily for temporary personnel to assist in the expansion of our research and development capabilities; and
•
an increase of $0.5 million of other expenses.
General and administrative expenses
General and administrative expenses were $2.7 million for the three months ended March 31, 2021 and $2.1 million for three months ended March 31, 2020. The increase of $0.6 million was primarily due to increased personnel-related expenses of $0.4 million primarily attributable to an increase in headcount to build our infrastructure, and increased consulting and legal fees of $0.2 million.
Interest expense
Interest expense was $0.3 million for the three months ended March 31, 2021, which related to our Loan Agreement with Hercules.
Other income, net
Interest income was $28 thousand for the three months ended March 31, 2021 and $0.3 million for the three months ended March 31, 2020, which included interest earned on our cash, cash equivalents, and short-term and long-term investment balances.
Comparison of the Year Ended December 31, 2020 (Successor) to the period from June 21, 2019 through December 31, 2019 (Successor), and the Period from January 1, 2019 through June 20, 2019 (Predecessor)
The following table summarizes our results of operations for the periods presented. The change in the results of operations is reflective of the (Successor) for the year ended December 31, 2020 compared to combined periods of both (Successor) June 21, 2019 to December 31, 2019 and (Predecessor) January 1, 2019 to June 20, 2019:
|
(in thousands)
|
|
|
Successor
year ended
December 31, 2020
|
|
|
Successor
period from
June 21, 2019
(Inception) to
December 31, 2019
|
|
|
Predecessor
period from
January 1,
2019 to
June 20, 2019
|
|
|
Change
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
$
|
39,681
|
|
|
|
|
$
|
10,107
|
|
|
|
|
$
|
4,159
|
|
|
|
|
$
|
25,415
|
|
|
|
General and administrative
|
|
|
|
|
9,495
|
|
|
|
|
|
3,622
|
|
|
|
|
|
2,145
|
|
|
|
|
|
3,728
|
|
|
|
Write off of in-process research and development asset
|
|
|
|
|
4,722
|
|
|
|
|
|
225,946
|
|
|
|
|
|
—
|
|
|
|
|
|
(221,224)
|
|
|
|
Total operating expenses
|
|
|
|
|
53,898
|
|
|
|
|
|
239,675
|
|
|
|
|
|
6,304
|
|
|
|
|
|
(192,081)
|
|
|
|
Loss from operations
|
|
|
|
|
(53,898)
|
|
|
|
|
|
(239,675)
|
|
|
|
|
|
(6,304)
|
|
|
|
|
|
192,081
|
|
|
|
Other income, net
|
|
|
|
|
704
|
|
|
|
|
|
908
|
|
|
|
|
|
302
|
|
|
|
|
|
(506)
|
|
|
|
Interest expense
|
|
|
|
|
(381)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(381)
|
|
|
|
Net loss
|
|
|
|
$
|
(53,575)
|
|
|
|
|
$
|
(238,767)
|
|
|
|
|
$
|
(6,002)
|
|
|
|
|
$
|
191,194
|
|
|
Research and development expenses
The following table summarizes the components of our research and development expenses for the periods presented:
|
(in thousands)
|
|
|
Successor
year ended
December 31, 2020
|
|
|
Successor
period from
June 21, 2019 to
December 31, 2019
|
|
|
Predecessor
period from
January 1, 2019 to
June 20, 2019
|
|
|
Change
|
|
|
Personnel and related costs
|
|
|
|
$
|
14,901
|
|
|
|
|
$
|
3,222
|
|
|
|
|
$
|
1,686
|
|
|
|
|
$
|
9,993
|
|
|
|
Facility and other allocated costs
|
|
|
|
|
3,262
|
|
|
|
|
|
179
|
|
|
|
|
|
70
|
|
|
|
|
|
3,012
|
|
|
|
Research and laboratory
|
|
|
|
|
10,518
|
|
|
|
|
|
2,394
|
|
|
|
|
|
564
|
|
|
|
|
|
7,561
|
|
|
|
Collaborations
|
|
|
|
|
9,002
|
|
|
|
|
|
3,139
|
|
|
|
|
|
1,643
|
|
|
|
|
|
4,220
|
|
|
|
Consulting
|
|
|
|
|
730
|
|
|
|
|
|
113
|
|
|
|
|
|
92
|
|
|
|
|
|
525
|
|
|
|
Other
|
|
|
|
|
1,268
|
|
|
|
|
|
1,060
|
|
|
|
|
|
104
|
|
|
|
|
|
104
|
|
|
|
Total research and development expense
|
|
|
|
$
|
39,681
|
|
|
|
|
$
|
10,107
|
|
|
|
|
$
|
4,159
|
|
|
|
|
$
|
25,415
|
|
|
Research and development expenses were $39.7 million for the year ended December 31, 2020 and $14.3 million for the year ended December 31, 2019. The increase of $25.4 million was primarily due to:
•
an increase in personnel-related expenses of $9.9 million, which was primarily attributable to an increase in headcount to expand our research and development capabilities;
•
an increase of $3.0 million of facility and other allocated costs, including rent and allocated overhead costs as a result of an expansion of our geographic footprint for office and lab space;
•
an increase of $7.6 million in research and laboratory costs, including laboratory supplies, preclinical studies, and other external research expenses;
•
an increase of $4.2 million for collaborative arrangements with FCDI;
•
an increase of $0.5 million of consulting costs primarily for temporary personnel to assist in the expansion of our research and development capabilities; and
•
an increase of $0.1 million of other expenses.
General and administrative expenses
General and administrative expenses were $9.5 million for the year ended December 31, 2020 and $5.8 million for year ended December 31, 2019. The increase of $3.7 million was primarily due to increased personnel-related expenses of $1.5 million primarily attributable to an increase in headcount to build our infrastructure, increased consulting and legal fees of $1.1 million, and increased information technology and facility costs, including rent, of $1.1 million.
Write-off of in-process research and development
The write off of in-process research and development of $4.7 million in 2020 relates to the acquisition of the assets of Empirica. The write off of in-process research and development in 2019 of $225.9 million relates to the acquisition of the assets of Prior Century.
Interest expense
Interest expense was $0.4 million for the year ended December 31, 2020, which related to our Loan Agreement with Hercules.
Other income, net
Interest income was $0.7 million for the year ended December 31, 2020 and $1.2 million for the year ended December 31, 2019, which included interest earned on our cash, cash equivalents, and short-term and long-term investment balances.
Unaudited Pro Forma Information
Immediately prior to the completion of this offering, all outstanding shares of our convertible preferred stock will convert into an aggregate of shares of common stock upon the closing of this offering. The unaudited pro forma basic and diluted net loss per share for the year ended December 31, 2020 and the three months ended March 31, 2021 were computed using the weighted-average number of shares of common stock outstanding, including the pro forma effect of the conversion of all outstanding shares of convertible preferred stock into shares of common stock, as if such conversion had occurred at the beginning of the period. Pro forma net loss per share does not include the shares expected to be sold in this offering.
The following table sets forth the computation of the unaudited pro forma basic and diluted net loss per share of common stock for the periods presented:
|
(in thousands, except share and per share data)
|
|
|
Three months ended
March 31, 2021
|
|
|
Year ended
December 31, 2020
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss used in calculating pro forma net loss per share, basic and
diluted
|
|
|
|
$
|
(18,348)
|
|
|
|
|
$
|
(53,575)
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding
|
|
|
|
|
19,278,887
|
|
|
|
|
|
18,825,136
|
|
|
|
Weighted-average convertible preferred stock
|
|
|
|
|
85,865,789
|
|
|
|
|
|
85,865,789
|
|
|
|
Pro forma weighted-average shares outstanding, basic and diluted
|
|
|
|
|
105,144,676
|
|
|
|
|
|
104,690,925
|
|
|
|
Pro forma net loss per share, basic and diluted
|
|
|
|
$
|
(0.17)
|
|
|
|
|
$
|
(0.51)
|
|
|
Liquidity, capital resources, and capital requirements
Sources of liquidity
To date, we have funded our operations from the issuance and sale of our preferred stock and have not generated any revenues. Since our inception, we have raised approximately $340 million in net proceeds from the sales of our equity securities. As of March 31, 2021, we had cash, and cash equivalents of $79.5 million and marketable securities of $166.6 million. Based on our research and development plans, we believe that the net proceeds from this offering, together with our existing cash, cash equivalents and marketable securities, will be sufficient to fund our operating expenses and capital expenditures requirements for the next months after this filing. Since our inception, we have not generated any revenue from product sales or any other sources, and we have incurred significant operating losses. We have not yet commercialized any products and we do not expect to generate revenue from sales of any product candidates for a number of years, if ever. We had an accumulated deficit of $310.7 million as of March 31, 2021. As further described in Note 3 of our audited consolidated financial statements, we obtained a cash capital commitment from Bayer totaling $215 million, from which net proceeds of $74.8 million were received in June 2019, $38.1 million were received in November 2020 and $31.9 million were received in January 2021. The commitment agreement terminated in connection with the Series C Financing, and Bayer has no continuing obligation to invest any additional amounts thereunder. As further described in Note 9 of our audited consolidated financial statements, we entered into a Loan Agreement with Hercules, pursuant to which net proceeds of $9.6 million were received by us in September 2020. We intend to use the proceeds of the Loan Agreement for working capital and general corporate purposes. As further described in Note 17 of our audited consolidated financial statements, in February 2021, we sold 24,721,999 shares of our Series C preferred stock to certain institutional investors for gross proceeds of approximately $160 million.
Future funding requirements
We expect to incur additional losses in the foreseeable future as we conduct and expand our research and development efforts, including conducting preclinical studies and clinical trials, developing new product candidates, establishing internal and external manufacturing capabilities, and funding our operations generally. Based on our current business plans, we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will be sufficient for us to fund our operating expenses and capital expenditure requirements for the next months after this filing. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. However, we anticipate that we will need to raise additional financing in the future to fund our operations, including the commercialization of any approved product candidates. We are subject to the risks typically related to the development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business.
Our future capital requirements will depend on many factors, including:
•
the scope, timing, progress, costs, and results of discovery, preclinical development, and clinical trials for our current and future product candidates;
•
the number of clinical trials required for regulatory approval of our current and future product candidates;
•
the costs, timing, and outcome of regulatory review of any of our current and future product candidates;
•
the cost of manufacturing clinical and commercial supplies of our current and future product candidates;
•
the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive marketing approval;
•
the costs and timing of preparing, filing, and prosecuting patent applications, obtaining, maintaining, protecting, and enforcing our intellectual property rights, and defending any intellectual property-related claims, including any claims by third parties that we are infringing upon, misappropriating, or violating their intellectual property rights;
•
our ability to maintain existing, and establish new, strategic collaborations, licensing, or other arrangements and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty, or other payments due under any such agreement;
•
the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;
•
expenses to attract, hire and retain, skilled personnel;
•
the costs of operating as a public company;
•
our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party and government payors;
•
addressing any potential interruptions or delays resulting from factors related to the COVID-19 pandemic;
•
the effect of competing technological and market developments; and
•
the extent to which we acquire or invest in businesses, products, and technologies.
Until and unless we can generate substantial product revenue, we expect to finance our cash needs through the proceeds from this offering, a combination of equity offerings and debt financings, and potentially through additional license and development agreements or strategic partnerships or collaborations with third parties. Financing may not be available in sufficient amounts or on reasonable terms. In addition, market volatility resulting from the COVID-19 pandemic or other factors could adversely impact our ability to access capital as and when needed. We have no commitments for any additional financing, and will likely be required to raise such financing through the sale of additional securities, which, in the case of equity securities, may occur at prices lower than the offering price of our common stock in this offering. If we sell equity or equity-linked securities, our current stockholders, including investors in this offering, may be diluted, and the terms may include liquidation or other preferences that are senior to or otherwise adversely affect the rights of our stockholders. Moreover, if we issue debt, we may need to dedicate a substantial portion of our operating cash flow to paying principal and interest on such debt and we may need to comply with operating restrictions, such as limitations on incurring additional debt, which could impair our ability to acquire, sell or license intellectual property rights which could impede our ability to conduct our business.
Cash flows
The following table summarizes our cash flows for the periods indicated:
|
(in thousands)
|
|
|
Three months
ended
March 31, 2021
|
|
|
Three months
ended
March 31, 2020
|
|
|
Successor
year ended
December 31,
2020
|
|
|
Successor
Period from
June 21,
2019 to
December 31,
2019
|
|
|
Predecessor
period from
January 1,
2019 to
June 20, 2019
|
|
|
Net cash provided by (used in):
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
$
|
(22,179)
|
|
|
|
|
$
|
(6,884)
|
|
|
|
|
$
|
(41,269)
|
|
|
|
|
$
|
(11,768)
|
|
|
|
|
$
|
(4,400)
|
|
|
|
Investing activities
|
|
|
|
|
(119,034)
|
|
|
|
|
|
(4,178)
|
|
|
|
|
|
(22,757)
|
|
|
|
|
|
(19,007)
|
|
|
|
|
|
(827)
|
|
|
|
Financing activities
|
|
|
|
|
(193,485)
|
|
|
|
|
|
—
|
|
|
|
|
|
47,690
|
|
|
|
|
|
74,839
|
|
|
|
|
|
—
|
|
|
|
Net (decrease) increase in cash, cash equivalents, and restricted cash
|
|
|
|
$
|
52,272
|
|
|
|
|
$
|
(11,062)
|
|
|
|
|
$
|
(16,336)
|
|
|
|
|
$
|
44,064
|
|
|
|
|
$
|
(5,227)
|
|
|
Operating activities
Net cash used in operating activities was $22.2 million, and $6.9 million for the three months ended March 31, 2021 and 2020, respectively. Net cash used in operating activities during the three months ended March 31, 2021 consisted primarily of our net loss of $18.3 million and net cash outflows from decreases in our accounts payable and accrued expenses and other liabilities of $5.2 million partially offset by increase in operating lease liability of $0.1 million, and non-cash charges of $1.1 million. The non-cash charges of $1.1 million consisted primarily of $0.7 million for depreciation expense, and non-cash operating lease expense of $0.2 million.
Net cash used in operating activities for the three months ended March 31, 2020 consisted primarily of our net loss of $9.7 million partially offset by net cash inflows from changes in operating assets and liabilities of $2.3 million and non-cash charges of $0.5 million. The non-cash charges of $0.5 million consisted primarily of $0.2 million for depreciation expense, non-cash stock-based compensation expense of $0.2 million, and non-cash operating lease expense of $0.1 million.
Net cash used in operating activities was $41.3 million, $11.8 million and $4.4 million for the year ended December 31, 2020 (Successor), the period from June 21, 2019 through December 31, 2019 (Successor) and the period from January 1, 2019 through June 20, 2019 (Predecessor), respectively. Net cash used in operating activities during the year ended December 31, 2020 (Successor) consisted primarily of our net loss of $53.6 million partially offset by increase in operating lease liability of $2.2 million, net cash inflows from increases in our accounts payable and accrued expenses and other liabilities of $4.4 million and non-cash charges of $7.4 million. The non-cash charges of $7.4 million consisted primarily of $1.4 million for depreciation expense, non-cash stock-based compensation expense of $0.9 million, non-cash operating lease expense of $0.4 million and write off of in-process research and development asset of $4.7 million from an asset acquisition.
Net cash used in operating activities during the period from June 21, 2019 through December 31, 2019 (Successor), consisted primarily of our net loss of $238.8 million, partially offset by non-cash charges of $226.3 million. The non-cash charges of $226.3 million consisted primarily of $225.9 million for write off of in-process research and development assets, and other non-cash charges of $0.4 million.
Net cash used in operating activities during the period from January 1, 2019 through June 20, 2019 (Predecessor) consisted primarily of our net loss of $6.0 million, partially offset by net cash inflows from changes in operating assets and liabilities of $1.5 million.
Investing activities
Cash used in investing activities was $119.0 million, and $4.2 million for the three months ended March 31, 2021 and 2020, respectively. Cash used in investing activities for the three months ended March 31, 2021
consisted primarily of net purchases of fixed maturity securities of $117.2 million, and purchases of property and equipment of $1.9 million.
Cash used in investing activities for the three months ended March 31, 2020 consisted primarily of net purchases of fixed maturity securities of $1.5 million, and purchases of property and equipment of $2.7 million.
Cash used in investing activities was $22.8 million, $19.0 million and $0.8 million for the year ended December 31, 2020 (Successor), the period from June 21, 2019 through December 31, 2019 (Successor) and the period from January 1, 2019 through June 20, 2019 (Predecessor), respectively. Cash used in investing activities for the year ended December 31, 2020 (Successor) consisted primarily of net purchases of fixed maturity securities of $8.2 million, purchases of property and equipment of $9.8 million, and net cash used for an asset acquisition of $4.7 million.
Cash used in investing activities for the period from June 21, 2019 through December 31, 2019 (Successor) consisted primarily of purchases of fixed maturity securities of $41.5 million, and purchases of property and equipment of $1.6 million, partially offset by net cash resulting from an asset acquisition of $24.2 million. Cash used in investing activities for the period from January 1, 2019 through June 20, 2019 (Predecessor) consisted primarily of purchases of property and equipment of $0.8 million.
Financing activities
Cash provided by financing activities was $193.5 million for the three months ended March 31, 2021 . There was no financing activities for the three months ended March 31, 2020. Cash provided by financing activities for the three months ended March 31, 2021 consisted primarily of net proceeds from collection of subscription receivable of $31.9 million and from sale of our Series C preferred shares of $159.6 million, payments of deferred offering costs associated with incremental legal, professional and other third-party fees directly associated with the planned IPO of $0.6 million, and cash resulting from the merger of $2.4 million.
Cash provided by financing activities was $47.7 million and $74.8 million for the year ended December 31, 2020 (Successor) and the period from June 21, 2019 through December 31, 2019 (Successor), respectively. There was no cash used in or provided by financing activities for the period from January 1, 2019 through June 20, 2019 (predecessor). Cash provided by financing activities for the year ended December 31, 2020 (Successor) consisted primarily of net proceeds from collection of subscription receivable of $38.1 million. Additionally, on September 14, 2020, the Company entered into a $10 million Loan Agreement with Hercules, pursuant to which net proceeds of $9.6 million were received by us.
Cash provided by financing activities during the period from June 21, 2019 through December 31, 2019 (Successor) consisted of net proceeds of $74.8 million from the sale of our common shares.
Contractual obligations and commitments
The following table summarizes our significant contractual obligations and commitments as of December 31, 2020:
|
(in thousands)
|
|
|
Payments due by period
|
|
|
|
1 year
|
|
|
1 to 3 years
|
|
|
3 to 5 years
|
|
|
More than 5 years
|
|
|
Total
|
|
|
Operating leases
|
|
|
|
$
|
1,220
|
|
|
|
|
$
|
3,347
|
|
|
|
|
$
|
3,629
|
|
|
|
|
$
|
13,207
|
|
|
|
|
$
|
21,403
|
|
|
|
Long-term debt
|
|
|
|
|
—
|
|
|
|
|
|
7,642
|
|
|
|
|
|
2,753
|
|
|
|
|
|
—
|
|
|
|
|
|
10,395
|
|
|
|
Interest on long-term debt(1)
|
|
|
|
|
968
|
|
|
|
|
|
1,543
|
|
|
|
|
|
48
|
|
|
|
|
|
—
|
|
|
|
|
|
2,560
|
|
|
|
|
(1)
Reflects minimum interest payable under the Loan Agreement. Payment herein are subject to variable rate debt have been estimated.
Other than as disclosed in the table above, the payment obligations under our license, collaboration, and acquisition agreements as of December 31, 2020 are contingent upon future events such as our achievement of pre-specified development, regulatory, and commercial milestones, or royalties on net product sales. See the section titled “Business—Licensing, Partnerships and Collaborations” for more information about these payment
obligations. As of December 31, 2020, the timing and likelihood of achieving the milestones and success payments and generating future product sales are uncertain and therefore, any related payments are not included in the table above. The Company has commitments under operating leases for certain facilities used in its operations. The Company’s leases have initial lease terms ranging from five to 16 years. The Company entered into three leases that had not commenced at December 31, 2020. As a result, future lease payments of approximately $0.5 million in 1 year, $4.8 million in 1 to 3 years, $5.0 million in 3 to 5 years and $16.3 million in more than 5 years are not included within the table above.
We also enter into agreements in the normal course of business for sponsored research, preclinical studies, contract manufacturing, and other services and products for operating purposes, which are generally cancelable upon written notice. These obligations and commitments are not included in the table above. See Note 11 to our audited consolidated financial statements included elsewhere in this prospectus for additional information.
We have entered into a $10.0 million Term Loan Agreement with Hercules. Amounts borrowed under the Loan Agreement have an interest-only period of up to 24 months and a maturity date of April 1, 2024. See Note 9 to our audited consolidated financial statements included elsewhere in this prospectus for additional information.
Off-balance sheet arrangements
Since our inception, we have not engaged in any off-balance sheet arrangements as defined under the rules and regulations of the SEC.
Quantitative and qualitative disclosures about market risk
We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. We do not currently have any material exposure to foreign currency fluctuations and do not engage in any hedging activities as part of our normal course of business.
Interest rate risk
We had cash, cash equivalents, and restricted cash of $80.0 million as of March 31, 2021, which consisted of bank deposits and money market funds. We also had marketable securities of $166.6 million as of March 31, 2021. The primary objective of our investment activities is to preserve capital to fund our operations while earning a low risk return. Because our marketable securities are primarily short-term in duration, we believe that our exposure to interest rate risk is not significant, and a hypothetical 1.0% change in market interest rates during any of the periods presented would not have had a significant impact on the total value of our portfolio. Additionally, we had the $10.0 million borrowing related to the Loan Agreement in September 2020 with a floating interest rate per annum (based on a year of 360 days) equal to (i) the sum of (a) the greater of 6.30% plus (b) the prime rate as reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue, or (ii) 9.55%. We are therefore exposed to changes in variable United States interest rates on borrowings under our Loan Agreement. A hypothetical 1% increase in interest rates would not result in a material impact to our business.
JOBS act accounting election
As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise generally applicable to public companies. As such, we may take advantage of reduced disclosure and other requirements otherwise generally applicable to public companies, including:
•
presenting only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s discussion and analysis of financial condition and results of operations” disclosure in this prospectus;
•
not being required to have our registered independent public accounting firm attest to management’s assessment of our internal control over financial reporting;
•
presenting reduced disclosure about our executive compensation arrangements;
•
an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;
•
not being required to hold non-binding advisory votes on executive compensation or golden parachute arrangements; and
•
extended transition periods for complying with new or revised accounting standards.
We have taken advantage of some of these reduced disclosure and other requirements in this prospectus. Accordingly, the information contained herein may be different than the information you receive from our competitors that are public companies or other public companies in which you hold stock.
The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period to enable us to comply with new or revised accounting standards and, therefore, we will adopt new or revised accounting standards at the time private companies adopt the new or revised accounting standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the closing of this offering, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Critical accounting policies and significant judgments and estimates
Our audited consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the audited consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting
policies are described in more detail in the notes to our audited consolidated financial statements included elsewhere in this prospectus, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
Research and development expenses
We record research and development costs in the periods in which they are incurred. We accrue for research and development costs based on the estimated services performed, but not yet invoiced, pursuant to contracts with research institutions or other service providers that conduct and manage preclinical studies and other research services on our behalf and record these costs in accrued and other current liabilities. We make judgments and estimates in determining the accrued liabilities balance at each reporting period. Payments made prior to the receipt of goods or services to be used in research and development are recorded as prepaid expenses until the goods or services are received.
To date, we have not experienced any material differences between accrued costs and actual costs incurred. However, the status and timing of actual services performed may vary from our estimates, resulting in adjustments to expenses in future periods. Changes in these estimates that result in material changes to our accruals could materially affect our results of operations.
Acquisitions
We account for business combinations using the acquisition method of accounting, which requires the assets acquired, including IPR&D, and liabilities assumed, be recorded at their fair values as of the acquisition date. Any excess of the purchase price over the fair value of net assets acquired is recorded as goodwill. The determination of the estimated fair value of these items requires us to make significant estimates and assumptions.
If we determine the acquisition does not meet the definition of a business combination under the acquisition method of accounting, the transaction is accounted for as an asset acquisition and no goodwill or contingent consideration are recognized at the acquisition date. In an asset acquisition, up-front payments allocated to IPR&D and subsequent milestone payments are recorded in research and development expense.
Stock-based compensation
We recognize compensation costs related to restricted stock awards, restricted stock shares, and stock options granted to employees and nonemployees based on the estimated fair value of the awards on the date of grant, and we recognize forfeitures as they occur. For restricted stock awards the fair value of our common stock is used to determine the resulting stock-based compensation expense. For stock options we estimate the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option pricing model. The fair value of the stock-based awards is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period.
The Black-Scholes option pricing model requires the use of highly subjective assumptions to determine the fair value of stock-based awards. These assumptions include:
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Fair Value of Common Stock—See the subsection titled “—Common Stock Valuations.”
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Expected Term—The expected term represents the period that the stock-based awards are expected to be outstanding. We use the simplified method to determine the expected term, which is based on the average of the time-to-vesting and the contractual life of the options.
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Expected Volatility—Since we are not yet a public company and do not have any trading history for our common stock, the expected volatility is estimated based on the average historical volatilities of common stock of comparable publicly traded entities over a time period equal to the expected term of the stock option grants. The comparable companies are chosen based on their size, stage in the product development cycle, and area of
specialty. We will continue to apply this process until sufficient historical information regarding the volatility of our own stock price becomes available.
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Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the awards.
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Expected Dividend— We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, we used an expected dividend yield of zero.
See Note 14 to our audited consolidated financial statements included elsewhere in this prospectus for information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted in the Year Ended December 31, 2020 (Successor), the period from June 21, 2019 through December 31, 2019 (Successor), and the period from January 1, 2019 through June 20, 2019 (Predecessor). Such assumptions involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our stock-based compensation could be materially different.
In June 2018, Prior Century adopted the 2018 Plan. The 2018 Plan provided for Prior Century to sell or issue common stock or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the board of directors, and consultants of Prior Century under terms and provisions established by the board of directors.
During the year ended December 31, 2020 and the periods from June 21, 2019 through December 31, 2019, equity compensation awards were granted from Prior Century to our employees. We recognized the costs of the stock based payments incurred by Prior Century on its behalf as our employees vest in the awards (i.e., we recognize expense measured on the same basis as Prior Century). We also record a corresponding capital contribution from Prior Century.
The intrinsic value of all outstanding options as of March 31, 2021 was approximately $ million, based on the assumed initial public offering price of $ per share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, of which approximately $ million is related to vested options and approximately $ million is related to unvested options.
Common stock valuations
Prior to this offering, we were a privately-held company with no active public market for our common stock. Therefore, our board of directors, with the assistance and upon the recommendation of management, has for financial reporting purposes periodically determined the estimated per share fair value of our common stock on the date of grant in part using contemporaneous independent third-party valuations consistent with the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation (Practice Aid). Within the contemporaneous valuations performed by our board of directors, a range of factors, assumptions, and methodologies were used. The significant objective and subjective factors included, but are not limited to:
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our most recently available valuations of our common stock performed by an independent third-party valuation firm;
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the prices of shares of our convertible preferred stock sold to investors in arm’s length transactions, and the rights, preferences and privileges of our convertible preferred stock relative to our common stock;
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committed future rounds of funding;
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our stage of development and material risks related to our business;
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our results of operations and financial position, including our levels of available capital resources;
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progress of our research and development activities;
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the lack of marketability of our common stock as a private company;
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the hiring of key personnel and the experience of management;
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the likelihood of achieving a liquidity event for our securityholders, such as an initial public offering or a sale of our company, given prevailing market conditions;
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the valuation of publicly traded companies in the life sciences and biotechnology sectors, as well as recently completed mergers and acquisitions of peer companies;
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the status of strategic transactions, including the acquisition and licensing of intellectual property and technology;
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trends and developments in our industry; and
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external market conditions affecting the life sciences and biotechnology industry sectors.
Our board of directors exercises significant judgment in estimating the fair value of our common stock. Such estimates involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our equity-based compensation could be materially different. Changes in judgments could have a material impact on our results of operations.
For our valuations performed prior to December 31, 2020, in accordance with the Practice Aid, we determined the option pricing model (OPM) method, utilizing recent rounds of preferred financing when available and if a recent round of financing wasn’t available utilizing an equity value determined by the amount invested in the company plus a market return, was the most appropriate method for determining the fair value of our common stock based on our stage of development and other relevant factors. The OPM framework, utilizing a recent round of financing (the backsolve method) infers the equity value implied by a recent financing transaction by making assumptions for the expected time to liquidity, volatility, discount for lack of marketability, and risk-free rate and then solving for the value of equity such that value for the most recent financing equals the amount paid. This method was selected as management concluded that the contemporaneous financing transactions were arms’-length transactions. The OPM framework utilizing the amount invested in the company plus a return provides the basis for the equity value in the OPM and then utilizes certain assumptions for the expected time to liquidity, volatility, discount for lack of marketability, and risk-free rate to estimate the fair value of the common stock.
For our valuations performed after December 31, 2020 we determined the equity value of our business using the hybrid method with input from management and contemporaneous third-party valuations. The hybrid method is based upon the probability-weighted value across two scenarios, being (i) successfully consummating an initial public offering and (ii) alternative scenarios in which an initial public offering is not consummated. The hybrid method can be a useful alternative to explicitly modeling all probability-weighted expected return scenarios in situations when the company has transparency into one or more near term exits but is unsure about what will occur if current plans do not materialize. In the first scenario, the potential exit date, the probability exit value and the likelihood of interim financings were considered. In the second scenario, which was assigned the residual probability, the potential exit date, the equity volatility, the assumed interest rate, the dividend yield and equity inflection points at which the allocation of proceeds changes were considered.
Following the closing of this offering, the fair market value of our common stock will be the closing price of our common stock on the date of grant on the primary stock exchange on which our common stock is traded.
Recently adopted and recent accounting pronouncements
See Note 2 to our audited consolidated financial statements included elsewhere in this prospectus for information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition or results of operations.
Business
Overview
We are an innovative biotechnology company developing transformative allogeneic cell therapies to create products for the treatment of both solid tumor and hematological malignancies with significant unmet medical need. We have created a comprehensive allogeneic cell therapy platform that includes industry-leading induced pluripotent stem cells, or iPSCs, differentiation know-how to generate immune effector cells from iPSCs, or iPSC-derived cells, clustered regularly interspaced short palindromic repeats, or CRISPR, mediated precision gene editing that allows us to incorporate multiple transgenes and remove target genes intended to optimize cell product performance, sophisticated protein engineering capabilities to develop proprietary next generation chimeric antigen receptors, or CARs, our proprietary Allo-EvasionTM technology intended to prevent rejection of our cell products by the host immune system, and cutting edge manufacturing capabilities intended to minimize product development and supply risk. We believe that these vertically integrated capabilities will allow us to further expand our existing pipeline and develop therapeutics from iPSC-derived natural killer cells, or iNK cells, or iNK, and iPSC-derived T cells, or iT cells, or iT, that may provide enhanced clinical outcomes compared to available therapeutic options. Our vision is to become a premier cell therapy company by developing and ultimately commercializing allogeneic cell therapies that dramatically and positively transform the lives of patients suffering from life-threatening cancers. To achieve our vision, we have assembled a world-class team whose members collectively have decades of experience in cell therapy and drug development, manufacturing, and commercialization.
The field of cell therapy is rapidly evolving, with autologous and allogeneic technologies demonstrating the strong potential of this therapeutic modality. We believe that our industry leading, end-to-end iPSC-derived allogeneic cell therapy platform will allow us to overcome technical and biological limitations of other donor-derived cell therapies. The unlimited replication capacity of iPSCs allows us to incorporate multiple genetic modifications at precise sites, or loci, in the genome of iPSCs that are designed to improve cell function using a CRISPR-mediated approach targeting a DNA repair pathway called homology directed repair, or HDR. The precision of our CRISPR-HDR gene editing technology and clonal selection eliminates random integration events and allows more controlled expression of transgenes of interest compared to other gene editing methodologies. The self-renewal capacity of iPSCs also enables the generation of master cell banks derived from single genetically engineered clones thus allowing the implementation of cost-efficient manufacturing of drug product that can be made available on demand at any clinical site. We have assembled a unique and powerful combination of technologies that bring together a preeminent iPSC-derived allogeneic cell therapy platform with highly advanced cell engineering and manufacturing capabilities. We believe this unique combination puts us in a position to disrupt the oncology treatment paradigm and market.
The key elements of our approach include:
Our efficient precision gene editing technology:
We have developed highly efficient gene engineering processes to generate our product candidates. Our first product candidate will have six CRISPR-mediated homologous recombination and repair edits, and we plan to incorporate additional edits in our future product candidates. We are currently using the CRISPR-MAD7 nuclease to enable precise editing of the iPSC genome, and have developed proprietary applications of the CRISPR-MAD7 technology to genetically modify iPSCs by simultaneously removing target genes or adding transgenes (which is commonly known as knocking-out and knocking-in, respectively) of interest at precise genetic loci. Our approach preserves genome integrity and achieves more predictable and consistent transgene expression as compared to approaches driven by viruses or transposable segments called transposons, which result in varied gene copy number and random integration events that risk mutations, namely insertional mutagenesis.
Our proprietary Allo-EvasionTM technology:
We are leveraging our Allo-EvasionTM technology to design cells capable of evading identification and destruction by the host immune system. We believe this technology may permit dosing in patients with limited or no
immune preconditioning regimens. The reduction in allogeneic immune-reactivity enabled by our use of this technology, which is designed to prevent rejection by the patient’s immune system may allow repeat dosing of our CAR-modified cell therapies, and sustain therapeutic efficacy over a long period of time.
CAR and protein engineering:
CAR design is a critical component of innovative cell therapy product candidates. We assembled a team of scientists with deep protein engineering expertise and invested in the single domain antibody fragment, or VHH, antibody platform to develop world-class CAR engineering capabilities that we believe will allow us to create multi-specific CAR constructs targeting more than one tumor antigen. We believe that targeting multiple antigens on tumor cells will help address tumor heterogeneity and antigen loss, which are frequently observed in tumor cells. We have created a proprietary synthetic library of humanized VHH binders to enable in-house binder screens and multiple campaigns against several tumor antigens are ongoing to generate the CAR constructs for future product candidates.
Common engineered iPSC progenitor accelerates new product candidate generation:
With other cell therapy platforms generated from cells with limited replicative capacity, the creation of a new product candidate requires starting over with each of the gene engineering steps having to be incorporated into the product. This is not only time and resource intensive; it also makes it more difficult to predict functionality and safety based upon products that may have been clinically tested in earlier programs. In contrast, all of our iPSC-derived product candidates include a set of shared core features intended to increase their functionality, safety, and persistence. We integrate these core features into a common engineered iPSC progenitor, which has several advantages:
Significant acceleration of new product candidate generation.
Multiple product candidates are generated by engineering additional features, such as adding different CARs to the common progenitor to create new clinical candidates for different tumor indications. With this approach, we do not need to re-engineer common functionalities every time we generate a new product candidate.
Robust manufacturing processes for multiple product candidates.
Since the starting iPSC line is the same for multiple product candidates, our manufacturing processes are predictable and robust.
Predictability of product candidate functionality, safety, and persistence.
Because multiple clinical candidates are derived from the same engineered iPSC line, the lessons learned from one product candidate can be leveraged across multiple product candidates, which facilitates clinical development. For instance, the allo-reactivity of products derived from the same common engineered iPSC progenitor should be very similar.
We expect to file an investigational new drug application, or IND, with the U.S. Food and Drug Administration, or the FDA, for our lead product candidate CNTY-101, a CAR-iNK product candidate targeting CD19 for lymphoma, in mid 2022. We expect to file an IND for CNTY-103, our CD133 + EGFR iNK product candidate designed to treat glioblastoma, in the first half of 2023. Our third candidate, CNTY-102, is a bi-specific CD19 + CD79b iNK or iT product candidate targeting lymphoma, with IND filing expected in the second half of 2023, and, our fourth candidate, CNTY-104, is a multi-specific product candidate targeting acute myeloid leukemia, or AML, with IND filing expected in mid 2024. As there are disease settings which will favor iNK or iT products, we are actively investigating both iNK and iT cell platforms for CNTY-102 and CNTY-104, as either may have preferential clinical features. We are also advancing an earlier discovery stage pipeline with novel CARs and binders against multiple solid tumor targets using our iNK and iT cell therapy platforms. We believe that the therapeutics we discover and develop, if approved, will have a significant impact on the quality of life of patients suffering from devastating hematological and solid tumor malignancies. Our approach to developing therapies for life-threatening cancers
of highly unmet medical need potentially presents an opportunity to efficiently advance our product candidates through clinical development, regulatory approval and ultimately to commercialization.
Our collaboration with FUJIFILM Cellular Dynamics Inc., or FCDI, provides us with licenses to certain premier iPSC technologies, patents and know-how, giving us our initial start which enabled us to accelerate generation of our first-generation product candidates and development of our manufacturing processes. We have built and expanded on this foundation with our own resources, applying our own gene editing, protein engineering, process development, and manufacturing expertise to develop our novel product candidates and platforms for which we are developing our own intellectual property. We retain exclusive commercialization rights in the United States and other major commercial markets for our product candidates developed pursuant to our collaboration with FCDI.
We are led by pioneers and subject-matter experts with decades of collective experience in cell therapy and oncology drug development. Dr. Osvaldo Flores, our Chief Executive Officer, has over 25 years of experience in pharmaceutical research and development. Prior to Century, he was Vice President of R&D at Janssen after the acquisition of Novira Therapeutics, where he was a co-founder, President and Chief Science Officer. Earlier in his career, he held senior positions at Merck & Co. and Tularik Inc. Dr. Hyam Levitsky, our President of Research and Development, previously held key R&D positions at Juno Therapeutics and Roche. Dr. Adrienne Farid, our Chief Operations Officer, has over 25 years of drug development experience and previously worked at Celgene, Roche, and SmithKline Beecham. Dr. Greg Russotti, our Chief Technology Officer, has over 30 years of experience and previously worked at Celgene and Merck. Dr. Luis Borges, our Chief Scientific Officer, has over 25 years of experience, with precedent positions in Cell Medica, Five Prime Therapeutics, Amgen, and Immunex. Dr. Michael Diem, our Chief Business Officer, has more than 15 years of experience in the pharmaceutical industry and held business and investment roles at Amicus, AstraZeneca, Aevi Genomics, GlaxoSmithKline, and SR One.
Our board of directors includes members with extensive experience leading companies in the fields of biotechnology and biopharmaceuticals, including Joseph Jimenez, former Chief Executive Officer of Novartis, and Toshikazu Ban, Corporate Vice President and Senior Deputy General Manager of the pharmaceutical product division at FUJIFILM Corporation Ltd. Our internal abilities are further underpinned by our Scientific Advisory Board, which consists of world-renowned scientists, clinicians and key opinion leaders with decades of experience in the fields of stem cell biology, immunology, oncology, and cell therapy.
Since our inception in 2018, we have raised gross proceeds of approximately $340 million. Our stockholders include premier life science and strategic investors, including Versant Ventures, Leaps by Bayer, FCDI, Casdin Capital, Fidelity Management & Research LLC, the Federated Hermes Kauffmann Funds, RA Capital, Logos Capital, OrbiMed, Marshall Wace, Qatar Investment Authority, Avidity Partners, and Octagon Capital.
Our pipeline
We are assembling a portfolio of allogeneic iNK and iT cell therapy product candidates across solid tumor and hematological malignancies. This pipeline is comprised of cell therapies that will address diseases where we believe current therapies are inadequate. All product candidates incorporate our proprietary Allo-EvasionTM technology to avoid host rejection and potentially increase the durability of clinical responses. With the exception of our lead product candidate, CNTY-101, each of our product candidates is designed to target multiple tumor antigens. We currently anticipate filing an IND for our lead product candidate, CNTY-101, targeting B-cell lymphoma, mid 2022. Our second product candidate, CNTY-103, is designed to treat glioblastoma, and we currently anticipate filing an IND in the first half of 2023. Our third product candidate, CNTY-102, is designed to further improve B-cell malignancy treatment, and we are planning on filing an IND for it in the second half of 2023. Our fourth product candidate, CNTY-104, is being developed to treat AML with the IND filing expected in mid 2024. Our
development programs consist of the product candidates illustrated in the pipeline chart below:
(1)
We are party to an option agreement with Bayer HealthCare LLC, or Bayer, pursuant to which Bayer was granted certain bidding rights relating to the potential transfer of rights with respect to certain product candidates being researched and developed by us which are comprised of iNK cells, macrophages or dendritic cells, including CNTY-101, CNTY-103 and any other product candidate comprised of iNK cells that we develop in the future. Bayer’s rights under the option agreement are subject to important limitations. See “—Licensing, partnership and collaboration—Bayer HealthCare LLC—Option Agreement” for more information.
CNTY-101: Our CAR-iNK candidate targeting CD19 for relapsed, refractory B-cell lymphoma.
Our lead product candidate, CNTY-101, is an allogeneic, iPSC-derived CAR-iNK cell therapy that has been engineered to express CD19 CAR, soluble IL-15, an EGFR safety switch, and also contains gene edits needed to incorporate Allo-EvasionTM technology. We expect clinical candidate clone selection in the first half of 2021, and plan to move into IND enabling preclinical and technical studies and manufacturing at that time. We anticipate filing an IND to advance CNTY-101 into a Phase 1 clinical trial in mid 2022.
CNTY-103: Our CAR-iNK candidate targeting CD133 + EGFR for recurrent glioblastoma.
We are pursuing a differentiated approach addressing glioblastoma multiforme, or GBM, tumor heterogeneity, and planning local administration of the iNK cell product candidate. CNTY-103 represents our first clinical product candidate targeting a solid tumor and we believe targeting GBM with our engineered iNK cells may provide an opportunity to assess the clinical utility of, or establish proof of concept for, our iPSC-derived iNK cell therapy platform. We are projecting filing an IND and/or clinical trial application, or CTA, for recurrent GBM in the first half of 2023.
CNTY-102: Our CAR-iT or CAR-iNK candidate targeting CD19 + CD79b for relapsed, refractory B-cell lymphoma and other B-cell malignancies.
CNTY-102 will simultaneously target CD19 and CD79b, intended to increase depth and durability of response by eliminating the effect of CD19 antigen loss that has been observed as a factor limiting treatment durability, as well as targeting CD79b, an independently regulated, ubiquitous and validated B-cell target. We currently envision filing the IND for CNTY-102 in the second half of 2023.
CNTY-104: Our CAR-iNK or CAR-iT multi-specific candidate for acute myeloid leukemia.
CNTY-104 will utilize our multi-specific iNK or iT cells for the treatment of AML. Given the known therapeutic activity of natural killer, or NK, cells in AML, there might be an advantage to using the iNK cell platform to build the product candidate, but we will evaluate both the iNK and iT cell therapy platforms and choose the one likely to provide the best therapeutic index in the clinic. We currently envision filing the IND for CNTY-104 in mid 2024.
Discovery platform.
In addition to our named programs, we are actively engaged in a number of earlier stage discovery programs where we believe our iPSC-derived allogeneic cell therapy platform may provide differentiated therapeutic benefits. These discovery stage initiatives are focused on several solid tumor indications including bladder cancer and renal cell carcinoma. For these and other indications, we plan to use multispecific CARs and explore the use of both iNK and iT cells to identify the best cell platform to build the product candidate.
Our use of iPSCs provides us with a differentiated advantage in product development and manufacturing
The majority of allogeneic approaches currently in development use differentiated T cells or NK cells derived from the peripheral blood of healthy donors. Although the use of allogeneic cells in the manufacture of CAR-based T cell or NK cell therapies offers significant advantages, the use of donor cells in the production of allogeneic cell therapies has significant limitations. For example, the number of doses that can be produced from a single donation of blood is limited, such that multiple donations will be needed over the lifetime of a product. Therefore, genetic modifications must be performed in their entirety following each donation. Furthermore, all blood, even from the same donor collected at different times, has some degree of variability and, as a result, product comparability from donation to donation must be demonstrated. In addition, the number of edits that can be introduced into the genome of T cells or NK cells is severely limited, as each engineering step requires cells to replicate. Excessive expansion cycles often result in cell exhaustion, with the engineered lymphocytes (white blood cells) expressing checkpoint molecules, often accompanied by a loss of functionality. As a consequence, the engineering process for these donor-derived cell therapies requires a careful balancing between the number of replication cycles achievable and the generation of fully functional cells resulting in significant limitations.
We believe our engineered, iPSC-derived allogeneic cell therapy platforms can overcome many of the challenges inherent to cell therapy, provide a significant advantage over existing cell therapy technologies. We are focused on developing novel therapeutics designed to address many of the significant unmet medical needs in cancer treatment.
Core characteristics of our iPSC-derived allogeneic cell therapy platforms
Our iPSC-derived allogeneic cells differentiate our therapeutic development approach
The source cells used in the manufacture of our allogeneic cell therapy candidates are induced pluripotent stem cells, or iPSCs. An iPSC is a type of stem cell that can be generated directly from a somatic cell. A somatic cell is a cell that has become functionally differentiated, or specialized, such as a blood cell, skin cell or bone cell. IPSC-derived cell products offer significant technical and manufacturing advantages. These cells have unlimited replication capacity and can act as a progenitor cell for other cell types, including the different types of immune cells. IPSCs share similar biological properties with embryonic stem cells, such as morphology, patterns of gene and protein expression, and growth properties including mitotic activity and doubling time. Our in-licensed iPSC technology allows us to reprogram differentiated cells into iPSCs and to somatic the iPSCs to generate different immune cell types including iNK cells and iT cells.
We believe the use of iPSCs will enable us to manufacture cell therapies of increased consistency, in a shorter period of time, at scale and at reduced cost compared to donor-derived NK or T cell therapies. Unlike these donor-derived cell therapies where all the engineering steps are performed using differentiated cells, all of our engineering procedures are performed on iPSCs. We believe that using iPSCs as a starting point for our cell therapies will allow us to produce our allogeneic cell therapies in an efficient and consistent manner. iPSCs are more amenable to multiple genetic manipulations than differentiated lymphocytes and are capable of maintaining their viability through numerous expansion rounds. We select specific single cell clones from bulk engineered cell product, which we characterize to include specified edits and ensure the absence of off-target genomic
alterations. A single cell clone is used to construct a master cell bank capable of providing a sufficient number of doses for the life of a product due to the unlimited replicative capacity of iPSCs.
Our use of iPSCs provide us with differentiated advantages in product development and manufacturing
Our strategy
Our vision is to be a leader in the treatment of both solid tumor and hematological malignancies that address unmet medical needs by developing innovative allogeneic cell therapy products derived from our proprietary technologies. We are initially focused on advancing the research, clinical development and commercialization of tumor-targeted iNK and iT cell therapeutics. We believe that our iPSC-derived allogeneic cell therapy platforms have the potential to overcome the limitations of existing therapies, lower manufacturing costs and improve patient outcomes. To deliver on our mission, we intend to:
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Build a leading cell therapy company leveraging our comprehensive iPSC-derived allogeneic cell therapy platforms designed to overcome the limitations of existing cancer therapies. We have created comprehensive allogeneic cell therapy platforms that include industry-leading iPSC differentiation know-how, CRISPR-mediated precision gene editing, sophisticated protein engineering capabilities, proprietary Allo-EvasionTM technology, and cutting edge manufacturing capabilities. We believe the incorporation of these elements into our platforms affords us numerous advantages over autologous and donor-derived differentiated T, NK and other cell therapies, and may eliminate many of the challenges inherent in these other cell therapy modalities.
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Maximize the potential to treat a broad range of cancers by exploiting the distinct biologies of both NK and T cells. We are initially developing our CAR-iNK and CAR-iT cell therapy platforms for multiple indications including lymphoma, glioblastoma, acute myeloid leukemia and other solid tumor and hematological malignancies. We anticipate each platform will have a distinct biology that influences its function, and accordingly, the disease settings in which it is best suited for development. We view this dual development strategy as an opportunity to maximize the potential benefits of each platform and its associated immune cell. In the future, we may develop therapies that simultaneously incorporate both CAR-iNK and CAR-iT cells in the treatment of individual patients.
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Leverage our Allo-EvasionTM technology across our product platform to avoid host rejection and enable repeat dosing. Central to the potential clinical performance of our iPSC-derived cell therapies is our novel and proprietary Allo-EvasionTM technology, which we intend to implement across our entire product platform. This proprietary technology allows us to engineer cells designed to avoid recognition and rejection by the host immune system. Furthermore, it enables repeat dosing, which we believe will enable us to immediately reinforce the immunological line of defense as cells dosed previously succumb to immune exhaustion and provide our cell therapies the benefit of enhanced durability and persistence. We believe this may reduce or possibly eliminate the need for immune preconditioning regimens, and enhance the
recruitment of host immune cells to participate in the anti-tumor response. We believe these advantages could enable the implementation of more flexible and effective dosing protocols for our off-the-shelf product candidates, which we anticipate will increase physician and patient access.
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Exploit serial gene editing of iPSCs to create product candidates with enhanced functionalities and fit for purpose product characteristics. We utilize CRISPR-mediated precision gene editing that allows us to incorporate multiple transgenes and knock-outs to achieve precise genetic modifications at defined locations in the iPSC genome. Our first clinical product candidate, CNTY-101, will incorporate six gene edits, which we believe are essential attributes necessary for meaningful clinical performance, including a CAR to mediate tumor recognition and killing, features to evade immune rejection and a safety switch to enable product elimination if ever necessary. We believe this initial set of gene edits will form the foundation for follow-on product candidate development. Additionally, we believe our investment in our gene editing technology will allow us to expand upon our current capabilities and integrate further fit for purpose gene edits intended to enhance clinical performance of our future product candidates.
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Leverage our own manufacturing infrastructure, product and process understanding, and scale-up technologies to minimize manufacturing risk. We are strategically investing in manufacturing across all aspects of the value chain to become leaders in the industry. We are building internal manufacturing facilities that we believe will enable us to learn and iterate more rapidly and increase control of development timelines for expedited clinical development of high quality products. We will continue to invest in process and analytical development capabilities and closely study our cell process parameters that affect product quality. Furthermore, we intend to establish expertise in scale-up technologies designed to enable optimal manufacturing scale, which will reduce cost of goods and improve patient access.
Background
The role of NK cells and T cells in the human immune system
The human immune system is comprised of two integrated systems, the innate immune system and the adaptive immune system. The innate immune system involves an immediate, non-specific response to recognize and protect against foreign pathogens based on broadly conserved pathogen associated molecular patterns and generally lacks pathogen or disease-specific immune memory.
Innate immune system—NK Cells
Cytotoxic NK cells are part of the front-line innate immune response, and in this capacity, monitor the body for signs of pathogens or signals of disease. NK cells have the unique ability to selectively identify and destroy abnormal cells through multiple direct and indirect mechanisms while leaving normal healthy cells unharmed. These mechanisms include (i) direct innate killing by binding to stress ligands expressed by diseased or dysfunctional cells and releasing toxic granules and perforins, (ii) indirect killing by producing and releasing proinflammatory cytokines that play a pivotal role in orchestrating the adaptive immune response, and (iii) antibody-mediated targeted killing by binding to cells targeted for elimination through a process known as antibody-dependent cellular cytotoxicity.
Adaptive immune system—T Cells
The adaptive immune system is characterized by antigen-specific immune responses mediated by T and B cells. T cells are distinguished from other immune system cells by the presence of a T cell receptor, or TCR, on their surface. TCRs are activated through engagement with antigens on the major histocompatibility complex, or MHC, of cells. In humans, these antigens are known as human leukocyte antigens, or HLAs. Upon antigen recognition, CD8 T cells, also referred to as cytotoxic lymphocytes, or CTLs, bind to the MHC-antigen complex, become activated and destroy the targeted cell. The adaptive immune responses require several days to develop because T and B cells need to undergo clonal expansion before they can mount an immune response. The innate and adaptive immune systems also differ on the longevity of the immune response. After elimination of the pathogen, T and B cells can persist for decades as memory cells and quickly respond to new challenges by the
same pathogen. We seek to take advantage of the unique properties of T cells and their proven anti-cancer activity to engineer iPSC-derived T cell products.
Cellular immunotherapy and its use in the treatment of cancer
Cellular immunotherapy is a type of immunotherapy that focuses on modulating or enhancing the activity of different lymphocytes, in particular CTLs and NK cells, to treat cancer. The cells are typically engineered with receptors that redirect them to recognize and destroy tumor cells. A frequently used approach for cellular immunotherapy involves CARs on the surface of a lymphocyte that enable the CTL or NK cell to recognize specific antigens that are present on the surface of tumor cells.
At one end of the CAR is single or multiple binding domains that engage one or more target antigens. These binding domains are exposed to the outside of the engineered lymphocyte, where they can recognize the target antigen or antigens. To enable the engineering of multi-specific CARs, we use camelid VHH antibodies.
Our use of camelid VHH antibodies enables our design of multi-specific binding domains
As illustrated above, our CAR constructs incorporate VHHs. VHH domains are derived from a camelid antibody, a type of antibody found in camels, llamas and sharks, that consists of a heavy chain only with one variable region. This structure gives us greater design flexibility, including the use of concatemers that target multiple epitopes on the same antigen (biparatopic CARs) or multiple tumor antigens (bi- or tri-specific CARs).
In 2017, the U.S. Food and Drug Administration, or FDA, approved the first two CAR-T based cell therapies for the treatment of certain types of hematological cancers. They are axicabtagene ciloleucel, sold by Gilead Sciences under the brand name Yescarta®, and tisagenlecleucel, sold by Novartis under the brand name Kymriah®. Subsequently, Gilead Sciences’ Brexucabtagene autoleucel, branded Tecartus®, was approved in July 2020 and Bristol Myers Squibbs’ lisocabtagene maraleucel, branded Breyanzi®, received FDA approval in February 2021. Yescarta®, Kymriah® and Breyanzi® are approved for the treatment for relapsed or refractory large B-cell lymphoma, and Yescarta® is also approved for relapsed or refractory lymphoma and Tecartus® is approved for the treatment of relapsed or refractory mantle cell lymphoma. These therapies are autologous and made from T cells first collected from the patient, which are then genetically modified and administered back to the same patient. While these therapies represent a significant development milestone for the cellular therapy field overall, a significant percentage of patients who receive these therapies ultimately relapse. To date, no CAR-based cell therapies using NK cells have received FDA approval.
Advancements in cell therapy approaches have enhanced treatment alternatives for patients
Cell therapy has built on the success of already approved autologous CAR-T cell therapies. Allogeneic therapy, which uses lymphocytes donated by a healthy donor as the starting material, is designed to overcome several limitations inherent in the autologous approach. We believe the use of iPSC-derived cells further expands the therapeutic potential of cell therapy beyond those that utilize healthy donor-derived NK or T cells.
Evolution of targeted cell therapies in cancer
Limitations of autologous CAR-T therapies
Autologous CAR-T therapies have many characteristics that we believe limit their therapeutic potential. These therapies necessitate an individualized and lengthy manufacturing process, resulting in increased wait times for patients, limited product availability and increased supply chain complexity and cost. Additionally, patients may have undergone multiple therapeutic regimens such as chemotherapy or radiation treatment that may negatively impact the health of the donor cells. Damaged or weakened donor cells may not be able to properly proliferate, resulting in manufacturing failure or insufficient potency.
Limitations of healthy donor-derived allogeneic CAR-NK and CAR-T therapies
Allogeneic CAR-T and CAR-NK therapy uses lymphocytes donated by a person other than the patient as the starting biological material. Since the manufacturing process for allogeneic therapies is not individualized, allogeneic approaches enable immediate treatment availability and the opportunity to distribute cost across a larger number of doses, lowering the manufacturing cost per dose. Manufacturing healthy donor cells in larger batches provides the opportunity for more rigorous quality control and the production of engineered cells of a more consistent character while reducing the risk of manufacturing failure. While these benefits address some of the key limitations of autologous CAR-T therapies, allogeneic approaches still face challenges, including:
GvHD.
Graft versus host disease, or GvHD, is a serious and life-threatening condition triggered when donor T cells recognize the recipient as non-self and initiate a powerful immune response against the recipient. This recognition is mediated by TCR engagement with the HLA expressed on organs of the recipient. Conversely, allogeneic CAR-T cells may be recognized as foreign to the recipient’s body and eliminated by the recipient’s immune system. CAR-NK cells do not express a TCR, and therefore the use of iNK cells does not trigger GvHD.
Host versus graft rejection.
In a similar fashion, allogeneic CAR-T cells may be recognized as foreign by the recipient’s immune system, leading to their rejection. The patient’s immune system being sensitized to the allogenic CAR-T also precludes the ability for the cells to be effectively re-dosed. Both outcomes diminish the ability of the infused cells to attack the cancer.
Limited gene editing potential.
Allogeneic approaches that utilize differentiated lymphocytes are limited to just a few genetic edits. One edit utilized consistently across all allogeneic approaches is the addition of a CAR. Furthermore, elimination of the HLA-I is another typical edit. The number of edits that can be introduced into the genome of differentiated NK cells or T cells is limited, as each engineering step requires cells to replicate and too many expansion cycles often result in cell exhaustion.
Finite replication capacity.
Once donor cells have been sourced and modified, they must be expanded into a quantity sufficient for therapeutic efficacy. The number of doses that can be produced from a single donation of blood is limited, such that multiple donations will be needed over the lifetime of a product. Therefore, genetic modifications must be performed in their entirety following each donation. Furthermore, all blood, even from the same donor collected at different times, has some degree of variability and, as a result, product comparability from donation to donation must be demonstrated. In addition, the number of edits that can be introduced into the genome of NK cells or T cells is severely limited, as each engineering step requires cells to replicate. Too many expansion cycles often result in cell exhaustion, with the engineered lymphocytes (white blood cells) expressing checkpoint molecules, often accompanied by a loss of functionality.
Advantages of iPSC vs. donor-derived approaches
An iPSC is a type of stem cell that can be generated directly from a functionally differentiated somatic cell such as a blood cell, skin cell or bone cell. IPSC-derived cell products offer what we believe are significant technical and manufacturing advantages compared to both autologous and other allogeneic approaches. IPSC cells can propagate indefinitely and can act as a progenitor cell for other cell types, including the different types of immune cells. Our in-licensed iPSC technology allows us to reprogram differentiated cells to become iPSCs and to then differentiate the iPSCs to generate different immune cell types including NK cells and T cells. We believe some of the advantages offered by iPSCs are:
Receptive to complex genetic editing.
We believe that iPSCs are far more amenable to multiple genetic manipulations than donor-derived NK cells and T cells because iPSC cells can undergo multiple rounds of replication without loss of functionality. In contrast, differentiated cells used in donor derived allogeneic approaches are limited to just a few genetic edits, which can impact their overall functionality. The number of edits that can be introduced into the genome of differentiated NK cells or T cells is limited because each engineering step requires cells to replicate and too many expansion cycles often result in cell exhaustion and loss of functionality.
Significant replication capacity.
iPSCs are derived from single cell clones, which are used to construct a master cell bank capable of providing a sufficient number of doses for the life of a product due to the unlimited replicative capacity of iPSCs.
Streamlined manufacturing and consistent product.
The use of a single master cell bank allows iPSC-derived products to be produced with greater consistency, at the greatest possible scale and at reduced cost compared to donor-derived NK cells or T cells.
We believe that iPSC-derived cell therapies provide meaningful advantages over other modalities and have the potential to disrupt the oncology treatment paradigm.
Stages of iPSC gene editing, characterization, and clonal selection
Stages of iPSC gene editing, characterization, and clonal selection prior to the generation of the engineered iPSC master cell bank (MCB). Genetic engineering of our product candidates occurs exclusively at the iPSC stage, where the cells have unlimited replicative capacity and pluripotency. In the above figure, we highlight the multiple steps required for selection of the final CNTY-101 clinical candidate. Gene edited iPSCs from multiple donors were enriched for having the introduced transgenes and knockouts and subsequently cloned at the single cell level. Uniform expression of the transgenes and knockouts was confirmed, and clones were evaluated for their growth potential, genetic profile, differentiation potential into iNK cells, in vitro functionality, and in vivo performance (tumor growth inhibition, persistence and toxicity).
Our rationale for developing both iNK and iT allogeneic cell therapy platforms
We are focusing on two immune effector cell platforms, CAR-iNK and CAR-iT. We anticipate each platform will have a distinct biology that influences its function, and accordingly, the disease settings in which it is best suited for development. We view this dual development strategy as an opportunity to maximize the potential benefits of each platform and its associated immune cell. In the future, we may develop therapies that simultaneously incorporate both CAR-iNK and CAR-iT cells in the treatment of individual patients. We believe that gene engineering and control over differentiation during manufacturing may mitigate some of the liabilities of a given cell type while preserving the most desirable features. Examples of this include the potential reduction of the risk of GvHD in iT cells through the use of TCRs that are not expected to cause GvHD, which we refer to herein as Trusted TCRs, or the potential extension of cell persistence of NK cells through the addition of cytokine signaling to promote survival. Finally, there are also clinical settings in which a putative shortcoming inherent to one cell type (e.g., short persistence of NK cells) might confer an advantage (e.g., when targeting AML antigens that are also expressed on some normal hematopoietic progenitors, enabling a chance for normal cell recovery between doses). Ultimately, the development of both platforms enables a unique opportunity to merge the intrinsic biology of these lymphocyte subsets with desirable engineering attributes to tailor therapies best suited for the clinical path being pursued.
Development of CAR-NK and CAR-T platforms: distinct biology influences disease-specific applications
Our proprietary technology and differentiated approach
Advanced cell engineering expertise further differentiates our iPSC-derived allogeneic cell therapies
Our research and development team includes personnel with deep expertise in cell engineering. Cell engineering encompasses two critical components: genome engineering and protein engineering. We believe robust expertise in both these areas is of critical importance to realizing the potential of our iPSC-derived allogeneic cell therapy platforms. Genome engineering involves the manipulation of the cellular genome, through the use of genetic manipulation strategies including genetic knock-outs, knock-ins and HDR, to enable the creation of optimized cell products specifically tailored to address a particular disease. Protein engineering refers to the engineering and incorporation of CARs and other transgenes such as stimulatory cytokines, allo-evasive molecules, safety switches, and reporter proteins to generate highly functional cell therapies. We leverage these integrated capabilities to potentially enable our cell therapies to persist longer, to overcome detection by the host immune system and to elicit an enhanced therapeutic effect.
End-to-end development of product candidates
Common engineered iPSC progenitor
All of our product candidates include a set of core features to increase their functionality, safety, and persistence. These features include (i) our Allo-EvasionTM technology to enable the cells to avoid detection by the host
immune system; (ii) a safety switch to allow for the rapid elimination of the cells from the patient if necessary; (iii) the inclusion of a homeostatic cytokine, IL-15, which promotes increased functionality and persistence in vivo, and is specific to NK cell therapy candidates; and (iv) a positron emission tomography, or PET, reporter molecule to allow for tracing of the distribution of cells upon administration, a capability we intend to include in our future product candidates. Our lead product candidate, CNTY-101, already incorporates the first three of these features. We plan to build all of these core features into a “common engineered iPSC progenitor” which will be utilized in the creation of a master cell bank. Further engineering to advance a development candidate for a specific target is then limited only to the addition of a CAR construct, allowing the generation of multiple product candidates targeting different indications from a single iPSC progenitor.
A single engineered iPSC progenitor can be used for multiple product candidates
Highly efficient engineering processes
We have designed highly efficient engineering processes to generate our product candidates. During the engineering process, we frequently combine the knock-out of specific genes with the knock-in of transgenes we seek to express. In the case of CNTY-101, our lead product candidate, we incorporate six gene edits into three engineering steps to combine the knock-out of two genes (beta-2-microglobulin, or β2m, and Class II Major Histocompatibility Complex Transactivator, or CIITA) with the knock-in of four transgenes (HLA-E, EGFR safety switch, IL-15, and CD19 CAR). The specific steps include (i) knock-out of β2m to eliminate HLA-I expression with the knock-in of HLA-E, (ii) knock-out of CIITA to eliminate HLA-II expression with the simultaneous knock-in of the EGFR safety switch and IL-15 and (iii) knock-in of the CAR construct into the adeno-associated virus insertion sequence 1, or AAVS1, locus.
Engineering steps used to generate our CNTY-101 clinical candidate
These modifications are enabled by our innovative use of advanced biological engineering tools and technologies coupled with the application of internal expertise. We use CRISPR-based nuclease to enable precise editing of the iPSC genome. For CNTY-101 we used the nuclease Cpf-1 but have shifted to CRISPR-MAD7 for all subsequent programs for commercial reasons. In addition to our license from Inscripta, Inc. to use CRISPR-MAD7, we also have a license from Inscripta, Inc. to access the sequence of the enzyme which allows us to develop proprietary protocols to produce and purify the enzyme in-house as well as optimize its use to edit the genome. We have optimized our use of CRISPR-MAD7 to enable CRISPR-mediated homologous recombination and repair of multiple edits per iPSC.
CRISPR mediated homologous recombination/repair
Advantages of our proprietary Allo-EvasionTM technology
We believe that our Allo-EvasionTM engineering technology will allow our cell product candidates to escape recognition and destruction by the host immune system. We believe the reduction in allogeneic reactivity enabled by our use of this technology will allow us to conduct repeat dosing of our CAR-modified cell therapies to improve therapeutic efficacy. In combination with the extended killing capability of optimized immune cells
derived from single genetically engineered cell cloning, we envision utilizing repeat dosing to maximize durability of response and efficacy. Additionally, we believe this technology may permit dosing in patients with limited or no immune preconditioning regimens.
The potential of Allo-EvasionTM using NK inhibitory ligands
Preventing recognition of allogeneic iNK cell product candidates by T cells and NK cells from immune competent recipients. Genetic knockout of genes necessary for HLA I and II molecule expression removes the targets of recognition by allogeneic CD8+ and CD4+ T cells respectively, but renders the cells susceptible to killing by recipient NK cells (middle panel). Introduction of the NK inhibitory ligand HLA-E into the product candidate (right panel) delivers a negative signal to recipient NK cells that protects them from elimination.
Illustrative potential of PK of Allo-EvasionTM
Future generations of our cell therapies will embrace an extended range of capabilities
We envision future generations of our iPSC-derived allogeneic cell therapy platforms to incorporate additional capabilities. For instance, we are working on new approaches to lessen the effects of immunosuppressive cytokines, increase the secretion of pro-inflammatory cytokines, improve tumor homing through engineered receptors, convert immune checkpoints into co-stimulatory signals and recruit and activate endogenous immunity. We believe therapeutic enhancements such as these may be particularly relevant to cell therapies intended to treat solid tumors. In addition, we intend to engineer into our iPSCs a PET reporter molecule to enable the imaging of the patient to trace the distribution of the administered cells.
Future product candidates will be designed to embrace a potentially extended range of capabilities
To achieve our objective of discovering, developing and ultimately commercializing innovative cell therapies to treat cancer, we believe our core competencies and capabilities must extend well beyond a knowledge of iPSCs. In addition to deep capabilities in cell engineering, we believe the expertise needed in-house must also include iPSC biology, oncology, immunology, and manufacturing which are essential to engineer and develop cell therapies that have a high likelihood of clinical success.
Manufacturing, product quality and COGS advantages
We believe our use of iPSCs, which have unlimited replicative capacity, will allow us to develop a streamlined manufacturing process with scalability advantages while producing consistent, high quality, off-the-shelf products at reduced manufacturing costs. Given the unlimited replicative capacity of iPSCs, we believe that a single master cell bank can be used for the lifetime of the product.
We intend to develop expertise in scale-up technologies to enable optimal manufacturing scale. To achieve this goal, we are building a team of process development engineers and scientists as well as manufacturing and quality staff with experience in scaling cell expansion, cell harvest and final product filling processes. In addition, we are leveraging knowledge from other modalities, such as allogeneic mesenchymal stromal cell therapies, live virus vaccines, and therapeutic proteins such as monoclonal antibodies, to identify and develop scalable technologies intended to enhance our manufacturing and production processes. We believe that these efforts will ultimately result in efficiencies of scale and reduced manufacturing costs for our products. We intend to increase our investment in scale-up technology as our product pipeline advances through clinical trials towards commercialization.
We are investing in internal manufacturing facilities and capabilities that we believe will enable us to analyze, learn and adapt more rapidly, reduce manufacturing costs and increase control of development and manufacturing timelines for efficient clinical development and, if approved, commercial production of our product candidates. A key aspect of our investment in internal manufacturing facilities and capabilities includes the construction of our Current Good Manufacturing Practices, or cGMP, manufacturing facility in Branchburg, New Jersey. We anticipate that this facility will become operational by the end of 2021. This multi-product, multi-phase facility will have the capabilities and capacity to manufacture both NK and T cells, as well as other immune cell types, for complete optionality.
We believe that having access to our internal manufacturing facility, along with that of FCDI, will increase clinical supply availability and provide us with manufacturing and developmental flexibility. Furthermore, the expertise and learnings at each site can be leveraged for a greater probability of success on any project at either site. We
believe this manufacturing network, along with our commitment to develop expertise in process scale-up and process understanding, will enable more efficient manufacturing and clinical development with lower cost of goods and consistent product quality.
Off-the-shelf commercialization opportunity for iPSC-derived allogeneic cell therapy platform derived product candidates
Allogeneic cells that can be cryopreserved offer the inherent advantage of off-the-shelf availability. Unlike autologous products, which cannot be produced until patient material is collected, the timing for manufacturing of allogeneic products is not dependent upon the patient. Primary donor cells can be collected and genetically modified well in advance of manufacturing, and manufacturing can be planned such that product is always readily available off-the-shelf for patients.
While cell therapies can be cryopreserved, cell quality may be negatively impacted by the freezing and thawing cycle. To combat this, we are making a significant investment in the development of robust and reliable freezing and thawing methods through rigorous examination of pre-freezing conditions that might affect the freeze/thaw, freezing parameters such as excipient types and concentrations, freezing temperature profiles, container configurations, and thawing conditions. The optimization of the many parameters that go into these steps will be enabled by the development of reliable quality testing procedures that measure the critical quality attributes of the product. We believe investing in these procedures and methods will help ensure that our cryopreserved cells maintain their quality through the freezing and thawing process.
Preclinical profiles or characteristics of development candidates
Our product platforms
iPSC-derived iNK cell platform
Multiple processes have evolved to allow for the differentiation of an iPSC into an immune cell. Many of these approaches involve platforms that use various signaling molecules, referred to as feeder cells, to facilitate iPSC differentiation. We have engineered our iNK cell platform so that that it is feeder cell-free, which simplifies the manufacturing process and further reduces manufacturing costs.
Differentiation of iPSCs to functional immune cells involves a series of process stages conducted under strictly controlled conditions, with different cytokine mixtures introduced at different process stages. IPSCs are initially differentiated into hematopoietic progenitor cells, or HPCs, during which they assemble into three-dimensional aggregates. Cells from these aggregates bud off and are replated onto different tissue culture vessels coated with a specific extracellular matrix and exposed to a cytokine cocktail that promotes differentiation of the HPCs to NK cells, a process that takes fourteen days. After differentiation, cells are incubated for seven days to activate the NK cells. We are currently capable of achieving fully functional iNK cells from iPSCs in 30 days.
The phenotype of iPSC-derived NK cells is similar to primary human NK cells
We have intentionally focused on the parameters that define immune cell functionality to direct internal development initiatives. This focus is intended to improve upon the intellectual property licensed from FCDI. Accordingly, the parameters which have been the primary drivers of our activities have been cell persistence, killing potential and lack of induced toxicities, among other considerations. At the same time, we also characterize the cells phenotypically. As evidenced in the comparison presented above, NK cells derived from our iPSC-derived allogeneic cell therapy platforms are similar to primary human NK cells recovered from peripheral blood, with the phenotypic markers we evaluated displaying close alignment and the slight differences observed reflecting expected person-to-person variation.
Assessment of these cells’ functionality demonstrates their potential for tumor cell cytotoxicity. Through a series of in vitro studies we evaluated the various mechanisms through which iNK cells eliminate tumor cells. As is presented below, one of the mechanisms used by NK cells to kill tumor cells involves the recognition of tumor cells lacking HLA-I by innate immune receptors. Using a leukemic cell line, K562, that lacks HLA molecules, we noted that the cell killing capacity of our iNK cells closely mirrored that of NK cells isolated from peripheral blood.
Our iNK cells kill K562 tumor cells similarly to PBMC peripheral NK cells
Century’s iNK cells and peripheral blood mononuclear cell, or PBMC, NK cells were incubated with K562 tumor cells labelled with NuclightRed, or NLR, for 72 hours. Cocultures were imaged every 3 hours on the Incucyte live cell imager. Upon cytolysis the target cells lose their NLR signal. Tumor cell index measures the density of tumor cells in the wells and is calculated as (tumor and iNK well at time x / tumor only well at time x) / (tumor and iNK well at first time point) * 100.
The addition of a CAR construct to the NK cell introduces a second mechanism by which tumor cells are eliminated. Our iPSC-derived NK cells demonstrated CAR-mediated tumor-cell killing of CD19 lymphoma cells, or Raji cells, comparable to peripheral blood CAR-Ts engineered with the same CAR construct.
Our CAR-iNK cells kill lymphoma cells similarly to peripheral blood CAR-T cells
Our CAR-iNK cells and peripheral blood CAR-T cells were incubated with Raji tumor cells labelled with NLR for 60 hours. Cocultures were imaged every 3 hours on the Incucyte live cell imager. Upon cytolysis the target cells lose their NLR signal. Tumor cell index measures the density of tumor cells in the wells and is calculated as (tumor and iNK well at time x / tumor only well at time x) / (tumor and iNK well at first time point) * 100.
Our iNK cells also demonstrate the ability to engage and kill cancerous cells through multiple challenge rounds. In an evaluation of sustained killing capability, the results of which are presented below, we observed that iNK cells were successful in eliminating lymphoma cells through seven killing cycles before evidence of cell exhaustion and a decrease in cytolytic activity was observed. These results suggest that not only are the cells capable of retaining functionality and the ability to proliferate, but that the cytolytic machinery and signaling mechanism connecting target recognition to effector immune cells maintains sustained durability as well.
Our CAR-iNK cells have robust serial killing activity against lymphoma cells
Our CAR-iNK cells were incubated with Reh tumor cells labelled with NLR for multiple rounds of killing. Every 72 hours, the iNK cells were transferred to new tissue culture wells containing fresh tumor cells and allowed to kill for 72 hours. Cocultures were imaged every 3 hours on the Incucyte live cell imager. Upon cytolysis the target cells lose their NLR signal. Tumor cell index measures the density of tumor cells in the wells and is calculated as (tumor and iNK well at time x / tumor only well at time x) / (tumor and iNK well at first time point) * 100. Loss in killing activity was observed between rounds seven and eight.
The tumor-killing potential of our iNK cells was confirmed through in vivo evaluations. Raji lymphoma cells were administered intravenously to mice that were then dosed three consecutive days with both non-engineered and CAR-modified iNK cells, which had also been engineered to express the IL-15 cytokine. Tumor growth was then monitored over the following 20 days. As is illustrated in the graph below, the CAR-IL15 iNK cells showed meaningful anti-tumor activity, with tumor growth inhibition shown to be as high as 84.7%. Notably this study was conducted using bulk engineered material, prior to single cell cloning, which we believe has the potential to enhance anti-tumor activity.
Our CAR-iNK cells have robust anti-tumor activity in vivo
The above chart displays Daudi tumor growth inhibition, or TGI, of mice treated with CD19-CAR-iNK cells administered under three different dose schedules. Average radiance, bioluminescence, or BLI of mice bearing intraperitoneal Daudi lymphoma xenografts, treated with CD19-CAR-iNK cells. Mice were implanted intraperitoneal with 1x105 cells Daudi-Fluc cells on Day 0 and CD19-CAR-iNK cells were administered intravenously at 1x107 cells per mouse on Days 1, 4, 8, 15, 18, and 22 as indicated by the arrows above.
In addition, to enhanced functionality, the engineered IL-15 has shown an identifiable benefit to persistence. As is presented in the illustration below, we observed viable iNK cells in the lungs and peripheral blood of mice 20 days after a single administration of CAR-iNK cells with IL-15, a result which was not noted in mice administered CAR-iNK cells without the addition of the cytokine.
The addition of a homeostatic cytokine significantly enhances iNK persistence
IPSC-derived iT cell platform
In addition to NK cells derived from our iPSC-derived allogeneic cell therapy platforms, we are also advancing the development of iPSC-derived T cells. The therapeutic properties offered by T cells, such as large in vivo expansion capacity, extended immune memory and the potential inclusion of engineered TCRs for additional tumor killing capacity, provide compelling reasons supporting their inclusion in our anti-cancer cell therapy arsenal. However, the development of allogeneic T cell-based therapies requires addressing unique challenges, such as GvHD. GvHD occurs when allogeneic donor T cells recognize an HLA class I and class II molecules on host cells and induce a severe and potentially life-threatening immune response against the host tissues. This is a challenge we plan to overcome by selecting Trusted TCRs that do not mediate GvHD.
We are exploring two major T cell subsets to develop our iT cell platform
Proprietary Trusted TCR constructs enable our generation of TrueTTM cells
Many companies that are pursing the development of allogeneic T cell therapies engineer T cell with an intentionally deleted TCR to eliminate the risk of GvHD. We have taken a fundamentally different approach; we
believe that retention of the TCR is of significant importance, particularly to iPSC-derived T cells, as it helps with the differentiation and functionality of iPSC-derived T cells. We have devised strategies to utilize αβ or γδ TCRs on iPSC-derived T cells while minimizing risk of GvHD. In general, our approach capitalizes on selection of Trusted TCRs.
γδ T cells do not recognize hypervariable HLA class I or II receptors. Instead, γδ TCRs recognize ligands that are mostly invariant between individuals and these TCRs are unlikely to mediate GvHD. We leverage this characteristic of γδ chains to engineer iPSC lines with Trusted TCRs to create T-iPSC line that will be used to differentiate iT cell products. There are also special scenarios where an αβ TCR can have properties that lessen or eliminate the risk for GvHD, such in the case of some TCRs specific for viral antigens or the invariant αβ TCR expressed by, natural killer T cells, or NKT cells. We are pursuing γδ and αβ Trusted TCR approaches because γδ and αβ T cells have meaningfully different biological properties that can be explored for different tumor indications. Because of the importance of the TCR in normal T lymphocyte development, we call iPSC-derived T cells that express a Trusted TCR TrueTTM cells as a contrast to T cell engineered without a TCR.
For any TrueTTM cell approach there are two main strategies that can be deployed to make iPSC-derived T cells. The first is to begin with a T cell from a healthy donor where the TCR identity is known (either a γδ T cell, NKT cell or conventional αβ T cell). Such T cells can be isolated, expanded, and purified. Then the desired T cell, which carries the desired rearranged TCR genes, is reprogrammed to generate iPSCs that carry the same TCR genes. We call these T cell-derived iPSCs T-iPSCs and they can be used to produce T cells with the desired TCR. We have developed proof of concept for this approach using T-iPSC lines that were reprogrammed using peripheral blood γδ T cells. A second approach is to use iPSC that were derived from a non-T cell and thus lack a rearranged TCR. In this scenario, the desired TCR is selected and synthesized as a transgenic construct. Then the desired TCR is engineered into iPSCs such that T cells that are produced from the iPSCs will carry the engineered TCR. We have developed proof of concept for approached using an iPSC line that was derived from non-T cells, in this case CD34+ peripheral blood hematopoietic cells, where we introduced a viral-specific TCR.
Differentiation of TrueTTM cells results in cells that co-express TCR and CD3 and can utilize an engineered CAR for target cell killing
The process for differentiating T cells from iPSC is a multistage in vitro system that includes several growth factors and key ligands that mimic the developmental signals found in the human thymus where T cells normally develop. We have refined protocols to differentiate T cells from both T-iPSC and TCR-engineered iPSCs.
For γδ T cells, the current process yields T cells that uniformly express the γδ TCR and CD3. These iPSCs have been engineered to express a CD19 CAR for initial proof of concept studies. When the iPSC-derived γδ T cells are exposed to CD19-expressing lymphoma cells, the lymphoma cells are killed in an antigen-specific manner.
Differentiation of γδ CAR-iT cells from T-iPSC
A T-iPSC line that was derived from a γδ T cell was used to differentiate γδ T cells using a process that takes approximately 5-6 weeks. At the end of the process, cells were collected and stained for flow cytometry. The left panel demonstrates co-expression of CD3 and the γδ TCR on the cell surface of resulting iT cells. Because the T-iPSC line was also engineered with a CAR transgene, the CAR protein was also detected on the surface of these iT cells.
γδ CAR-iT cells kill CD19-expressing lymphoma cells
CAR-iT cells were used in a tumor cell killing assay on an IncuCyte instrument. For this study, Reh cells, a CD19-expressing lymphoma line was used. PBMC CAR-T are PBMC-derived T cells that have been engineered to express the same CAR molecule, which have been added as a control for this study. When CD19-positive Reh cells were exposed to CAR-T cells, both iPSC-derived and PBMC-derived CAR-T cells mediated tumor killing.
For conventional αβ T cells, the current process yields iT cells that uniformly express the αβ TCR and CD3. These iPSCs were also engineered to express a CD19 CAR to evaluate their tumor cell killing activity. When the iPSC-derived αβ T cells were exposed to CD19-expressing lymphoma cells, the lymphoma cells were killed in an antigen-specific manner.
Differentiation of αβ CAR-iT cells from T-iPSC
A T-iPSC line that was derived from a αβ T cell was used to differentiate αβ T cells using a process that takes approximately five to six weeks. At the end of the process, cells were collected and stained for flow cytometry. The left panel demonstrates co-expression of CD3 and the αβ TCR on the cell surface of resulting iT cells. Because
the T-iPSC line was also engineered with a CAR transgene, the CAR protein was also detected on the surface of these iT cells (right panel).
αβ CAR-iT cells kill CD19-expressing lymphoma cells
CAR-iT cells were used in a tumor cell killing assay on an IncuCyte instrument. For this study, Reh cells, a CD19-expressing lymphoma line was used. PBMC CAR-T are PBMC-derived T cells that have been engineered to express the same CAR, which have been added as a control for this study. When CD19-positive Reh cells were exposed to CAR-T cells, both iPSC-derived and PBMC-derived CAR-iT cells mediated tumor killing.
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Serial killing of CD19+ tumor cells by CAR-γδ-iT cells is comparable to PBMC-derived CAR-T cells. The serial killing assay was performed using an Incucyte instrument where viable tumor cells expressed Nuclight Red and were enumerated every 3 hours based on Red Calibrated Units, or RCU, a measure of total red fluorescence. At the beginning of the culture, 1e5 CAR-γδ-iT or CAR-T were added to each well followed by addition of 2e4 NALM-6 target cells (Nuclight Red+). Cells were cultured in complete medium with 10 ng/ml rhIL-15. Every 24 hours, 2e4 fresh NALM-6 cells were added to the culture and data was recorded for 10 days. Increasing RCU indicates daily addition of new targets and/or outgrowth of tumor cells. Decreasing RCU indicates tumor cell killing by γδ CAR-iT cells or PBMC CAR-T cells.
Collectively, we have made significant progress in deriving iPSC lines that carry Trusted TCRs as well as refining the differentiation process to generate TrueTTM cells that express a TCR and a CAR. The cells mediate robust killing
of lymphoma cells when their CAR is engaged. We believe that we have put in place the fundamental building blocks to continuing the advancement of our iT cell platform to generate iPSC-derived αβ and/or γδ T cell therapies for different tumor indications.
Our development candidates
We are assembling a portfolio of allogeneic iNK and iT cell therapy product candidates across solid tumors and hematological malignancies. This pipeline is comprised of cell therapies that will address diseases where we believe current therapies are inadequate. Our product candidates incorporate our proprietary Allo-EvasionTM technology which is designed to avoid host rejection and potentially increase the durability of clinical responses. With the exception of our lead product candidate, CNTY-101, each of our product candidates is designed to target multiple tumor antigens. We currently anticipate filing an IND for our lead product candidate, CNTY-101, targeting B-cell lymphoma, in mid 2022. Our second product candidate, CNTY-103, is designed to treat glioblastoma, and we currently anticipate filing an IND in the first half of 2023. Our third product candidate, CNTY-102, is designed to further improve B-cell malignancy treatment, and we are planning an IND in the second half of 2023. Our fourth product candidate, CNTY-104, is being developed to treat AML with the IND expected in mid 2024. Our development programs consist of the product candidates illustrated in the pipeline chart below:
(1)
We are party to an option agreement with Bayer HealthCare LLC, or Bayer, pursuant to which Bayer was granted certain bidding rights relating to the potential transfer of rights with respect to certain product candidates being researched and developed by us which are comprised of iNK cells, macrophages or dendritic cells, including CNTY-101, CNTY-103 and any other product candidate comprised of iNK cells that we develop in the future. Bayer’s rights under the option agreement are subject to important limitations. See “—Licensing, partnership and collaboration—Bayer HealthCare LLC—Option Agreement” for more information.
CNTY-101: Our CAR-iNK candidate targeting CD19 for relapsed, refractory B-cell lymphoma
Disease background
B-cell lymphoma is a cancer that affects B lymphocytes that make up part of the immune system. It generally originates in the lymph nodes. B-cell lymphoma includes both Hodgkin’s disease and approximately 80% to 85% of patients diagnosed with non-Hodgkin’s lymphoma, or NHL, a disease classification that includes more than 50 different hematological malignancies. In the United States, approximately 70,000 cases of NHL are diagnosed each year and the number of new diagnoses is increasing each year as the median age in the United States increases. 30-40% of these patients will relapse or have disease refractory to current treatments.
Current treatment and shortcomings
Treatment of non-Hodgkin’s lymphoma is dependent on disease designation. Indolent disease may be treated with localized radiation or simply monitored for disease progression, at which time the disease is often treated with rituximab, with or without chemotherapy. Aggressive disease is treated with chemotherapy if diagnosed in the earlier stages of disease progression or with combination of rituximab and chemotherapy if diagnosed in the more advanced stages. While aggressive NHL is curable, indolent disease currently is not.
In aggressive large B-cell lymphomas, existing FDA-approved CD19 CAR-T cell therapies show overall response rates of 50-80%, complete response rates of 30-40%, and where longer term follow up data is available, a three year survival rate of 47%. They are also shown to be effective in aggressive and indolent lymphoma
subpopulations and are in active testing in second line lymphoma. While these treatments have transformed care, significant medical need still exists in the relapsing and progressing patients that remain, with additional limitations of the autologous therapies described herein. As such, there is active investigation of several allogeneic B-cell targeting CAR-T therapies and B-cell targeting CAR-NK cell therapies in lymphoma.
Our therapeutic approach and development program
Our lead product candidate, CNTY-101, is an allogeneic, iPSC-derived CAR-iNK cell product for the treatment of B-cell lymphomas. CNTY-101 has been engineered with the following features:
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expression of CD19 CAR to target malignant B cells. Our CAR construct uses the FMC63 scFv and the signaling domains of CD28 and CD3ζ;
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knock-out of HLA-I and HLA-II to escape elimination by the patient’s CD8 and CD4 T cells;
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knock-in of HLA-E to avoid killing by the patient’s NK cells;
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expression of IL-15 to provide homeostatic cytokine support to improve persistence and functionality; and
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incorporation of an EGFR safety switch to allow for elimination of the product if necessary.
The safety switch consists of a shorter version of the extracellular domain of EGFR, which binds to clinically approved antibodies, such as Cetuximab, which can trigger product elimination through antibody-dependent cellular cytotoxicity, or ADCC, or antibody-dependent cellular phagocytosis, or ADCP.
We believe the modifications described above may lead to treatments with greater potency, persistency and durability. As the CD19 target and the FMC63-CD28z CAR have has been validated by existing FDA-approved CAR-T therapies, we believe target-related risks have been significantly diminished, as the approved CAR-T cell products have been shown to improve remission rates and improve overall survival in patients with various B-cell malignancies. The inclusion of a validated CAR construct in our first product candidate eliminates a key variable, i.e. the performance of a novel CAR construct, better enabling our Allo-EvasionTM engineered iNK platform to be validated in the initial studies. The validity of this therapeutic approach is further supported by a M.D. Anderson clinical trial of CAR-NK cells targeting CD19 used in the treatment of relapsed or refractory NHL and chronic lymphocytic leukemia, or CLL, patients. In that trial, eight of the 11 patients responded to treatment with seven patients achieving complete remission.
CNTY-101 and CD19 CAR construct
Left panel: engineered features of CNTY-101. Right panel: structure of the CD19 CAR construct used in CNTY-101
We have completed engineering of iPSC lines from five different donors and single cell cloning of numerous iPSC lines. The single cell clones are undergoing genotype and phenotype identity, purity, safety, manufacturability, and
in vitro and in vivo functional testing. CD19 iNK single cell clones demonstrate significant cytotoxicity in vitro comparable to CAR-T controls, and numerous cycles of serial killing after repeated challenge with lymphoma cells. CNTY-101 single cell clones also demonstrate IL-15 expression and persistence in vivo, as well as in vivo tumor growth inhibition. We expect clinical candidate clone selection in the first half of 2021, and plan to move into IND-enabling preclinical and technical studies and manufacturing at that time. We currently anticipate filing an IND in mid 2022 to advance CNTY-101 into a Phase 1 clinical trial.
Preclinical studies and selection of the final product candidate for CNTY-101
To identify the CNTY-101 clinical candidate, we engineered iPSC lines from five different donors. The initial characterization studies were done with bulk cells prior to single cell cloning (bulk-engineered cells), and we have now generated additional data with single-cell clones. To identify the candidate, we have narrowed down to six clonal cell lines derived from two donors. The initial evaluation of the Allo-EvasionTM features and safety switch was done on bulk-engineered iPSC lines.
Allo-EvasionTM studies with bulk-engineered CAR-iNK cells
To prevent recognition of our CAR-iNK cells by CD8 T cells from the patient, we eliminated the expression of the HLA-I by deleting β2m, a protein that is required for the expression of HLA-I molecules on the cell surface. Our current Allo-EvasionTM data has been generated with bulk-engineered iNK cells prior to single cell clonal selection. However, even with bulk-engineered cells where a small percentage of cells (1.6%) in the population still retains HLA-I, it is clear that the deletion of β2m significantly diminishes the allo-reactivity of allogeneic CD8 T cells against our iNK cells. In the final clinical candidate clones for therapeutic products, HLA-I will be uniformly absent from all iNK cells.
Elimination of HLA-I prevents allogeneic immune recognition of iNK cells by CD8 T cells
Elimination of HLA-I prevents allogeneic immune recognition of iNK cells by CD8 T cells. To determine if removal of HLA-I via β2m knock-out prevents recognition of iNK cells by allogeneic T cells, a mixed lymphocyte reaction, or MLR, was performed with CD8 T cells from six allogeneic donors. Allogeneic T cells show virtual no proliferation when incubated with iNK cells that do not express HLA-I (B2Mko iNK), in contrast with iNK cells expressing HLA-I (iNK).
Deletion of HLA-I prevents the recognition of our iNK cells by allogeneic T cells, but on the other hand, it exposes the iNK cells to killing by the patient’s NK cells. NK cells can sense the lack of HLA-I as a danger signal (missing self-hypothesis) and eliminate HLA-I negative cells. As part of our Allo-EvasionTM technology, we engineered the expression of HLA-E, a monomorphic MHC Class I related molecule to prevent the killing of the HLA-I null iNK cells. HLA-E engages an inhibitory receptor, NKG2A on NK cells and prevents their cytolytic activity. Our data with bulk-engineered iNK cells indicates that HLA-E is effective in mitigating the killing of the null iNK cells.
Expression of HLA-E prevents killing of iNK cells
that have been engineered to prevent HLA-I expression
In contrast with HLA-I null iNK cells, which are killed by allogeneic NK cells, HLA-I null iNK cells engineered with HLA-E are mostly protected from killing by allogeneic NK cells.
Evaluation of the EGFR safety switch with bulk engineered CAR-iNK cells
CNTY-101 is engineered with a safety switch that can be triggered to eliminate the cells if ever necessary. Our switch includes a shorter version of the EGFR extracellular domain, anchored to the plasma membrane. This form of EGFR binds to cetuximab, a clinically approved antibody we plan to use as a trigger for the safety switch. Cetuximab engages FcγR on innate immune cells, such as NK cells and macrophages, to eliminate EFGR-expressing cells through ADCC or ADCP. Our preliminary data from in vivo studies indicates that the cetuximab effectively triggers the elimination of iNK cells engineered with our EGFR safety switch from different tissues including blood, liver, and lungs.
Elimination of iNK cells using EGFR safety switch
NSG mice were intravenously infused with 1x107 CD19iNK and one day later treated with 40 mg/kg cetuximab or rituximab (as a control). On Day 8, mice were humanely euthanized and whole blood, liver, and lung samples were collected and analyzed for the presence of iNK cells.
Single-cell cloning of engineered iPSC from different donors to identify the final clinical candidate
We have now completed the single cell cloning of engineered iPSC lines from three different donors. The single cell clones have been characterized for the expression of NK cell markers and the inserted transgenes. Selected clones were then characterized genetically by karyotype analysis, copy number variations, transgene copy number and insertion fidelity, and, finally, whole genome sequencing. The phenotype and genotype positive clones were progressed to an iNK differentiation, in vitro functional and manufacturability screens. We have narrowed down the number of candidates to six clonal lines from two different donors. These lines are being evaluated in vivo for final clinical candidate selection, which is set to occur in the first half of 2021. We anticipate filing an IND in mid 2022 and subsequently advance CNTY-101 into a Phase 1 clinical trial.
CNTY-101 lead discovery funnel to identify final clinical candidate
Selected single-cell clones express engineered transgenes in virtually all cells after expansion
We have run a series of phenotypic assays and transgene expression characterization to narrow down the list of top candidates to six iPSC lines. After expansion in culture, the cell populations derived from single cell clones are highly uniform. Virtually all cells from all clones are CD45+, CD56+, CD3- indicating that these cells are NK cells. In addition, the cells uniformly express the CAR, HLA-E, and EGFR (safety switch) transgenes indicating that our product candidate clones are highly uniform when assessed for phenotypic markers.
Transgene expression and purity of iNK cells
Transgene expression and purity of day 21 iNK clones as measured by flow cytometry. All clones were >97% iNK cells defined as live/CD45+/CD56+/CD3- (top left panel). Transgene expression (CAR, EGFR, and HLA-E) was measured on total live population after expansion of the single cell clones.
Functional analysis of iNK cells generated from individual iPSC clones reveals meaningful differences in the in vitro persistence and killing capacity of clinical candidates.
In addition to assuring uniform transgene expression in the clones under consideration for clinical candidate selection, we compared two in vitro functional attributes across clones that could influence their ability to inhibit tumor growth. The first is the cell-intrinsic capacity to persist in culture in the presence or absence of CD19 expressing tumor targets in the absence of exogenous cytokine support. As seen in the figure below, there was a meaningful difference between clones in the recovery of iNK cells after a seven day culture, with three clones demonstrating particularly favorable persistence.
Average iNK cell number as measured by flow cytometry at the conclusion of the 7 day persistence assay. iNK cells were cultured alone or in co-culture with CD19+ NALM6 or REH cells at an effector to target ratio of 1:1 in the absence of any exogenous cytokine support for 7 days and then analyzed by flow cytometry. The iNK cell population was defined as live, CD45+, CD56+cells.
Single-cell clones mediate serial killing of lymphoma cells
In addition to the persistence demonstrated above, for cell therapies to be effective in eliminating cancer cells, single CAR-T or CAR-NK cells need to be able to engage and kill multiple tumor cells in succession a process commonly described as serial killing. To evaluate the fitness of our CAR-iNK cells, we established a serial killing assay in which iNK cells are put through multiple rounds of killing with fresh tumor cell targets added every 24 hours. This is one of our most relevant in vitro assays to characterize and distinguish CAR-iNK cell clones. Our most potent clones (iPSC611, iPSC387, iPSC384) sustain serial killing activity for over ten rounds of killing. These clones have now progressed to in vivo studies for characterization of their anti-tumor activity against human lymphoma xenografts. These in vivo studies will determine the final choice of the iPSC clone that will be selected to generate the CNTY-101 clinical candidate.
Serial killing assay with single-cell iNK clones
To demonstrate the ability of our clonal CAR-iNK cells to kill lymphoma cells over multiple rounds of tumor challenge, NuclightRed labeled Nalm-6 CD19+ lymphoma cells were cocultured with iNK clones at an E:T ratio of 5:1. The
plates were imaged every three hours to record the frequency of tumor cells by recording red fluorescence (Red Calibrated Unit, or RCU). Every 24 hours, new tumor cell targets were added to the wells. Differences in repeated killing are apparent with some clones having tumor serial killing for over ten rounds whereas others show loss of tumor control after five rounds of tumor killing.
Preliminary assessment of CD19 CAR-iNK cell clone inhibition of tumor growth in vivo
The clones that performed best in the persistence and serial killing assays shown above were advanced into in vivo tumor growth inhibition studies. The CD19 expressing NALM6 lymphoma model was used in a mouse xenograft model to determine the impact of the three leading clones (as determined above) on tumor growth. Tumor was established on day zero and iNK cells derived from single-cell clones (iPSC384, iPSC387, iPSC611)or bulk engineered iNK cells (iPSC300) were administered intravenously on days 1, 8, and 15. As predicted, each of the three lines derived from single-cell clones mediated significant anti-tumor growth inhibition which was greater than CD19 CAR-iNK cells derived from the bulk culture (iPSC300).
Single-cell clones eliminate CD19+ B cells
One of the key hallmarks of approved CD19 CAR-T cell therapy is the observation that patients who respond to treatment have B-cell aplasia (loss of B cells). Because normal B-cells express CD19, B-cell aplasia is expected during CD19 CAR-T cell treatment and has been used as a pharmacodynamic indicator of CAR-T cell activity. To determine whether our CD19 CAR-iNK cells eliminate normal B cells, we used B cells from four different allogeneic donors and incubated them with our top candidate iNK single cell clones. After 48 hours in culture, all iNK clones showed robust killing of B cells with complete elimination in most assays. This data indicates that B-cell aplasia should be expected during treatment of lymphoma patients. B-cell aplasia is expected to benefit our Allo-Evasion™ strategy by further reducing the chance of patients mounting a humoral anti-iNK cell antibody response.
Elimination of B Cells in Co-cultures of PBMCs with CAR-iNK Cells Derived from Single-Cell Clones
Elimination of normal B cells from whole PBMCs by our top candidate iNK single-cell clones. To evaluate B-cell killing activity in-vitro, CAR-iNK cells derived from six single-cell clones were co-cultured for 48 hours with PBMCs from four healthy donors. The PBMCs were labeled with cell trace violet (CTV) and cocultured with CAR-iNK clones at an effector: Target ratio of 1:1. B-cells were defined as CTV+/CD45+/CD19+ and the reduction in B-cell numbers graphed as a percentage of the total B-cells present in the co-culture conditions compared to the “No Effector” condition for each donor (set at 100%). Samples were run on BD Symphony A3 cytometer and the data is represented as average of the four PBMC donors with error bars representing standard deviation.
Our CNTY-101 clinical development program
We believe the successful development of CNTY-101 will enable us to establish clinical proof of concept for our CAR-iNT cell therapy and Allo-EvasionTM technology. CNTY-101 is projected to enter preclinical and technical IND-enabling studies and manufacturing this year, supporting an IND filing in the middle of 2022.
We intend to initiate a first-in-human Phase 1 clinical study in the United States in 2022, in relapsed and refractory large B-cell lymphoma, or RR NHL, patients including dose escalation and expansion portions, designed to evaluate the safety, tolerability, pharmacokinetics, persistence, efficacy, and recommended Phase 2 dose and schedule of CNTY-101. We plan to assess both CD19-naïve and CD19-CAR-T treated patients who have relapsed. We will evaluate dose and dosing schedule, and characterize repeat dosing and its impact on safety, persistence, and efficacy. Depending on FDA feedback on our study design, we’re expecting to be able to evaluate preliminary safety in several patients approximately six months after study start and preliminary efficacy approximately nine to twelve months after study start. CNTY-101 will allow for benchmarking, where safety and efficacy can be compared to the available results for mono-specific CD19 autologous and allogeneic therapies that also utilize the FMC63 binder and CAR.
The primary objective of the Phase 1 clinical study will be to evaluate incidence and nature of dose-limiting toxicities within each dose level cohort. The secondary objectives of the study will include cell pharmacokinetics and persistence, incidence, nature, and severity of adverse events, overall response rate, complete and partial response rates, and duration of response, among other measures. Exploratory measures will include evaluation of immunogenicity, correlation of antigen expression with response, and cytokine profile as a reporter of safety.
We believe CNTY-101 may provide significant treatment advantages including (i) as a result of our ability to repeat dose, the potential to enhance objective response rates, or ORRs, and the duration of response, or DoR; (ii) the potential to treat patients immediately upon diagnosis since product is available off-the-shelf; and (iii) the potential to use milder lymphodepletion regimens by reducing or eliminating the immunogenicity and alloreactivity of the administered cells, potentially providing an improved safety profile. Off the shelf availability of CNTY-101 at any clinical site, and, a potentially improved safety profile enabling outpatient use, could improve patient access. For these reasons, we believe CNTY-101, if approved by the FDA or other applicable regulatory authorities, will address substantial unmet market needs for an off-the-shelf, safe and effective cell therapy offering an improved therapeutic profile.
CNTY-103: Our CAR iNK candidate targeting CD133 + EGFR for recurrent glioblastoma
Disease background
GBM is the most aggressive cancer that originates in the brain and accounts for 15% of all brain cancers. There is no known cure for this form of cancer and as such, GBM represents a significant unmet medical need. Treatment for GBM involves surgery followed by chemotherapy and radiation and is considered only palliative as patient relapse is virtually inevitable. Surgical removal of the tumor mass is often complicated by tumor growth into critical regions or the brain, which cannot be excised surgically. While Avastin® and Gliadel® have been approved for use in the treatment of recurrent GBM, their therapeutic benefit is modest. Duration of survival after diagnosis is generally 12 to 15 months with treatment, 3 months without treatment. Recurrence is virtually inevitable, with short survival times and no effective therapies.
Our therapeutic approach
We are pursuing a novel and differentiated approach to the treatment of recurrent GBM using allogeneic iNK cells. Our initial GBM product candidate, CNTY-103, is a dual-targeted CD133 + EGFR iNK, Allo-EvasionTM technology enabled product, engineered to express IL-15, a safety switch to allow for cell removal and possibly a PET reporter for imaging of the cells after administration to the patients. A dual-target should advantage our treatment strategy, as GBM tumor cells have high target heterogeneity. We believe an iNK cell product will minimize clinical safety risks such as cytokine release syndrome, and our ability to locally administer may minimize systemic toxicity and could eliminate the need for lymphodepletion, allowing older and less fit patients to have access to treatment. CNTY-103 represents our first clinical candidate targeting a solid tumor.
CNTY-103
Through our June 2020 acquisition of the assets of Empirica Therapeutics Inc., or Empirica, we gained access to a broad set of assets to enable the development of novel cell therapies for GBM. This acquisition brought us significant GBM expertise, direct access to tumor tissue from GBM patients, new potential targets for GBM CARs, novel, proprietary preclinical models of GBM, and access to an established laboratory to conduct development activities. These models involve the administration of the human tumor xenografts into mouse brains and delivery of the cell therapy candidates directly to sites in the brain where the tumor cells were implanted. These xenograft GBM models have been used to demonstrate the potential utility of CD133 CAR-T therapy to treat GBM. As seen in the data presented below, the CD133 CAR originally developed by Empirica demonstrates compelling anti-tumor activity against three different GBM tumors that express CD133.
CD133 CAR-T cells display strong in vivo anti-tumor activity against GBM xenografts
As is depicted in the cross-sectional images presented below, results achieved in an in vivo mouse model provide further evidence of the utility of CD133 as a therapeutic target. Tumor cells were implanted into the brains of mice and the mice administered either a CAR-control or a CAR targeting CD133. The image on the left, which reflects tumor growth, is representative of mice dosed with the control CAR. Mice treated with the CAR-targeting CD133 through intracranial delivery, shown on the right, displayed significant tumor shrinkage.
CD133 targeted CARs significantly reduced tumor burden in preclinical in-vivo studies
Tumor shrinkage leads to increased survival, as outlined in the graph below.
Tumor shrinkage led to improved survival
Mice intracranially treated with CART133 cells have improved survival compared to mice treated with control CART cells (p = 0.0027).
Epidermal growth factor receptor (EGFR) is a well-known oncogene expressed in multiple tumors. Tumors frequently overexpress wild-type and mutant EGFR, including the EGFRvIII variant which is expressed in a fraction of GBM tumors. EGFR gene amplification and overexpression is present in about 40% of GBM and amongst the tumors with amplified EGFR, about 50% express EGFRvIII. We plan to engineer the EGFR-CAR for CNTY-103 to bind both the wild-type and EGFRvIII variant.
CNTY-103 may also allow for additional therapeutic benefit, taking advantage of the ability to administer the cells directly into the brain and repeat dosing to enhance response durability. Current treatment of GBM commonly utilizes the insertion of a catheter through the cranium directly into the tumor space or brain ventricles. We envision mitigating the challenge of therapeutic delivery across the blood-brain barrier through the use of this intracranial port. We believe that accessing the tumor site using an indwelling catheter may not only facilitate localized trafficking of the therapeutic cells to the tumor and limit the need for lymphodepletion, but also significantly diminish issues related to potential systemic toxicity. In addition, we believe the administration of the CAR-NK cells into the brain eliminates the need to use lymphodepletion, which is not tolerated by older patients or patients with low performance status.
We anticipate filing an IND and/or CTA to begin a Phase 1 clinical trial of CNTY-103 for the treatment of recurrent GBM in the first half of 2023. As CNTY-103 is our first solid tumor product candidate, Phase 1 development will include clinical proof of concept. The primary objectives of the Phase 1 study will be safety and tolerability, and we will also assess cell pharmacokinetics and persistence, and GBM efficacy and translational measures, including response rate, tumor volume, minimum residual disease, median progression free survival, and overall survival. Upon positive Phase 1 clinical trial results, we would move to develop through registration for use in recurrent GBM, as well as consider evaluating CNTY-103 further in earlier GBM populations.
CNTY-102: Our CAR-iNK or CAR-iT candidate targeting CD19 + CD79b for relapsed, refractory B-cell lymphoma and other B-cell malignancies
Our next-generation product candidate directed to treat B-cell malignancies is CNTY-102, an iPSC-derived Allo-EvasionTM technology enabled, CAR-iNK or CAR-iT cell therapy designed to simultaneously target two tumor antigens, CD19 and CD79b. CNTY-102 will also be engineered with homeostatic cytokine support, a safety switch to be utilized for cell elimination if required clinically and possibly a PET reporter for imaging of the cells after administration to the patients. Our use of a multi-targeted CAR is intended to increase depth and durability of
response by eliminating the effect of CD19 antigen loss that has been observed as a factor limiting durability of CAR-T cell therapies, as well as taking advantage of targeting CD79b, an independently regulated, ubiquitous and validated B-cell target.
CNTY-102
We are actively investigating both iNK and iT cell platforms for this product, as either may have preferential clinical features: iT cells are expected to have high proliferative capacity, persistence, and trafficking, leading to sustained anti-tumor activity, while iNK cell products are intrinsically active against tumor cells, traffic in the hematopoietic compartment where lymphoma is localized, and so far have demonstrated reduced clinical safety risks (e.g., limited observation of cytokine release syndrome). We currently envision filing an IND for CNTY-102 in the second half of 2023.
Preliminary clinical safety, translational (exploratory biomarker) and efficacy data will be emerging from the CNTY-101 Phase 1 trial at the time we plan to file the CNTY-102 IND, which will allow us to refine the CNTY-102 clinical design and allow for an in depth comparison. We intend to evaluate CNTY-102 in a Phase 1 clinical trial in relapsed, refractory aggressive B-cell NHL, chronic lymphocytic leukemia, or CLL, and/or B-cell acute lymphoblastic leukemia, or B-ALL. We will assess safety, tolerability, pharmacokinetics, persistence, and efficacy, with primary objectives of the Phase 1 to evaluate and compare depth and durability of response, as we believe dual tumor antigen targeting will significantly improve the efficacy profile. Additional Phase 1 objectives include determining the recommended Phase 2 clinical trial dose, schedule, and lymphodepletion conditions.
CNTY-104: Our CAR-iNK or CAR-iT multi-specific candidate for the treatment of acute myeloid leukemia
Disease background
AML is the most common form of acute leukemia, with 20,000 patients per year diagnosed in US. AML is an aggressive, heterogeneous hematopoietic malignancy characterized by genetic abnormalities in myeloid stem cells. 5-year overall survival, or OS, among patients with AML aged <60 years is ~ 35%, with 5-year OS among patients >60 years ~ 11%, reflecting a high unmet need to improve survival and quality of life for the majority of patients with AML. First line therapy includes a combination of cytarabine- and anthracycline-based regimens with allogeneic stem cell transplantation for eligible candidates, and recently approved, targeted therapies for specific mutations. Approximately 50% of patients relapse after achieving a complete remission in AML, leading to a poor prognosis. Allogeneic hematopoietic cell transplantation, or Allo-HCT, after achieving a second
remission, likely offers the only possible current chance for cure. Despite numerous clinical studies, outcomes are consistently disappointing with 5-year overall survival rates of ~ 10%.
Our therapeutic approach
We are developing a multi-specific CAR-iNK or CAR-iT cell product candidate to treat relapsed, refractory, and secondary AML. CNTY-104 is a CAR-iNK or CAR-iT product candidate designed to target at least two tumor-associated antigens of relevance in AML. We are currently investigating four tumor targets to select the final candidates for the CNTY-104 product candidate. CNTY-104 will include a safety switch and possibly a PET reporter for imaging of the cells after administration to the patients.
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Use of CAR-T cell therapies have been limited to date in myeloid malignancies due to the heterogeneity of AML cells, and, the absence of antigens that are not also expressed on normal hematopoietic stem progenitor cells. Cell therapy approaches targeting these specific antigens have often led to prolonged myeloablation, causing risk of infection and transfusion dependence in patients. As such, we are planning to create a multi-specific CAR-iNK or iT product that allows for controlled dosing and controlled persistence (e.g. enabling resting periods) to enable elimination of AML blasts while mitigating toxicities to the bone marrow. This approach may provide an improvement in treatment efficacy, tolerability, and safety. There may be an advantage to evaluate an iNK cell product, pending characterization of in vivo pharmacokinetics and persistence, but we will evaluate both cell platforms to engineer CNTY-104. We currently envision filing an IND for CNTY-104 in mid 2024.
Discovery platform
In addition to our named programs, we are actively engaged in a number of earlier stage discovery programs where we believe our IPSC-derived allogeneic cell therapy platform may provide differentiated therapeutic benefits. These discovery stage initiatives are focused on several solid tumor indications including bladder cancer and renal cell carcinoma. For these indications we plan to use multi-specific CARs and explore the use of both iNK and iT cells to identify the best cell platform to build the product candidate.
We have initiated multiple VHH antibody campaigns to identify binders to build the CAR constructs for the prioritized tumor indications. These campaigns are at different stages of development and include targets for bladder cancer and targets for renal cell carcinoma. Our goal is to do side by side comparisons of the different CARs to select the final CAR constructs for the product candidates. We plan to have these CARs ready in 2022 and add them to the common engineered iPSC progenitor.
We intend to evaluate the use of engineered macrophages and dendritic cells in the future as potential anti-cancer cell therapies. We believe the function of these immune cells may enable both standalone use as well as their inclusion in potent effector cell cocktails where the complementary engagement of the different immune cells reinforces and enhance overall therapeutic efficacy against different type of tumor malignancies.
Manufacturing
We believe that our iPSC-derived NK cells and T cells afford us a significant opportunity to advance multiplex gene-edited cell therapies that can be produced at substantially lower cost and accessible by a much larger patient population as compared to other donor-derived and autologous cell therapy approaches. To capitalize on these advantages, we believe it is imperative to develop an intimate understanding of the relevant cell types, the processes used to manufacture these cells, and the analytical methods required to accurately and reliably measure critical product attributes. We believe this understanding will enable us to produce safe and efficacious products, implement process and product changes with greater efficiency and accelerate the clinical development of commercializable products. In addition, we intend to develop a significant depth of expertise related to scale manufacturing, which we believe is essential to enable cell expansion, harvest and final container filling, along with cryopreservation, at a significantly reduced per dose cost. We have constructed our manufacturing strategy with the intent of achieving these objectives.
We believe that our relationship with FCDI and its role in the manufacture of our initial product candidates has provided valuable know-how that accelerated development of our proprietary methods to generate functional iPSC-derived iNK cells. We believe that our optimized iPSC differentiation methods are scalable and compatible with efficient manufacturing processes. Our process development group is responsible for overall management of process optimization efforts and we have contracted with FCDI to provide us with process development services on an ongoing basis.
Current activities with FCDI are focused on enhancements to NK cell production. As the protocols for cryopreservation of NK cells are not as well established as the protocols for T cell freezing and storage, we believe that addressing the key determinants of cryopreservation is of particular relevance to the success of our more advanced therapeutic programs. The ability of NK cells to withstand cryopreservation depends not only on the freezing step itself, but on multiple factors in the entire manufacturing process both preceding and following freezing, including the thawing process and post-thaw handling prior to patient administration. As such, all factors involved in the supply chain, from initial cell engineering to patient administration, are being addressed to characterize the impact of cryopreservation on NK cells, especially its impact on yield, activity, stability and consistency. We have invested significant resources to optimize our manufacturing process and continue to iteratively invest in this area. We are also committing additional resources to ensure that adequate infrastructure and expertise is available at clinical sites regarding handling and treatment preparation.
Effective cryopreservation strategies must consider all elements of the supply chain
We intend to source clinical supply of CNTY-101 from FCDI. FCDI currently maintains a cGMP compliant manufacturing facility in Madison, Wisconsin and our audit of the facility confirmed its Phase 1 readiness. We also intend to source clinical trial supply for our other iNK product candidates, and we will have the option to source NK cell therapies to be sold commercially, if approved, from FCDI. At the same time, we are investing in the
construction of our own 53,000 square foot cell therapy manufacturing facility in Branchburg, New Jersey. We anticipate that this facility will become operational by the end of 2021. While we intend to use this facility as the primary manufacturing site for CAR-iT cell therapies, we have designed the facility to be a flexible, multi-product facility, capable of producing any immune cell type, and thereby serving as an alternative manufacturing site for our CAR-iNK cell therapies as well.
We believe the development of in-house manufacturing will enable us to analyze, learn and adapt more rapidly and increase control of development and manufacturing timelines for efficient clinical development of our product candidates. Through this enhanced control and investment in our process and analytical development capabilities, we believe we will gain a deeper understanding of our critical product attributes and better understand the factors that affect product quality. We also intend to develop expertise in scale-up technologies to enable optimal manufacturing scale for our product candidates, which will reduce cost of goods and improve patient access.
Licensing, partnerships and collaborations
Fujifilm Cellular Dynamics, Inc.
We are party to an exclusive license with FCDI, dated September 18, 2018, pursuant to which we have licensed from FCDI certain patents and know-how related to differentiation of iPSC cells into immune-effector cells in the field of cancer immunotherapeutics, or, as amended, the Differentiation License. We are also party to a non-exclusive license with FCDI, also dated September 18, 2018, pursuant to which we have licensed from FCDI certain patents and know-how related to the reprogramming of human somatic cells to iPSCs in the field of cancer immunotherapeutics, or, as amended, the Reprogramming License. On October 21, 2019, we entered into a Master Collaboration Agreement with FCDI pursuant to which we agreed to fund research and development work at FCDI pursuant to a research plan, or, as amended, the Collaboration Agreement. On March 23, 2021, we entered into a Manufacturing and Supply Agreement with FCDI, or the Manufacturing Agreement, pursuant to which FCDI will provide certain agreed upon technology transfer, process development, analytical testing and GMP manufacturing services to us.
Differentiation License Agreement
Under the Differentiation License, FCDI granted us an exclusive, fully paid-up, sublicensable, worldwide, excluding Japan, license under certain patent rights and know-how related to human iPSC to exploit cancer immunotherapy products consisting of cells that are or are modifications of NK cells, T cells, dendritic cells and macrophages derived from human iPSC, or FCDI Licensed Products. In return, we granted FCDI an exclusive, fully paid-up, sublicensable license under certain patents and know-how controlled by us to exploit FCDI Licensed Products for any cancer immunotherapy use in Japan or, with respect to any abandoned indication, worldwide, and a non-exclusive license to manufacture the FCDI Licensed Products for any cancer immunotherapy use worldwide until the termination of the Differentiation License. We also granted to FCDI a non-exclusive, sublicensable, worldwide license under certain manufacturing know-how developed by us under the Differentiation License or Collaboration Agreement for manufacturing and process development activities outside of the field of cancer immunotherapy for cells other than NK cells, T cells, dendritic cells and macrophages derived from human iPSC until the termination of the Differentiation License.
Under the Differentiation License, FCDI has an option, executable once a product candidate meets its primary endpoint(s) in a Phase 2 clinical trial, to exploit FCDI Licensed Products in Japan or, with respect to any abandoned indication, worldwide. If FCDI does not exercise its option, we will have the right to exploit FCDI Licensed Products in Japan, and we and FCDI will amend the Differentiation License as necessary to permit such exploitation. In consideration for the Differentiation License, Prior Century issued 7,500,000 shares of common stock to FCDI, which were exchanged for 7,500,000 shares of common stock in connection with the Reorganization.
The Differentiation License expires upon the expiration of the last-to-expire patent licensed thereunder, which is currently expected to expire in 2036. Either party may terminate the Differentiation License upon the other party’s
breach of any material obligation, subject to a 60-day notice and cure period, or in the event of the other party’s bankruptcy, if not dispensed or otherwise disposed within 60 days. We may terminate the Differentiation License in its entirety or on an indication-by-indication basis, a product-by-product basis or country-by-country basis, for convenience upon 90 days’ written notice. In addition, FCDI may terminate the Differentiation License if we fail to achieve certain development milestones. FCDI may also terminate the Differentiation License upon written notice in the event of termination of Reprogramming License.
The Differentiation License also contains customary representations and warranties, confidentiality, insurance and indemnification provisions.
Reprogramming License Agreement
Under the Reprogramming License, FCDI granted us a non-exclusive, worldwide, excluding Japan, license under certain patent rights and know-how related to cell reprogramming of human cells to iPSCs to exploit FCDI Licensed Products within the field of cancer immunotherapeutics. Included within the rights granted to us under such license are rights sublicensed to us under certain patents owned by the Wisconsin Alumni Research Foundation, or WARF, relating to the “Thompson Factors” for reprogramming human cells to iPSCs, pursuant to a license agreement between FCDI and WARF, or the WARF License. In return, we granted FCDI a non-exclusive, fully paid up, sublicensable license to manufacture or practice developments made by us in Japan and to practice developments made by us to manufacture FCDI Licensed Products worldwide until the termination of the Reprogramming License. We also granted to FCDI a non-exclusive, sublicensable, worldwide license under certain developments made by us under the Reprogramming License to make, have made, use, have used, research and develop iPSCs for activities outside of the field of cancer immunotherapy, so long as such rights are not used in conjunction with any other technology to differentiate iPSCs into NK cells, T cells, macrophages, or dendritic cells.
Under the Reprogramming License, we agreed to pay FCDI low single-digit percentage royalty payments on net sales of FCDI Licensed Products, as required by the WARF License, until the expiration of the last-to-expire patent licensed thereunder. We also agreed to pay certain milestone payments to FCDI as required by the WARF License upon the achievement of certain development and commercial milestones up to an aggregate of $6 million per FCDI Licensed Product.
The Reprogramming License expires upon the expiration of the last-to-expire patent licensed thereunder, which is currently expected to expire in 2034. Either party may terminate the Reprogramming License upon the other party’s breach of a material obligation, subject to a 60-day notice and cure period, or in the event of the other party’s bankruptcy, if not dispensed or otherwise disposed within 60 days. We may terminate the Reprogramming License for convenience upon 90 days’ notice in its entirety or on a product-by-product or country-by-country basis. FCDI may terminate the Reprogramming License if we fail to achieve certain development milestones. FCDI may also terminate the Reprogramming License upon written notice in the event of termination of the Differentiation License.
The Reprogramming License also contains customary representations and warranties, confidentiality, insurance and indemnification provisions.
Master Collaboration Agreement
Under the Collaboration Agreement, we established a collaborative relationship under which FCDI agreed to render certain services to us for the development and manufacture iPSC-derived cells in accordance with a research plan and approved budget funded by us. For the first three years of the term of the Collaboration Agreement, we agreed to pay FCDI a minimum of $2.5 million per year.
Under the Collaboration Agreement, with certain exceptions, we have ownership rights to the deliverables made under the collaboration, including any intellectual property rights therein. Such exceptions include, among other things, deliverables that are cells obtained or created by changing the state of a cell to a state of pluripotency using methods or materials covered by the licensed patents, or Reprogrammed iPS Cells, or any compositions or
materials derived from the use of Reprogrammed iPS Cells, produced by the use of Reprogrammed iPS Cells or which incorporate wholly or partially Reprogrammed iPS Cells, which, in each case, will be owned by FCDI, unless directly or indirectly derived from or made from the cell lines selected by us pursuant to the terms of the Collaboration Agreement.
The Collaboration Agreement expires upon the termination of the Reprogramming License. Either party may terminate the Collaboration Agreement upon the other party’s material breach, subject to a 30-day notice and cure period. We may terminate the Collaboration Agreement for convenience after October 1, 2021 by providing FCDI 60-days’ written notice.
The Collaboration Agreement also contains customary representations and warranties, confidentiality and indemnification provisions.
Manufacturing and Supply Agreement
Under the Manufacturing Agreement, FCDI will perform certain agreed upon technology transfer, process development, analytical testing, and GMP manufacturing services for us with respect to clinical supply of our product candidates as agreed to in future work orders. The Manufacturing Agreement contains certain exclusivity provisions, which remain effective until the fifth anniversary of the Manufacturing Agreement, including that FCDI will be our exclusive clinical supplier for the first NK cell product candidate for which we submit an IND and that FCDI will have the option to be our exclusive clinical supplier for certain of our next three or four product candidates for which we may submit an IND, depending on whether they are NK cell product candidates or T cell product candidates. Subject to certain conditions, FCDI may also have the right to be the exclusive clinical supplier for the first product candidate for which we submit an IND after the fifth anniversary of the Manufacturing Agreement.
Either party may terminate the Manufacturing Agreement upon the other party’s material breach, subject to a 30-day notice and cure period, or in the event that the activities to be performed under the Manufacturing Agreement are unable to be performed for scientific or technical reasons and the parties are unable to resolve such issue within 60 days. We may terminate the Manufacturing Agreement for convenience after March 23, 2026 by providing FCDI 60-days’ written notice.
Bayer HealthCare LLC
Option Agreement
In June 2019, we entered into an option agreement with Bayer, or the Option Agreement, which was subsequently amended and restated in February 2021, pursuant to which Bayer was granted certain bidding rights relating to the potential transfer of rights with respect to certain product candidates being researched and developed by us which are comprised of allogeneic iPSC-derived natural killer cells, macrophages or dendritic cells, which we refer to as the Research Products. For clarity, T cell programs are excluded from the Bayer Option Agreement Research Products. Under the Option Agreement, Bayer was granted a right of first refusal, or ROFR, to submit bids for the transfer or license of rights to research, develop and/or commercialize certain Research Products, which we refer to as the Research Product Rights. The Research Products include CNTY-101, CNTY-103 and any other product candidate comprised of iNK cells that we develop in the future. Bayer’s ROFR is only exercisable with respect to up to four Research Products and the right terminates upon our tenth IND submission. Subject to certain exceptions, Bayer may only exercise these option rights in a non-sequential and alternating manner, and such rights are subject to additional limitations.
In the event that Bayer exercises its ROFR right, we will provide Bayer with our current, minimum offer terms with respect to the relevant Research Product Rights, or the Minimum Offer Terms, as determined by our Board (excluding any director appointed by Bayer), which will include (i) the minimum upfront cash proceeds to be received by us for the Research Product Rights and (ii) any other applicable licensing and financial terms. If Bayer’s bid does not meet the Minimum Offer Terms, Bayer’s ROFR rights with respect to that Research Product terminate except that Bayer will retain topping rights for future third party bids for that Research Product. If
Bayer’s bid meets the Minimum Offer Terms, we can accept the bid or seek a third party valuation to determine the fair market value of the Research Product Rights and Bayer will have the opportunity to match the third party valuation. If Bayer does not match the third party valuation, Bayer’s rights with respect to that Research Product terminate except that Bayer will retain topping rights for future third party bids for that Research Product that are less than the third party valuation. The Option Agreement also contains provisions regarding our receipt of an unsolicited bid for certain Research Product Rights prior to an IND submission for a Research Product under which Bayer will have the option to submit a competing bid or relinquish its rights with respect to the transfer of the applicable Research Product in connection with the unsolicited bid.
The Option Agreement terminates upon the earlier of (i) Bayer and its affiliates ceasing to hold any of our capital stock or (ii) a change of control of us, as defined therein. The Option Agreement also contains customary representations and warranties and confidentiality provisions.
iCELL Inc.
On March 20, 2020, we entered into an exclusive sublicense, or the iCELL Sublicense, with iCELL Inc., or iCELL, for certain patents related to an immune function reconstruction method using multipotent stem cells and the method for producing antigen specific T-cells, in each case, to research, develop and commercialize products in the United States, France, Germany, Italy, Liechtenstein, the Netherlands, Switzerland and the UK and any other countries where valid claims exist. Additionally, we received a non-exclusive license to such rights in Japan. The rights sublicensed to us under the iCELL Sublicense were licensed to iCELL by the University of Tokyo, or UTokyo, pursuant to an exclusive license agreement, or the UTokyo License. iCELL reserved for itself and for UTokyo an irrevocable, nonexclusive, royalty-free license to make and use certain non-public information for their own internal educational and research activities.
The initial term of the sublicense expires on the later of (i) March 31, 2027, or (ii) the expiration of the last-to-expire valid claim covering a licensed product, which is currently expected to expire in 2033. iCELL may terminate the agreement with 30 days’ notice if we have failed to make a payment within 60 days of such payment becoming due and we do not cure such breach within 30 days of written notice. We may terminate the agreement upon 90 days’ written notice if any third party brings a claim against us related to the licensed patents or technology and such claim is not settled within 90 days.
Pursuant to the iCELL Sublicense, we paid an upfront license issue fee in the low six-figures and we agreed to make low single-digit percentage royalty payments until the last-to-expire valid claim under the licensed patents to iCELL on certain net sales amounts of the products developed under the iCELL Sublicense, as well as commercial milestone payments on a country-by-country basis based on certain net sales amounts related to products developed under the iCELL Sublicense in the aggregate of $70 million. We also agreed to make certain milestone payments to iCELL upon the achievement of certain developmental and regulatory milestones in the aggregate of $4.25 million. Upon the termination of the UTokyo License, iCELL will use good faith efforts to assist us in exercising any rights available to us under the UTokyo License to become a direct licensee of UTokyo. The iCELL Sublicense also contains customary representation and warranties, confidentiality, insurance, audit, indemnification and miscellaneous provisions.
University of Toronto and McMaster University
On June 9, 2020, we entered into an asset purchase agreement by and among Empirica, our wholly-owned subsidiary Century Therapeutics Canada ULC, or Century Canada and us pursuant to which we purchased certain assets of Empirica, including a license agreement, or the Empirica License, dated January 22, 2019, by and among the Governing Council of the University of Toronto, or the Council, the McMaster University, or, together with the Council, the Toronto Universities, and Empirica. Under the Empirica License, we received an exclusive, non-transferable, sublicensable, worldwide license under certain patents and antibody sequences and related intellectual property rights and know-how to, among other things, reproduce, manufacture and commercialize certain CD-133 related antibody and antibody sequence-derived technology, including but not limited to BiTE and
bi-Specific or engineered T-Cells, including but not limited to CAR-Ts. The Toronto Universities reserve a royalty-free, non-exclusive, perpetual, irrevocable license to use such technology for non-commercial research, educational and administrative purposes.
The Empirica License expires upon the expiration of the last-to-expire valid claim covering the antibody and antibody-derived technology licensed under the agreement, which, if issued, is expected to expire in 2037. The Toronto Universities may immediately terminate the agreement upon certain insolvency events or upon our material breach with 30 days’ prior written notice and cure period. We may terminate the agreement for convenience upon 30 days’ written notice.
Pursuant to the Empirica License, we are required to make aggregate milestone payments of $18 million to the Toronto Universities upon the achievement of regulatory approval for certain products developed pursuant to the Empirica License in the United States, European Union and Japan until the expiration of the last-to-expire valid claim covering the antibody and antibody-derived technology licensed under the agreement. We are also required to make royalty payments to the Toronto Universities in an amount equal to a low single-digit percentage of annual net sales of any product commercialized utilizing technology licensed under the Empirica License. We are also required to pay the Toronto Institutions 50% of all non-royalty payments from sublicenses up to certain maximum amounts and 50% of royalty payments from sublicenses up to a maximum low single-digit percentage. The Empirica License contains customary representations and warranties, confidentiality, insurance, audit and indemnification provisions.
Inscripta
In January 2019, we entered into a non-exclusive license agreement with Inscripta, Inc. Under the license agreement, we obtained a non-exclusive, worldwide, royalty-free, irrevocable license to a patent portfolio covering the composition, production and use of CRISPR-MAD7, a novel gene-editing CRISPR endonuclease from the Eubacterium rectale genome. The license agreement does not contain any payment terms; thus no payments have been made, or will be made, to Inscripta under the license agreement. The licensed intellectual property includes two issued U.S. patents and any pending applications claiming priority therefrom. Our license covers the use of CRISPR-MAD7 to perform research and development in both academic and commercial setting and use of MAD7 to perform commercial services, provided that such use may not include the (i) sale or resale of MAD7, including as part of a therapeutic product, (ii) continued use of MAD7 in a commercial manufacturing process or (iii) use of MAD7 in the editing of human embryos. Such license will expire upon the expiration of the last valid claim under the licensed patents, which is currently expected to expire in 2037. These licensed issued patents and any licensed patents that may issue from these pending patent applications will expire in 2037, without giving effect to any patent term adjustment or extension.
Intellectual property
Intellectual property is of vital importance in our field and in biotechnology generally. We seek to protect and enhance our intellectual property, proprietary technology, inventions, and improvements that are commercially important to the development of our business by seeking, maintaining, enforcing and defending patent rights, whether developed internally or licensed from third parties.
We do not own any issued patents covering our product candidates, platforms or technology and our patent portfolio is currently comprised only of provisional patent applications. Additionally, we have not filed any patent applications related to our product candidates other than CNTY-101. We have also filed provisional patent applications relating to our T-cell platform related to compositions and methods for generating alpha-beta and gamma delta T-cells from iPSCs. Additionally, we have filed a provisional application on gene transfer vectors and methods of engineering iPSCs. We have sought patent protection in the United States related to our CNTY-101 product candidate, as well as other iPSC-derived engineered CAR cells comprising certain transgene insertions and deletions, including our proprietary Allo-Evasion™ technology. This portfolio covers compositions of programmed cellular immunotherapies, our proprietary Allo-Evasion™ technology and our platform for industrial scale iPSC engineering and differentiation. The portfolio also includes technology for a universal CAR cell platform. With
regard to such United States provisional patent applications, if we do not timely file any non-provisional patent applications, we may lose our priority date with respect to our provisional patent applications and any patent protection on the inventions disclosed in our provisional patent applications. Such applications may not result in issued patents and, even if patents do issue, such patents may not be in a form that will provide us with meaningful protection for our product candidates. We also rely on trade secrets that may be important to the development of our business, but which may be difficult to protect and provide us with only limited protection.
We expect to file additional patent applications in support of current and new clinical candidates as well as new platform and core technologies. Our commercial success will depend in part on obtaining, maintaining, protecting and enforcing patent protection and trade secret protection of our current and future product candidates and the methods used to develop and manufacture them, as well as successfully defending such patents against third-party challenges and operating without infringing, violating or misappropriating the intellectual property or proprietary rights of others. Our ability to stop unauthorized third parties from making, using, selling, offering to sell or importing our products depends on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities. We cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any patents that may be granted to us in the future will be commercially useful in protecting our product candidates, discovery programs and processes. For this and more comprehensive risks related to our intellectual property, please see “Risk factors—Risks related to our intellectual property.”
The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, including the United States, the patent term is generally 20 years from the earliest date of filing a non-provisional or Patent Cooperation Treaty, or PCT patent application. In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier filed patent. In the United States, the patent term of a patent that covers an FDA-approved drug may also be eligible for patent term extension, which permits patent term restoration as compensation for the patent term lost during the FDA regulatory review process. The Drug Price Competition and Patent Term Restoration Act, or the Hatch-Waxman Act, permits a patent term extension of up to five years beyond the expiration of the patent. The length of the patent term extension is related to the length of time the drug is under regulatory review. Patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent applicable to an approved drug may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended. Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug. In the future, if and when our products receive FDA approval, we expect to apply for patent term extensions on patents covering those products. We plan to seek patent term extensions to any issued patents we may obtain in any jurisdiction where such patent term extensions are available, however there is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment of whether such extensions should be granted, and if granted, the length of such extensions. For more information regarding the risks related to our intellectual property, see “Risk factors—Risks related to our intellectual property.”
In some instances, we submit patent applications directly with the USPTO as provisional patent applications. Corresponding non-provisional patent applications must be filed not later than 12 months after the provisional application filing date to claim priority to the provisional application filing date. With regard to such United States provisional patent applications, if we do not timely file any non-provisional patent applications, we may lose our priority date with respect to our provisional patent applications and any patent protection on the inventions disclosed in our provisional patent applications. While we intend to timely file non-provisional patent applications relating to our provisional patent applications, we cannot predict whether any such patent applications will result in the issuance of patents that provide us with any competitive advantage.
We will file U.S. non-provisional applications and PCT applications that claim the benefit of the priority date of earlier filed provisional applications, when applicable. The PCT system allows a single application to be filed within
12 months of the original priority date of the patent application, and to designate all of the PCT member states in which national patent applications can later be pursued based on the international patent application filed under the PCT. The PCT searching authority performs a patentability search and issues a non-binding patentability opinion for some or all of the claims filed in the application, which can be used to evaluate the chances of success for the national applications in foreign countries prior to having to incur the filing fees. Although a PCT application does not issue as a patent, it allows the applicant to seek protection in any of the member states through national-phase applications. At the end of the period of two and a half years from the earliest priority date of the PCT application, separate patent applications can be pursued in any of the PCT member states either by direct national filing or, in some cases by filing through a regional patent organization, such as the European Patent Office. The PCT system delays expenses, allows a limited evaluation of the chances of success for national/regional patent applications and enables substantial savings where applications are abandoned within the first two and a half years of filing.
For all patent applications, we determine claiming strategy on a case-by-case basis. We seek to file patents containing claims for protection of all useful applications of our proprietary technologies and any product candidates, as well as all new applications and/or uses we discover for existing technologies and product candidates, assuming these are strategically valuable. We continuously reassess the number and type of patent applications, as well as the pending and issued patent claims to pursue maximum coverage and value for our processes, and compositions, given existing patent office rules and regulations. Further, claims may be modified during patent prosecution to meet our intellectual property and business needs.
We recognize that the ability to obtain patent protection and the degree of such protection depends on a number of factors, including the extent of the prior art, the novelty and non-obviousness of the invention, and the ability to satisfy the enablement requirement of the patent laws. In addition, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted or further altered even after patent issuance. Consequently, we may not obtain or maintain adequate patent protection for any of our product candidates, platform or technology. We cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient proprietary protection from competitors. In addition, any patents that we hold may be challenged, circumvented or invalidated by third parties.
The patent positions of biotechnology companies like ours are generally uncertain and involve complex legal, scientific and factual questions. Our commercial success will also depend in part on not infringing, violating or misappropriating the intellectual property or proprietary rights of third parties. Third-party patents could require us to alter our development or commercial strategies, or our product candidates or processes, obtain licenses, which may not be available on commercially reasonable terms, or at all, or cease certain activities. If third parties prepare and file patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference or derivation proceedings in the USPTO to determine priority of invention. Further, our breach of any license agreements or our failure to obtain a license to proprietary rights required to develop or commercialize our product candidates may have a material adverse impact on us. For more information, see “Risk Factors—Risks Related to Intellectual Property.”
In addition to patent protection, we also rely on trade secrets, know-how, other proprietary information and/or continuing technological innovation to develop and maintain our competitive position. We seek to protect and maintain the confidentiality of proprietary information to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. Although we take steps to protect our proprietary information and trade secrets, including through contractual means with our employees and consultants, third parties may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose our technology. Thus, we may not be able to meaningfully protect our trade secrets. It is our policy to require our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with us. These agreements provide that all confidential information concerning our business or financial affairs developed or made known to the individual during the course of the individual’s
relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances. Our agreements with employees also provide that all inventions conceived by the employee in the course of employment with us or from the employee’s use of our confidential information are our exclusive property. However, such confidentiality agreements and invention assignment agreements can be breached and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting trade secrets, know-how and inventions. For more information regarding the risks related to our intellectual property, see “Risk factors—Risks related to our intellectual property.”
Intellectual property relating to iPSC technology
We have licensed from FCDI a portfolio of six patent families including issued patents and pending applications broadly applicable to the reprogramming of somatic cells. Our license is non-exclusive within the field of cancer immunotherapeutics in the worldwide territory outside of Japan. This portfolio covers various aspects of the generation of human iPSCs from somatic cells and, as of March 16, 2021, includes 12 issued U.S. patents claiming methods and compositions used in the reprogramming of human somatic cells to iPSCs. Specifically, the portfolio includes patents with claims for producing human iPSCs from hematopoietic progenitor cells using episomal genetic vectors and includes claims for doing the reprogramming under feeder free conditions. The portfolio also includes a composition of matter patent issued in the United States covering an Epstein-Barr Virus, or EBV, reprogramming vector containing genes for certain reprogramming factors. These issued patents and any patents that may issue from these pending patent applications will expire on dates ranging from 2029 to 2034, without giving effect to any patent term adjustment or extension.
Included within the license is a sublicense under certain patents, which are directed to compositions and methods of using and making iPSCs, owned by WARF relating to the so-called “Thompson Factors” for reprogramming human cells to iPSCs, The issued United States patents in this portfolio will expire on dates ranging from 2028 to 2029, without giving effect to any patent term adjustment or extension.
Given that the rights granted to us under these patents are non-exclusive, third parties may obtain licenses to these patents and related technology to compete with us. For more information, see “Risk Factors—Risks related to commercialization of our product candidates—We face significant competition, and if our competitors develop product candidates more rapidly than we do or their product candidates are more effective, our ability to develop and successfully commercialize products may be adversely affected.”
Intellectual property relating to genetic engineering
In January 2019, we entered into a non-exclusive license agreement with Inscripta, Inc. Under the license agreement, we obtained a non-exclusive, royalty-free, irrevocable license to a patent portfolio covering the composition, production and use of CRISPR-MAD7, a novel gene-editing CRISPR endonuclease from the Eubacterium rectale genome. The intellectual property includes two issued U.S. patents and any pending applications claiming priority therefrom. Our license covers the making and using of CRISPR-MAD7 for editing iPSCs, making master engineered iPSC lines and using master engineered iPSC lines to manufacture human therapeutic products. These issued patents and any patents that may issue from these pending patent applications will expire in 2037, without giving effect to any patent term adjustment or extension.
Given that the rights granted to us under these patents are non-exclusive, third parties may obtain licenses to these patents and related technology to compete with us. For more information, see “Risk Factors—Risks related to commercialization of our product candidates—We face significant competition, and if our competitors develop product candidates more rapidly than we do or their product candidates are more effective, our ability to develop and successfully commercialize products may be adversely affected.”
Intellectual property relating to the differentiation of hematopoietic cells
We have licensed from FCDI a portfolio of six patent families regarding methods of differentiating iPSC cells including issued patents and pending patent applications broadly applicable to the differentiation of iPSC cells,
the last of which is currently expected to expire in 2036. Our license is exclusive to exploit cancer immunotherapeutic products consisting of cells that are or are modifications of NK cells, T cells, dendritic cells and macrophages derived from human iPSCs. This portfolio covers various aspects of the generation of hematopoietic precursor and immune effector cells from iPSCs and, as of March 16, 2021, includes five issued U.S. patents claiming methods for the differentiation of human iPSCs to hematopoietic precursor cells and further differentiation into immune effector cells. Specifically, the portfolio includes patents with claims for producing hematopoietic precursor cells from iPSCs using a multi-step process involving certain defined media. These issued patents and any patents that may issue from these pending patent applications will expire on dates ranging from 2030 to 2036, without giving effect to any patent term adjustment or extension.
Intellectual property relating to engineered iPSCs and derivative cells
Currently, we own eight pending provisional patent applications covering our engineered iPSC cells, cell differentiation technology, compositions of engineered cellular immunotherapies, and gene transfer vectors and methods of engineering iPSC cells. The portfolio includes composition of matter claims covering our CNTY-101 product, as well as other iPSC-derived engineered CAR cells comprising certain transgene insertions and deletions, including our proprietary Allo-Evasion™ technology. One of our provisional patent applications includes claims directed to a universal CAR cell platform. We have also filed provisional patent applications relating to our T-cell platform related to compositions and methods for generating alpha-beta and gamma delta T cells from iPSCs. Any U.S. patents that may issue from such pending provisional patent applications would expire in 2040 or 2041, without giving effect to any patent term adjustment or extension.
Intellectual property relating to engineered T cells
We have exclusively sublicensed from iCELL two families of patents owned by the University of Tokyo relating to immune function reconstruction method using multipotent stem cells and method for producing antigen-specific T cells. The portfolio includes two issued U.S. patents claiming methods for the production of T cells having antigen specificity from iPSC cells derived from human T cells where the T cells differentiated from the iPSC cells retain the antigen specificity of the human T cell from which it was derived. These issued patents will expire in 2031, without giving effect to any patent term adjustment or extension.
Competition
The biotechnology and pharmaceutical industries have made substantial investments in recent years into the rapid development of novel immunotherapies for the treatment of a range of pathologies, including infectious diseases and cancers, making this a highly competitive market.
We face substantial competition from multiple sources, including large and specialty pharmaceutical, biopharmaceutical and biotechnology companies, academic research institutions and governmental agencies and public and private research institutions. Our competitors compete with us on the level of the technologies employed, or on the level of development of product candidates. In addition, many small biotechnology companies have formed collaborations with large, established companies to (i) obtain support for their research, development and commercialization of products or (ii) combine several treatment approaches to develop longer lasting or more efficacious treatments that may potentially directly compete with our current or future product candidates. We anticipate that we will continue to face increasing competition as new therapies and combinations thereof, technologies, and data emerge within the field of immunotherapy and, furthermore, within the treatment of infectious diseases and cancers.
In addition to the current standard of care treatments for patients with infectious diseases or cancers, numerous commercial and academic preclinical studies and clinical trials are being undertaken by a large number of parties to assess novel technologies and product candidates in the field of immunotherapy. Results from these studies and trials have fueled increasing levels of interest in the field of immunotherapy.
Large pharmaceutical companies that have commercialized or are developing immunotherapies to treat cancer include AstraZeneca, Bristol Myers Squibb, Gilead Sciences, Merck, Novartis, Pfizer, and Roche/Genentech.
Companies that compete with us directly on the level of the development of product candidates targeting B-cell lymphomas include Gilead Sciences, Novartis and Bristol Myers Squibb, among others. Companies developing therapeutic candidates to treat glioblastomas include Arbor Pharmaceuticals and Genentech.
On the technology level, other emerging biopharmaceutical companies which can potentially develop competing cell therapy candidates to treat cancer include Fate Therapeutics, Allogene Therapeutics and Nkarta Therapeutics.
Many of our competitors, either alone or in combination with their respective strategic partners, have significantly greater financial resources and expertise in research and development, manufacturing, the regulatory approval process, and marketing than we do. Mergers and acquisition activity in the pharmaceutical, biopharmaceutical and biotechnology sector is likely to result in greater resource concentration among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through sizeable collaborative arrangements with established companies. These competitors also compete with us in recruiting and retain qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
Our commercial opportunity could be reduced or eliminated if one or more of our competitors develop and commercialize products that are safer, more effective, better tolerated, or of greater convenience or economic benefit than our proposed product offering. Our competitors also may be in a position to obtain FDA or other regulatory approval for their products more rapidly, resulting in a stronger or dominant market position before we are able to enter the market. The key competitive factors affecting the success of all of our programs are likely to be product safety, efficacy, convenience and treatment cost.
Government regulation
In the United States, biologic products are licensed by FDA for marketing under the Public Health Service Act, referred to as the PHS Act, and regulated under the Federal Food, Drug, and Cosmetic Act, or the FDCA. Both the FDCA and the PHS Act and their corresponding regulations govern, among other things, the testing, manufacturing, safety, purity, potency, efficacy, labeling, packaging, storage, record keeping, distribution, marketing, sales, import, export, reporting, advertising and other promotional practices involving biologic products. FDA clearance must be obtained before clinical testing of biologic products. FDA licensure also must be obtained before marketing of biologic products. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.
United States development process
The process required by the FDA before a biologic product may be marketed in the United States generally involves the following:
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completion of nonclinical laboratory tests and animal studies according to Good Laboratory Practices, or cGLP, and applicable requirements for the humane use of laboratory animals or other applicable regulations;
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preparation of clinical trial material in accordance with cGMP;
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submission to the FDA of an application for an IND, which must become effective before human clinical trials may begin;
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approval by an institutional review board, or IRB, reviewing each clinical site before each clinical trial may be initiated;
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performance of adequate and well-controlled human clinical trials according to Current Good Clinical Practices, or cGCP, and any additional requirements for the protection of human research subjects and their health information, to establish the safety, purity, potency, and efficacy, of the proposed biologic product for its intended use;
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submission to the FDA of a Biologics License Application, or BLA, for marketing approval that includes substantive evidence of safety, purity, potency, and efficacy from results of nonclinical testing and clinical trials;
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satisfactory completion of an FDA inspection prior to BLA approval of the manufacturing facility or facilities where the biologic product is produced to assess compliance with cGMP, to assure that the facilities, methods and controls are adequate to preserve the biologic’s identity, strength, quality and purity;
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potential FDA audit of the nonclinical and clinical study sites that generated the data in support of the BLA;
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potential FDA Advisory Committee meeting to elicit expert input on critical issues and including a vote by external committee members;
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FDA review and approval, or licensure, of the BLA, and payment of associated user fees, when applicable; and
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compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategies, or REMS, and the potential requirement to conduct post-approval studies.
Before testing any biologic product candidate in humans, the product candidate enters the preclinical testing stage. Nonclinical tests include laboratory evaluations of product chemistry, pharmacology, toxicity and formulation, as well as animal studies to assess the potential safety and activity of the product candidate. The conduct of the nonclinical tests must comply with federal regulations and requirements including GLPs.
The clinical study sponsor must submit the results of the nonclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. Some nonclinical testing typically continues after the IND is submitted. An IND is an exemption from the FDCA that allows an unapproved product to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer an investigational product to humans. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA requests certain changes to a protocol before the trial can begin, or the FDA places the clinical trial on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA may also impose clinical holds on a biologic product candidate at any time before or during clinical trials due to safety concerns or non-compliance. If the FDA imposes a clinical hold, trials may not recommence without FDA authorization and then only under terms authorized by the FDA.
Clinical trials may involve the administration of the biologic product candidate to healthy volunteers or subjects under the supervision of qualified investigators, generally physicians not employed by or under the study sponsor’s control. Clinical trials involving some products for certain diseases, including some rare diseases, may begin with testing in patients with the disease. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety, including stopping rules that assure a clinical trial will be stopped if certain adverse events should occur. Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND. Clinical trials must be conducted and monitored in accordance with the FDA’s regulations comprising the cGCP requirements, including the requirement that all research subjects or his or her legal representative provide informed consent. Further, each clinical trial must be reviewed and approved by an independent IRB, at or servicing each institution at which the clinical trial will be conducted. An IRB is charged with protecting the welfare and rights of study participants and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the form and content of the informed consent that must be signed by each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed. Additionally, some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data safety monitoring board or committee.
Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:
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Phase 1. The biologic product is initially introduced into healthy human subjects and tested for safety. In the case of some products for rare and severe diseases, the initial human testing is often conducted in patients.
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Phase 2. The biologic product is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule.
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Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy, potency and safety in an expanded patient population at geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit ratio of the product and provide an adequate basis for product labeling. In biologics for rare diseases where patient populations are small and there is an urgent need for treatment, Phase 3 trials might not be required if an adequate risk/benefit can be demonstrated from the Phase 2 trial.
Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These clinical trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up.
During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical trial investigators. Annual progress reports detailing the results of the clinical trials must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA and the investigators for serious and unexpected adverse events, any findings from other studies, tests in laboratory animals or in vitro testing that suggest a significant risk for human subjects, or any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within seven calendar days after the sponsor’s initial receipt of the information. Phase 1, Phase 2, and Phase 3 clinical trials may not be completed successfully within any specified period, if at all. The FDA or the sponsor or its data safety monitoring board may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the biologic has been associated with unexpected serious harm to patients.
Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the physical characteristics of the biologic as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. To help reduce the risk of the introduction of adventitious agents with use of biologics, the PHS Act emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the sponsor must develop methods for testing the identity, strength, quality, potency and purity of the final biological product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.
There are also various laws and regulations regarding laboratory practices, the experimental use of animals, and the use and disposal of hazardous or potentially hazardous substances in connection with the research. In each of these areas, the FDA and other regulatory authorities have broad regulatory and enforcement powers, including the ability to levy fines and civil penalties, suspend or delay issuance of approvals, seize or recall products, and withdraw approvals.
Information about certain clinical trials must be submitted within specific timeframes to the NIH for public dissemination on its clinicaltrials.gov website. Sponsors or distributors of investigational products for the
diagnosis, monitoring, or treatment of one or more serious diseases or conditions must also have a publicly available policy on evaluating and responding to requests for expanded access requests.
United States review and approval processes
After the completion of clinical trials of a biological product, FDA approval of a BLA must be obtained before commercial marketing of the product. The BLA must include results of product development, laboratory and animal studies, human studies, information on the manufacture and composition of the product, proposed labeling and other relevant information. The testing and approval processes require substantial time and effort and there can be no assurance that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all.
Under the Prescription Drug User Fee Act, as amended, or PDUFA, each BLA may be accompanied by a significant user fee. Under federal law, the submission of most applications is subject to an application user fee. The sponsor of an approved application is also subject to an annual program fee. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business. Additionally, no user fees are assessed on BLAs for product candidates designated as orphan drugs, unless the product candidate also includes a non-orphan indication.
Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the agency accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the BLA must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. The application also needs to be published and submitted in an electronic format that can be processed through the FDA’s electronic systems. If the electronic submission is not compatible with FDA’s systems, the BLA can be refused for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review of the BLA. The FDA reviews the BLA to determine, among other things, whether the proposed product is safe, potent, and effective, for its intended use, and has an acceptable purity profile, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, safety, strength, quality, potency and purity. The FDA may refer applications for novel products or products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. During the biological product approval process, the FDA also will determine whether a REMS is necessary to assure the safe use of the biological product. If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS; the FDA will not approve the BLA without a REMS, if required.
Before approving a BLA, the FDA may inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving a BLA, the FDA will typically inspect one or more clinical trial sites to assure that the clinical trials were conducted in compliance with IND study requirements and cGCP requirements. To assure cGMP and cGCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production, and quality control.
Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory criteria for approval and deny approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than the sponsor interprets the same data. If the agency decides not to approve the BLA in its present form, the FDA will issue a complete response letter that usually describes all of the specific deficiencies in the BLA identified by the FDA. The deficiencies identified may be minor, for example, requiring labeling changes, or major, for example, requiring additional clinical trials. Additionally, the complete response letter may include recommended actions that the applicant might take to
place the application in a condition for approval. If a complete response letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application.
If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval. In addition, the FDA may require post marketing clinical trials, sometimes referred to as Phase 4 clinical trials, designed to further assess a biological product’s safety and effectiveness, and testing and surveillance programs to monitor the safety of approved products that have been commercialized. As a condition for approval, the FDA may also require additional nonclinical testing as a Phase 4 commitment.
One of the performance goals agreed to by the FDA under the PDUFA is to review standard BLAs in ten months from filing and priority BLAs in six months from filing, whereupon a review decision is to be made. The FDA does not always meet its PDUFA goal dates for standard and priority BLAs and its review goals are subject to change from time to time. The review process and the PDUFA goal date may be extended by three months if the FDA requests or the BLA sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.
United States post-approval requirements
Maintaining substantial compliance with applicable federal, state, and local statutes and regulations requires the expenditure of substantial time and financial resources. Rigorous and extensive FDA regulation of biological products continues after approval, particularly with respect to cGMP. We will rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of any products that we may commercialize. Manufacturers of our products are required to comply with applicable requirements in the cGMP regulations, including quality control and quality assurance and maintenance of records and documentation.
Following approval, the manufacturing facilities are subject to biennial inspections by the FDA’s and such inspections may result in an issuance of FDA Form 483 deficiency observations, untitled letter, or a warning letter, which can lead to plant shutdown and other more serious penalties and fines. Prior to the institution of any manufacturing changes, a determination needs to be made whether FDA approval is required in advance. If not done in accordance with FDA expectations, the FDA may restrict supply and may take further action. Annual product reports are required to be submitted annually. Other post-approval requirements applicable to biological products, include reporting of cGMP deviations that may affect the identity, potency, purity and overall safety of a distributed product, record-keeping requirements, reporting of adverse events, reporting updated safety and efficacy information, and complying with electronic record and signature requirements.
After a BLA is approved, the product also may be subject to official lot release. As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution. If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot. The FDA also may perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots for distribution by the manufacturer. In addition, the FDA may conduct laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness of biological products. Systems need to be put in place to record and evaluate adverse events reported by health care providers and patients and to assess product complaints. An increase in severity or new adverse events can result in labeling changes or product recall. Defects in manufacturing of commercial products can result in product recalls.
We also must comply with the FDA’s advertising and promotion requirements, such as those related to direct-to-consumer advertising, the prohibition on promoting products for uses or inpatient populations that are not described in the product’s approved labeling (known as “off-label use”), industry-sponsored scientific and
educational activities, and promotional activities involving the internet. Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant or manufacturer to administrative or judicial civil or criminal sanctions and adverse publicity. FDA sanctions could include refusal to approve pending applications, withdrawal of an approval or license revocation, clinical hold, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, mandated corrective advertising or communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect.
Biological product manufacturers and other entities involved in the manufacture and distribution of approved biological products are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. Accordingly, manufacturers must continue to expend time, money, and effort in the areas of production and quality control to maintain cGMP compliance. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved BLA, including withdrawal of the product from the market. In addition, changes to the manufacturing process or facility generally require prior FDA approval before being implemented and other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.
Orphan drug designation
Under the Orphan Drug Act, the FDA may grant Orphan Drug Designation, or ODD, to a biological product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making a biological product available in the United States for this type of disease or condition will be recovered from sales of the product. ODD must be requested before submitting a BLA. After the FDA grants ODD, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. ODD does not convey any advantage in or shorten the duration of the regulatory review and approval process.
If a product that has ODD receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same biological product for the same indication for seven years, except in limited circumstances, such as not being able to supply the product for patients or showing clinical superiority to the product with orphan exclusivity.
Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity. Orphan product exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval of the same biological product as defined by the FDA or if our product candidate is determined to be contained within the competitor’s product for the same indication or disease. If a biological product designated as an orphan product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan product exclusivity.
Expedited review and approval programs
The FDA has various programs, including fast track designation, priority review, accelerated approval, and breakthrough therapy designation, that are intended to expedite or simplify the process for the development and
FDA review of biological products that are intended for the treatment of serious or life-threatening diseases or conditions and demonstrate the potential to address unmet medical needs. The purpose of these programs is to
provide important new biological products to patients earlier than under standard FDA review procedures. To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a biological product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need. The FDA will determine that a product will fill an unmet medical need if it will provide a therapy where none exists or provide a therapy that may be potentially superior to existing therapy based on efficacy or safety factors. In addition to other benefits, such as the ability to have greater interactions with the FDA, the FDA may initiate review of sections of a Fast Track BLA before the application is complete, a process known as rolling review.
The FDA may give a priority review designation, such as a rare pediatric disease designation, to biological products that treat a serious condition and, if approved, would provide a significant improvement in safety or effectiveness. A priority review means that the goal for the FDA to review an application is six months, rather than the standard review of ten months under current PDUFA guidelines. Most products that are eligible for fast track designation may also be considered appropriate to receive a priority review. In addition, biological products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval and may be approved on the basis of adequate and well-controlled clinical trials establishing that the biological product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require a sponsor of a biological product receiving accelerated approval to perform post-marketing studies to verify and describe the predicted effect on irreversible morbidity or mortality or other clinical endpoint, and the biological product may be subject to accelerated withdrawal procedures.
Moreover, under the Food and Drug Administration Safety and Innovation Act enacted in 2012, a sponsor can request designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug or biological product that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug or biological product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Drug and biological products designated as breakthrough therapies are also eligible for accelerated approval. The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy.
Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decides that the time period for FDA review or approval will not be shortened. Furthermore, fast-track designation, priority review, accelerated approval and breakthrough therapy designation, do not change the standards for approval and may not ultimately expedite the development or approval process.
Biologics Price Competition and Innovation Act
The Biologics Price Competition and Innovation Act of 2009, or BPCIA, which was enacted as part of the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, or PPACA, created an abbreviated approval pathway for biological products that are demonstrated to be “biosimilar” or “interchangeable” with an FDA-licensed reference biological product via an approved BLA. Biosimilarity to an approved reference product requires that there be no differences in conditions of use, route of administration, dosage form, and strength, and no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency. Biosimilarity is demonstrated in steps beginning with rigorous analytical studies or “fingerprinting,” in vitro studies, in vivo animal studies, and generally at least one clinical study, absent a waiver from the Secretary of Health and Human Services. The biosimilarity exercise tests the hypothesis that the investigational product and the reference product are the same. If at any
point in the stepwise biosimilarity process a significant difference is observed, then the products are not biosimilar, and the development of a stand-alone BLA is necessary. In order to meet the higher hurdle of interchangeability, a sponsor must demonstrate that the biosimilar product can be expected to produce the same clinical result as the reference product, and for a product that is administered more than once, that the risk of switching between the reference product and biosimilar product is not greater than the risk of maintaining the patient on the reference product. Complexities associated with the larger, and often more complex, structures of biological products, as well as the process by which such products are manufactured, pose significant hurdles to implementation that are still being evaluated by the FDA. Under the BPCIA, a reference biologic is granted 12 years of exclusivity from the time of first licensure of the reference product.
Regulation outside of the United States
In addition to regulations in the United States, we are subject to a variety of regulations in other jurisdictions governing clinical studies, commercial sales, and distribution of our products. Most countries outside of the United States require that CTAs be submitted to and approved by the local regulatory authority for each clinical study. In addition, whether or not we obtain FDA approval for a product, we must obtain approval of a product by the comparable regulatory authorities of countries outside the United States before we can commence clinical studies or marketing of the product in those countries. The approval process and requirements vary from country to country, so the number and type of nonclinical, clinical, and manufacturing studies needed may differ, and the time may be longer or shorter than that required for FDA approval.
To obtain regulatory approval of an orphan drug under the European Union regulatory system, we are mandated to submit a Marketing Authorization Application, or MAA, to be assessed in the centralized procedure. The centralized procedure, which came into operation in 1995, allows applicants to obtain a marketing authorization that is valid throughout the European Union. It is compulsory for medicinal products manufactured using biotechnological processes, for orphan medicinal products and for human products containing a new active substance which was not authorized in the Community before May 20, 2004 (date of entry into force of Regulation (EC) No 726/2004) and which are intended for the treatment of AIDS, cancer, neurodegenerative disorder or diabetes. The centralized procedure is optional for any other products containing new active substances not authorized in the Community before May 20, 2004 or for products that constitute a significant therapeutic, scientific or technical innovation or for which a Community authorization is in the interests of patients at Community level. When a company wishes to place on the market a medicinal product that is eligible for the centralized procedure, it sends an application directly to the European Medicines Agency, or EMA, to be assessed by the Committee for Medicinal Products for Human Use, or CHMP. The CHMP is responsible for conducting the assessment of whether a medicine meets the required quality, safety and efficacy requirements, and whether the product has a positive risk/benefit/risk profile. The procedure results in a Commission decision, which is valid in all European Union Member States. Centrally-authorized products may be marketed in all Member States. The centralized procedure is as follows: Full copies of the marketing authorization, or MA, application are sent to a rapporteur and a co-rapporteur designated by the competent EMA scientific committee. They coordinate the EMA’s scientific assessment of the medicinal product and prepare draft reports. Once the draft reports are prepared (other experts might be called upon for this purpose), they are sent to the CHMP, whose comments or objections are communicated to the applicant. The rapporteur is therefore the privileged interlocutor of the applicant and continues to play this role, even after the MA has been granted.
The rapporteur and co-rapporteur then assess the applicant’s replies, submit them for discussion to the CHMP and, taking into account the conclusions of this debate, prepare a final assessment report. Once the evaluation is completed, the CHMP gives a favorable or unfavorable opinion as to whether to grant the authorization. When the opinion is favorable, it shall include the draft summary of the product’s characteristics, the package leaflet and the texts proposed for the various packaging materials. The time limit for the evaluation procedure is 210 days. The EMA then has fifteen days to forward its opinion to the European Commission. This is the start of the second phase of the procedure: the decision-making process. The EMA sends to the Commission its opinion and assessment report, together with annexes containing: the SmPC, or Annex 1; the particulars of the MAH responsible for batch release, the particulars of the manufacturer of the active substance and the conditions of
the marketing authorization, or Annex 2; and the labelling and the package leaflet, or Annex 3. The annexes are translated into the 22 other official languages of the European Union. During the decision-making process, the Commission services verify that the marketing authorization complies with Union law. The Commission has fifteen days to prepare a draft decision. The medicinal product is assigned a Community registration number, which will be placed on its packaging if the marketing authorization is granted. During this period, various Commission directorates-general are consulted on the draft marketing authorization decision.
The draft decision is then sent to the Standing Committee on Medicinal Products for Human Use, (Member States have one representative each in both of these committees) for their opinions. The centralized procedure provides for the grant of a single marketing authorization that is valid for all European Union member states. The decentralized procedure provides for approval by one or more other, or concerned, member states of an assessment of an application performed by one member state, known as the reference member state. Under this procedure, an applicant submits an application, or dossier, and related materials including a draft summary of product characteristics, and draft labeling and package leaflet, to the reference member state and concerned member states. The reference member state prepares a draft assessment and drafts of the related materials within 120 days after receipt of a valid application. Within 90 days of receiving the reference member state’s assessment report, each concerned member state must decide whether to approve the assessment report and related materials. If a member state cannot approve the assessment report and related materials on the grounds of potential serious risk to the public health, the disputed points may eventually be referred to the European Commission, whose decision is binding on all member states.
Applications from persons or companies seeking “orphan medicinal product designation” for products they intend to develop for the diagnosis, prevention, or treatment of life-threatening or very serious conditions that affect not more than five in 10,000 persons in the European Union are reviewed by the Committee for Orphan Medicinal Products, or COMP. In addition, orphan drug designation can be granted if the drug or biologic is intended for a life threatening, seriously debilitating, or serious and chronic condition in the European Union and that without incentives it is unlikely that sales of the drug in the European Union would be sufficient to justify developing the drug or biologic. Orphan drug designation is only available if there is no other satisfactory method approved in the European Union of diagnosing, preventing, or treating the condition, or if such a method exists, the proposed orphan drug will be of significant benefit to patients.
Orphan drug designation provides opportunities for fee reductions, protocol assistance and access to the centralized procedure before and during the first year after marketing approval. Fee reductions are not limited to the first year after marketing approval for small and medium enterprises. In addition, if a product that has an orphan drug designation subsequently receives EMA marketing approval for the indication for which it has such designation, the product is entitled to orphan market exclusivity, which means the EMA may not approve any other application to market a similar drug or biologic for the same indication for a period of ten years. The exclusivity period may be reduced to six years if the designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity. Competitors may receive marketing approval of different drugs or biologics for the indications for which the orphan product has exclusivity. In order to do so, however, they must demonstrate that the new drugs or biologics are clinically superior over the existing orphan product. This demonstration of clinical superiority may be done at the time of initial approval or in post-approval studies, depending on the type of marketing authorization granted.
A Pediatric Investigation Plan, or PIP, in the European Union is aimed at ensuring that the necessary data are obtained to support the authorization of a medicine for children, through studies in children. All applications for marketing authorization for new medicines have to include the results of studies as described in an agreed PIP, unless the medicine is exempt because of a deferral or waiver. This requirement also applies when a marketing-authorization holder wants to add a new indication, pharmaceutical form, or route of administration for a medicine that is already authorized and covered by intellectual property rights. Several rewards and incentives for the development of pediatric medicines for children are available in the European Union Medicines authorized across the European Union with the results of studies from a PIP included in the product information are eligible for an extension of their supplementary protection certificate by six months. This is the case even when the studies’
results are negative. For orphan medicines, the incentive is an additional two years of market exclusivity. Scientific advice and protocol assistance at the EMA are free of charge for questions relating to the development of pediatric medicines. Medicines developed specifically for children that are already authorized but are not protected by a patent or supplementary protection certificate are eligible for a pediatric-use marketing authorization, or PUMA. If a PUMA is granted, the product will benefit from ten years of market protection as an incentive.
In March 2016, the EMA launched an initiative, The Priority Medicines, or PRIME, scheme, to facilitate development of product candidates in indications, often rare, for which few or no therapies currently exist. The PRIME scheme is intended to encourage development of drugs and biologics in areas of unmet medical need and provides accelerated assessment of products representing substantial innovation reviewed under the centralized procedure. Many benefits accrue to sponsors of product candidates with PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and accelerated MAA assessment once a dossier has been submitted. Importantly, a dedicated contact and rapporteur from the CHMP is appointed early in the PRIME scheme facilitating increased understanding of the product at EMA’s committee level. An initial meeting initiates these relationships and includes a team of multidisciplinary experts at the EMA to provide guidance on the overall development and regulatory strategies.
The United Kingdom left the European Union on January 31, 2020, referred to as Brexit, following which, existing European Union medicinal product legislation continued to apply in the United Kingdom during the transition period under the terms of the Brexit withdrawal agreement. The Brexit transition period, which ended on December 31, 2020, maintained access to the European Union single market and to the global trade deals negotiated by the European Union on behalf of its members. The Brexit transition period provided time for the United Kingdom and European Union to negotiate a framework for partnership for the future, which was then crystallized in the Trade and Cooperation Agreement, or TCA, and became effective on the January 1, 2021.
As of January 1, 2021, the Medicines and Healthcare products Regulatory Agency, or MHRA, is the United Kingdom’s standalone medicines and medical devices regulator. As a result of the Northern Ireland protocol, different rules will apply in Northern Ireland than in England, Wales and Scotland, together Great Britain, broadly, Northern Ireland will continue to follow the European Union regulatory regime, but its national competent authority will remain the MHRA. The MHRA has published a draft guidance on how various aspects of the United Kingdom regulatory regime for medicines will operate in Great Britain and in Northern Ireland following the expiry of the Brexit transition period on December 31, 2020. The guidance includes clinical trials, marketing authorizations, importing, exporting and pharmacovigilance and is relevant to any business involved in the research, development or commercialization of medicines in the United Kingdom. The new guidance was be given effect via the Human Medicines Regulations (Amendment etc.) (European Union Exit) Regulations 2019, or the Exit Regulations. The United Kingdom regulatory regime largely mirrors that of the European Union.
The MHRA has introduced changes to national licensing procedures, including procedures to prioritize access to new medicines that will benefit patients, an accelerated assessment procedure and new routes of evaluation for novel products and biotechnological products. All existing European Union MAs for centrally authorized products will automatically be converted (grandfathered) into United Kingdom MAs free-of-charge on January 1, 2021.
There will be no pre-marketing authorization orphan designation. Instead, the MHRA will review applications for orphan designation in parallel to the corresponding MA application. The criteria are essentially the same, but have been tailored for the Great Britain market, i.e., the prevalence of the condition in Great Britain (rather than the European Union) must not be more than five in 10,000. Should an orphan designation be granted, the period or market exclusivity will be set from the date of first approval of the product in Great Britain or the European Economic Area, wherever is earliest.
Healthcare laws and regulations
Sales of our product candidate, if approved, or any other future product candidate will be subject to healthcare regulation and enforcement by the federal government and the states and foreign governments in which we might conduct our business. The healthcare laws and regulations that may affect our ability to operate include the following:
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The federal Anti-Kickback Statute makes it illegal for any person or entity to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration that is in exchange for or to induce the referral of business, including the purchase, order, lease of any good, facility, item or service for which payment may be made under a federal healthcare program, such as Medicare or Medicaid. The term “remuneration” has been broadly interpreted to include anything of value;
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Federal false claims and false statement laws, including the federal civil False Claims Act, prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or services, including drugs and biologics, that are false or fraudulent;
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The Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors or making any false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services;
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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and their implementing regulations, impose obligations on certain types of individuals and
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entities regarding the electronic exchange of information in common healthcare transactions, as well as standards relating to the privacy and security of individually identifiable health information;
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The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare and Medicaid Services, or CMS, information related to payments or other transfers of value made to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and
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The Foreign Corrupt Practices Act, or FCPA prohibits United States businesses and their representatives from offering to pay, paying, promising to pay or authorizing the payment of money or anything of value to a foreign official in order to influence any act or decision of the foreign official in his or her official capacity or to secure any other improper advantage in order to obtain or retain business.
Many states have similar laws and regulations, such as anti-kickback and false claims laws that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs. Additionally, we may be subject to state laws that require pharmaceutical companies to comply with the federal government’s and/or pharmaceutical industry’s voluntary compliance guidelines, state laws that require drug and biologics manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, as well as state and foreign laws governing the privacy and security of health information, many of which differ from each other in significant ways and often are not preempted by HIPAA. Additionally, to the extent that our product is sold in a foreign country, we may be subject to similar foreign laws.
Healthcare Reform
The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system. The United States government, state legislatures and foreign governments also have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs and biologics. In recent years, the United States Congress, or Congress, has considered reductions in Medicare reimbursement levels for drugs and biologics administered by physicians. CMS, the agency that administers the Medicare and Medicaid programs, also has authority to revise reimbursement rates and to implement coverage restrictions for some drugs and biologics. Cost reduction initiatives and changes in coverage implemented through legislation or regulation could decrease utilization of
and reimbursement for any approved products. While Medicare regulations apply only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from federal legislation or regulation may result in a similar reduction in payments from private payors.
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively the Affordable Care Act, substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacts the pharmaceutical industry. The Affordable Care Act is intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on pharmaceutical and medical device manufacturers, and impose additional health policy reforms. Among other things, the Affordable Care Act expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum Medicaid rebate for both branded and generic drugs and biologics, expanded the 340B program, and revised the definition of average manufacturer price, or AMP, which could increase the amount of Medicaid drug rebates manufacturers are required to pay to states. The legislation also extended Medicaid drug rebates, previously due only on fee-for-service Medicaid utilization, to include the utilization of Medicaid managed care organizations as well and created an alternative rebate formula for certain new formulations of certain existing products that is intended to increase the amount of rebates due on those drugs. On February 1, 2016, CMS issued final regulations to implement the changes to the Medicaid Drug Rebate program under the Affordable Care Act. These regulations became effective on April 1, 2016. Since that time, there have been significant ongoing efforts to modify or eliminate the Affordable Care Act. On January 20, 2017, President Trump signed an executive order directing federal agencies to exercise existing authorities to reduce burdens associated with the Affordable Care Act pending further action by Congress. In October 2017, he signed an executive order which directed federal agencies to modify how the Affordable Care Act is implemented. The Tax Cuts and Jobs Act, enacted on December 22, 2017, repealed the shared responsibility payment for individuals who fail to maintain minimum essential coverage under section 5000A of the Internal Revenue Code of 1986, as amended, or the Code, commonly referred to as the individual mandate.
Other legislative changes have been proposed and adopted since passage of the Affordable Care Act. The Budget Control Act of 2011, among other things, created the Joint Select Committee on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select Committee did not achieve its targeted deficit reduction of an amount greater than $1.2 trillion for the fiscal years 2012 through 2021, triggering the legislation’s automatic reductions to several government programs. These reductions included aggregate reductions to Medicare payments to healthcare providers of up to 2% per fiscal year, which went into effect in April 2013. Subsequent litigation extended the 2% reduction, on average, to 2030 unless additional Congressional action is taken. However, pursuant to the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, the 2% Medicare sequester reductions have been suspended from May 1, 2020 through March 31, 2021 due to the COVID-19 pandemic. On January 2, 2013, the American Taxpayer Relief Act was signed into law, which, among other things, reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
Further legislative and regulatory changes under the Affordable Care Act remain possible, although the new Administration under President Biden has signaled that it plans to build on the Affordable Care Act and expand the number of people who are eligible for subsidies under it. President Biden indicated that he intends to use executive orders to undo changes to the Affordable Care Act made by the former administration and would advocate for legislation to build on the Affordable Care Act. It is unknown what form any such changes or any law would take, and how or whether it may affect our business in the future. We expect that changes or additions to the Affordable Care Act, the Medicare and Medicaid programs, changes allowing the federal government to directly negotiate drug prices and changes stemming from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the healthcare industry.
The Affordable Care Act has been subject to challenges in the courts. On December 14, 2018, a Texas U.S. District Court Judge ruled that the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. On December 18, 2019, the Fifth Circuit U.S. Court of Appeals held that the individual mandate is unconstitutional and remanded the case to the Texas District Court to reconsider its earlier invalidation of the entire Affordable Care Act. An appeal was taken to the U.S. Supreme Court which heard oral arguments in the case on November 10, 2020. A ruling is expected in 2021.
The Affordable Care Act requires pharmaceutical manufacturers of branded prescription drugs and biologics to pay a branded prescription drug fee to the federal government. Each individual pharmaceutical manufacturer pays a prorated share of the branded prescription drug fee, based on the dollar value of its branded prescription drug sales to certain federal programs identified in the law. Furthermore, the law requires manufacturers to provide a 50% discount off the negotiated price of prescriptions filled by beneficiaries in the Medicare Part D coverage gap, referred to as the “donut hole.” The Bipartisan Budget Act of 2018, or the BBA, among other things, amended the Affordable Care Act, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole,” by increasing from 50 percent to 70 percent the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D.
The Affordable Care Act also expanded the Public Health Service’s 340B drug pricing program. The 340B drug pricing program requires participating manufacturers to agree to charge statutorily-defined covered entities no more than the 340B “ceiling price” for the manufacturer’s covered outpatient drugs. The Affordable Care Act expanded the 340B program to include additional types of covered entities: certain free-standing cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals, each as defined by the Affordable Care Act. Because the 340B ceiling price is determined based on the average manufacturer price, or AMP, and Medicaid drug rebate data, revisions to the Medicaid rebate formula and AMP definition could cause the required 340B discounts to increase. Payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives as well. For example, CMS may develop new payment and delivery models, such as bundled payment models. Recently, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products. Such scrutiny has resulted in several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for pharmaceutical products.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
We expect that additional federal, state and foreign healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in limited coverage and reimbursement and reduced demand for our products, once approved, or additional pricing pressures.
Human capital resources
As of April 30, 2021, we had 97 full-time employees and ten part-time employees. Of our 107 full and part-time employees, 47 have Ph.D. or M.D. degrees and 69 are engaged in research and development activities. We consider our relationship with our employees to be good.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and additional employees. The principal purposes of our equity incentive plans are to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards and cash-based performance bonus awards.
Facilities
Our principal executive offices are located in Philadelphia, Pennsylvania, pursuant to a lease that expires in March 2032. We operate in three laboratory spaces in Philadelphia pursuant to leases that expire in January 2026, January 2031 and July 2023. Additionally, we lease office and laboratory space in Seattle, Washington pursuant to leases expiring in January 2030 and May 2030, respectively. Century Canada’s operations are located in Hamilton, Ontario, pursuant to a lease that expires in October 2025. We are investing in the construction of a 53,000 square foot cell therapy manufacturing facility on a tract of land in Branchburg, New Jersey pursuant to a lease expiring in May 2037. We believe that our current facilities are adequate to meet our ongoing needs, and that, if we require additional space, we will be able to obtain additional facilities on commercially reasonable terms.
Legal proceedings
We are not currently a party to any material legal proceedings. From time to time, we may become involved in other litigation or legal proceedings relating to claims arising from the ordinary course of business.
Management
The following table sets forth information regarding our executive officers and directors:
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Name
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Age
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|
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Position(s)
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|
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Executive Officers
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Osvaldo Flores, Ph.D.
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58
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President, Chief Executive Officer and Director
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Luis Borges, Ph.D.
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59
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Chief Scientific Officer
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Michael Diem, M.D.
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|
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51
|
|
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Chief Business Officer
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Adrienne Farid, Ph.D.
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|
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59
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Chief Operations Officer
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Hyam Levitsky, M.D.
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|
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63
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President of Research and Development
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Gregory Russotti, Ph.D.
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54
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Chief Technology Officer
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Non-Employee Directors
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Toshikazu Ban(4)
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60
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Director
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Kimberly Blackwell, M.D.(1)(3)
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52
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Director
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Cynthia Butitta(1)(2)
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66
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Director
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Eli Casdin(2)(3)
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48
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Director
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Juergen Eckhardt, M.D.(5)
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54
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Director
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Joseph Jimenez(2)(3)
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61
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Director, Chairman of the Board
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Alessandro Riva, M.D.(1)
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60
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|
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Director
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Carlo Rizzuto, Ph.D.(2)(3)
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51
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Director
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(1) Member of our audit committee upon effectiveness of the Registration Statement of which this prospectus forms a part.
(2) Member of our compensation committee upon effectiveness of the Registration Statement of which this prospectus forms a part.
(3) Member of our nominating and corporate governance committee upon effectiveness of the Registration Statement of which this prospectus forms a part.
(4) Mr. Ban has notified us that he will resign from our board of directors effective immediately prior to the effectiveness of the Registration Statement of which this prospectus forms a part.
(5) Dr. Eckhardt has notified us that he will resign from our board of directors effective immediately prior to the effectiveness of the Registration Statement of which this prospectus forms a part.
Executive officers
Osvaldo Flores, Ph.D. has served as a member of our board of directors since the 2021 Reorganization in February 2021, and previously served as a member of the board of managers of Century Therapeutics, LLC from June 2019 until the 2021 Reorganization in February 2021. Dr. Flores previously served as a member of the board of directors of Prior Century from September 2018 until the 2021 Reorganization in February 2021. Dr. Flores has served as our President and Chief Executive Officer since June 2019 and the President and Chief Executive Officer of Prior Century from September 10, 2018 until the 2021 Reorganization in February 2021. Dr. Flores was previously Vice President of R&D from December 2015 until December 2017, and Entrepreneur-in-Residence from January 2018 until August 2018 with Janssen, a Johnson & Johnson company. He founded and served as President and Chief Scientific Officer of Novira Therapeutics from January 2009 to December 2015. Prior to Novira, Dr. Flores was a department head at Merck & Co., where he led drug discovery and development programs across diverse therapeutic areas including antiviral, oncology, and metabolic, from 1999 to 2008. Dr. Flores began his R&D career at Tularik Inc., establishing key elements of the antiviral drug discovery platform. Dr. Flores received his Ph.D. in Biochemistry and Molecular Biology from Rutgers University and was a postdoctoral Fellow at the Salk Institute.
We believe that Dr. Flores is qualified to serve on our board of directors due to the valuable experience he brings in his capacity as our President and Chief Officer along with his extensive experience and knowledge of our industry.
Luis Borges, Ph.D. has served as our Chief Scientific Officer since April 2019. Dr. Borges previously served as Chief Scientific Officer of Cell Medica, a pharmaceutical company specializing in cellular immunotherapy, from August 2017 until March 2019. Prior to this, Dr. Borges served as Senior Vice President of Research from September 2016 until July 2017, and Vice President of Immuno-Oncology Research from July 2015 until September 2016 at Five Prime Therapeutics, Inc., a publicly-traded biotechnology company. Dr. Borges also served as Executive Director and Senior Director at Five Prime Therapeutics, Inc. from February 2015 until June 2015 and May 2014 until January 2015, respectively. Dr. Borges served in several positions at Amgen Inc., a publicly-traded biotechnology company from 2002 until 2014, most recently serving as Scientific Director from November 2011 until April 2014. Prior to this, Dr. Borges served at Immunex Corp., a publicly-traded biotechnology company, as a Postdoctoral Scientist from September 1996 until September 1999, and as a Staff Scientist from September 1999 until July 2002 when Amgen Inc. acquired Immunex Corp. Dr. Borges holds a Bachelor of Science in marine biology from the University of Lisbon and a Ph.D. in pathology from the University of Washington School of Medicine.
Michael Diem, M.D. has served as our Chief Business Officer since September 2020. Prior to joining us, Dr. Diem was Senior Vice President of Business and Corporate Development at Amicus Therapeutics, a global biotechnology company, from September 2017 to September 2020, and prior to that, he served as Senior Vice President, Business and Corporate Development at Aevi Genomic Medicine, a biopharmaceutical company, from May 2016 to September 2017. From October 2013 to April 2016, Dr. Diem was the Global Head of Corporate Strategy and Corporate Development at AstraZeneca, a global biopharmaceutical company, where he was responsible for mergers and acquisitions, divestitures, and managed the company’s strategic investment activities and MedImmune Ventures. Dr. Diem currently serves as an advisor to an investment fund of UPMC Enterprises, and has held this role since December 2020. Additionally, he serves on the board of directors of Venatorx Pharmaceuticals and the Boys and Girls Clubs of Philadelphia. Dr. Diem holds a B.A. in biological sciences from Rutgers University, an M.D. from the Rutgers-Robert Wood Johnson Medical School, and an M.B.A. from Case Western Reserve University. Dr. Diem completed his medical training at Duke University and is a Kauffman Fellow.
Adrienne Farid, Ph.D. has served as our Chief Operations Officer since April 2021 and previously served as Chief Development Officer from March 2019 until April 2021. Prior to joining us, Dr. Farid was Corporate Vice President Project Leadership and Business Operations in Research & Early Development from July 2017 to February 2019, and Vice President of Project Leadership, Research & Early Development from July 2014 until July 2017 with Celgene Corporation, a Bristol Myers Squibb global biopharmaceutical company; and held prior positions with Celgene Corporation from 2011. Dr. Farid held positions of Global Head, Project and Portfolio Management in Research & Early Development, or pRED, and in Clinical Research and Exploratory Development and Pharmaceutical and Analytical R&D, at Roche Pharmaceuticals from 1995 to 2011. Dr. Farid also worked as a Senior Investigator at GlaxoSmithKline from 1990 until 1994. Dr. Farid completed her postdoctoral fellowship at the California Institute of Technology. Dr. Farid received a B.A. in biochemistry from Barnard College. She holds a Ph.D. in Chemistry from Columbia University.
Hyam Levitsky, M.D. has served as our President, Research and Development since May 2019. Dr. Levitsky served as Executive Vice President and Chief Scientific Officer at Juno Therapeutics, Inc. from 2015 to 2018 and was Head of Cancer Immunotherapy Experimental Medicine at F. Hoffmann-La Roche & Co. from 2011 to 2015. Previously, Dr. Levitsky was Professor of Oncology, Medicine, and Urology at The Johns Hopkins University School of Medicine and the Sidney Kimmel Comprehensive Cancer Center where he began as an Assistant Professor of Oncology in 1991 and rose to Professor in 2002. At The Johns Hopkins University, Dr. Levitsky served as Scientific Director of the George Santos Bone Marrow Transplant Program from 2005 to 2011. He served on the External Scientific Advisory Board of the Pasteur Institute’s Center for Human Immunology from 2008 to 2010. Dr. Levitsky holds a number of honors including being named a Stohlman Scholar by the Leukemia and Lymphoma Society in 2002, and was elected as a member of the American Society for Clinical Investigation in 2002. Dr. Levitsky has served on the board of directors of Replimune Therapeutics, Inc. since May 2018. Dr. Levitsky received a B.S. from the University of Pennsylvania School of Engineering and Applied Science and an M.D. from The Johns Hopkins University School of Medicine.
Gregory Russotti, Ph.D. has served as our Chief Technology Officer since January 2020. Prior to joining us, Dr. Russotti held multiple positions at Celgene Corporation, a Bristol Myers Squibb company, from 2006 until 2009, including, Vice President of Cell Therapy Technical Development from January 2018 to November 2019, Vice President of Cell Therapy Development and Operations from October 2016 to December 2017, Vice President of Technical Operations of Celgene Cellular Therapeutics from May 2013 to October 2016, and Executive Director of Technical Operations of Celgene Cellular Therapeutics from June 2011 to May 2013. Prior to this, Dr. Russotti served as Senior Investigator at Merck & Co., where he oversaw process development of vaccines and biologics from December 2004 to November 2006, and various positions of increasing responsibility dating back to 1991, when he began his career at Merck. Dr. Russotti holds a number of honors including the ECI and NIIMBL Cell Therapy Manufacturing Award for leadership in cell therapy process development, scale-up, and manufacturing in 2019 as well as receiving the Rutgers Engineering School Distinguished Alumnus Medal of Excellence in Education and Research in 2013 and the John W. Jackson Leadership Award in 2011, an award that was given to one leader at Celgene each year. Dr. Russotti holds both a B.S. and M.S. in chemical engineering from Rensselaer Polytechnic Institute. He received his Ph.D. in biochemical and chemical engineering from Rutgers University.
Non-employee directors
Toshikazu Ban has served as a member of our board of directors since the 2021 Reorganization in February 2021, and previously served as a member of the board of managers of Century Therapeutics, LLC from June 2019 until the 2021 Reorganization in February 2021. Mr. Ban served on the board of directors of Prior Century from October 2018 until the 2021 Reorganization in February 2021. He has served as Corporate Vice President and Senior Deputy General Manager of the pharmaceutical product division at FUJIFILM Corporation since July 2018. Mr. Ban joined FUJIFILM Corporation in April 2013, a conglomerate operating in the photography, optics, biotechnology, and chemical industries, and served as Corporate Vice President and General Manager of regenerative medicine business product division from June 2016. Prior to joining FUJIFILM Corporation, Mr. Ban served at Takeda Pharmaceutical Co. Ltd. from April 1985 to March 2013 in various R&D management and Business Development roles of gradually increasing responsibility, including Senior Vice President, Global head of Business Development from January 2008 to January 2012. Mr. Ban is currently a Board Member of FUJIFILM Toyama Chemical and FUJIFILM Kyowa Kirin Biologics, Ltd. He has been a Director of Perseus Proteomics Inc. since June 2017. Mr. Ban earned his B.S. in Pharmaceutical Science from The University of Tokyo and M.S. from the Graduate School of Medical Science of Kyoto University.
We believe that Mr. Ban is qualified to serve on our board of directors due to his extensive management experience and deep understanding of the biotechnology industry. Mr. Ban has notified us that he will resign from our board of directors effective immediately prior to the effectiveness of the Registration Statement of which this prospectus forms a part.
Kimberly Lynn Blackwell, M.D. has served as a member of our board of directors since May 2021. Dr. Blackwell has been the Chief Medical Officer and Senior Vice President, Clinical Oncology Development at Tempus Labs, Inc., a biotechnology company, since March 2020. Previously, Dr. Blackwell was the Vice President of Early Phase Immunooncology at Eli Lilly and Company, a pharmaceutical company, from March 2018 to March 2020. Prior to Eli Lilly, Dr. Blackwell held positions at Duke Medical Center and Duke Cancer Institute as a Professor in the Department of Medicine from July 2012 to March 2018. Dr. Blackwell has served on the board of directors of Monte Rosa Therapeutics, Inc., a biotechnology company, and Zentalis Pharmaceuticals, Inc., a publicly-traded clinical-stage biopharmaceutical company, since June and July 2020, respectively. She has also served as a Steering Committee Member at the Duke Angel Network since February 2017 and on the Scientific Advisory Board for Artemis Women’s Health Fund since January 2021. Dr. Blackwell received her B.A. in bioethics from Duke University and her M.D. from the Mayo Clinic Medical School.
We believe that Dr. Blackwell is qualified to serve on our board of directors due to her experience on the board of pharmaceutical companies and her extensive knowledge of the biotechnology and pharmaceutical industries.
Cynthia Butitta has served as a member of our board of directors since February 2021. Ms. Butitta has served as a member of the board of directors of Olema Pharmaceuticals, Autolus Therapeutics plc, and UroGen Pharma Ltd., publicly traded biopharmaceutical companies, since August 2020, March 2018 and October 2017, respectively. Ms. Butitta previously served as the Chief Operating Officer of Kite Pharma Inc., a biopharmaceutical company, from March 2014 to September 2017 and as its Executive Vice President and Chief Financial Officer from January 2014 to May 2016. From May 2011 to December 2012, Ms. Butitta was Senior Vice President and Chief Financial Officer at NextWave Pharmaceuticals, Inc., a specialty pharmaceutical company. Prior to that, Ms. Butitta served in senior leadership roles at Telik, Inc., a biopharmaceutical company, from 1998 to 2010, including Chief Operating Officer and Chief Financial Officer. Ms. Butitta received a B.S. with honors in business and accounting from Edgewood College in Madison, Wisconsin and an M.B.A. in finance from the University of Wisconsin, Madison.
We believe that Ms. Butitta is qualified to serve on our board of directors due to her extensive experience as a public company director, her knowledge of corporate finance and accounting, and her experience as a biopharmaceutical company executive.
Eli Casdin has served as a member of our board of directors since February 2021. He founded Casdin Capital, a venture capital firm specializing in life sciences, in 2011 and serves as Chief Investment Officer of Casdin Capital. Prior to founding Casdin Capital, Mr. Casdin was a Vice President and Analyst at Alliance Bernstein and a member of its “thematic” based investment group from 2007 until 2011. Mr. Casdin’s previously held positions at Bear Stearns, an investment bank and Cooper Hill Partners, a biotechnology-focused investment firm. Mr. Casdin has served on the board of directors of life-sciences-focused special purpose acquisition companies CM Life Sciences, Inc. and CM Life Sciences II, Inc., since September 2020 and February 2021, respectively. Mr. Casdin also serves on the board of directors of several other life science and biotechnology-focused entities, including, AbSci Corporation, C2i Genomics, Cedilla Therapeutics, DNA Script, Einstein Medical, EQRx, GeneMatters, Genomatica, Insitro, Maze Therapeutics, Mnemo Therapeutics, PACT Pharma, Inc., New York Genome Center, Prominex Inc., Sexton Biotechnologies, SomaLogic, Tango Therapeutics, Tenaya Therapeutics, Verana Health, Inc., Verve Therapeutics, and Vineti, Inc. Mr. Casdin also serves on the Columbia University School of General Studies board of directors. Mr. Casdin earned his B.S. from Columbia University and an M.B.A. from Columbia Business School.
We believe that Mr. Casdin is qualified to serve on our board of directors due to his investment experience, knowledge of the biopharmaceutical industry, and extensive board experience on life sciences and biotechnology companies.
Juergen Eckhardt, M.D. has served as a member of our board of directors since the 2021 Reorganization in February 2021, and previously served as a member of the board of managers of Century Therapeutics, LLC from September 2020 until the 2021 Reorganization in February 2021. Dr. Eckhardt served as Vice President, Head of Venture Investments at Bayer Consumer Care AG, or Bayer AG, a conglomerate operating in the field of pharmaceuticals, consumer health and agriculture, from September 2016 until February 2019 and has served as Senior Vice President, Head of Leaps by Bayer, the strategic venture capital unit of Bayer AG, since March 2019. Before joining Bayer AG in 2016, Dr. Eckhardt was head of the venture capital franchise at Bellevue Asset Management, an investment management firm, in Switzerland from November 2004 to August 2016. Previously, Dr. Eckhardt was a management consultant and Associate Partner with McKinsey & Co. and a member of McKinsey’s Healthcare Leadership Team. Dr. Eckhardt currently serves as a member of the board of directors of Joyn Bio, Dewpoint, Khloris, Oerth Bio, Immunitas, eGenesis, and several other private companies. Dr. Eckhardt received his M.D. from the University of Basel and his M.B.A. from INSEAD in Fontainebleau, France.
We believe that Dr. Eckhardt is qualified to serve on our board of directors due to his deep knowledge of the biopharmaceutical industry and his diverse board experience. Dr. Eckhardt has notified us that he will resign from our board of directors effective immediately prior to the effectiveness of the Registration Statement of which this prospectus forms a part.
Joseph Jimenez has served as a member of our board of directors since the 2021 Reorganization in February 2021, and previously served as a member of the board of managers of Century Therapeutics, LLC from August 2019
until the 2021 Reorganization in February 2021. Mr. Jimenez has served as chairman of our board of directors since February 2021. Mr. Jimenez is currently Co-Founder and Managing Director of Aditum Bio, a venture capital firm. He has held this position since July 2019. Mr. Jimenez served as CEO of Novartis AG, a pharmaceutical company, from 2010 until his retirement in 2018. He led Novartis’ Pharmaceuticals Division from October 2007 to 2010 and its Consumer Health Division in 2007. From 2006 to 2007, Mr. Jimenez served as Advisor to the Blackstone Group L.P. Mr. Jimenez was Executive Vice President, President and CEO of Heinz Europe from 2002 to 2006, and President and CEO of H.J. Heinz Company North America from 1999 to 2002. Mr. Jimenez is currently a member of the board of directors of General Motors Company, where he has served since 2015. Mr. Jimenez has also been a member of the board of The Proctor & Gamble Company since March 2018 and Graphite Bio since June 2020. Additionally, Mr. Jimenez served on the board of directors of Colgate-Palmolive Company from 2009 to 2015, and of AstraZeneca PLC, from 2002 to 2007. Mr. Jimenez received his B.A. in marketing from Stanford University and an M.B.A. from the University of California, Berkeley.
We believe that Mr. Jimenez is qualified to serve on our board of directors due to his years of experience as a senior executive in the pharmaceutical industry, his extensive public company directorship experience, and his deep insights into our industry.
Alessandro Riva, M.D. has served as a member of our board of directors since May 2021. Dr. Riva recently served as the Chief Executive Officer of Ichnos Sciences, a biotechnology company focusing on oncology therapies. Previously, Dr. Riva was the Executive Vice President and Global Head, Oncology Therapeutics and Cell Therapy at Gilead Sciences, Inc., a biotechnology company, from January 2017 to March 2019. Prior to Gilead, Dr. Riva served as the Executive Vice President and Global Head, Oncology Development and Medical Affairs at Novartis AG, a position he held from January 2005 until December 2016. Dr. Riva received his M.D. from Università degli Studi di Milano.
We believe that Dr. Riva is qualified to serve on our board of directors due to his extensive management experience at biotechnology companies.
Carlo Rizzuto, Ph.D. has served as a member of our board of directors since the 2021 Reorganization in February 2021, and previously served as a member of the board of managers of Century Therapeutics, LLC from June 2019 until the 2021 Reorganization in February 2021. Dr. Rizzuto served on the board of directors of Prior Century from March 2018 until June 2019. From April 2018 until August 2018, Dr. Rizzuto was President, Secretary and Treasurer of Prior Century. Dr. Rizzuto joined Versant Ventures in November 2012 where he has served in a variety of roles including operating principal, venture partner and partner. Dr. Rizzuto has served as Chief Executive Officer of Highline Therapeutics, a biotech incubator established by Versant Ventures, since March 2015. Dr. Rizzuto previously served as Chief Business Officer of Anokion SA, a biopharmaceutical company, from January 2014 to January 2017. Prior to joining Versant Ventures, Dr. Rizzuto worked at Novartis AG, where he was a global program team director from 2010 to 2012. Dr. Rizzuto has served on the Pandion Therapeutics, Inc. board of directors since January 2018. Dr. Rizzuto received a Ph.D. in virology from Harvard University and a B.A. in biology from the University of Virginia.
We believe that Dr. Rizzuto is qualified to serve on our board of directors due to his knowledge and experience as an investor in the life sciences industry.
Family relationships
There are no family relationships among our directors and executive officers.
Board composition and election of directors
Our board of directors is currently composed of nine members and following the resignation of Toshikazu Ban and Juergen Eckhardt upon the effectiveness of the Registration Statement of which this prospectus forms a part, will consist of seven members. Eight of our directors are independent within the meaning of the independent director guidelines of Nasdaq. Pursuant to our certificate of incorporation as in effect immediately prior to this offering and voting agreement, Mr. Ban and Dr. Rizzuto were designated by the holders of our Series A preferred
stock; Dr. Eckhardt was designated by holders of our Series B preferred stock; Mr. Casdin was designated by the holders of our Series C preferred stock; and Dr. Flores was designated by the holders of our common stock, voting as a separate class. Mr. Jimenez, Ms. Butitta, Dr. Blackwell, and Dr. Riva were appointed as independent directors by our board of directors, and Mr. Jimenez was appointed as Chairman of our board of directors.
Classified board of directors
In accordance with our second amended and restated certificate of incorporation, which will become effective at the closing of this offering, our directors will be divided into three classes serving staggered three-year terms. At each annual meeting of stockholders, a class of directors will be subject to re-election for a three-year term. As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Our current directors will be divided among the three classes as follows:
•
the Class I directors will be Carlo Rizzuto, Eli Casdin, and Lalo Flores, and their terms will expire at the first annual meeting of stockholders held following the closing of this offering;
•
the Class II directors will be Cynthia Butitta and Alessandro Riva, and their terms will expire at the second annual meeting of stockholders held following the closing of this offering; and
•
the Class III directors will be Joseph Jimenez and Kimberly Blackwell, and their terms will expire at the third annual meeting of stockholders held following the closing of this offering.
Each director’s term continues until the election and qualification of his or her successor, or his or her earlier death, resignation, or removal. Our second amended and restated certificate of incorporation and our amended and restated bylaws, which will become effective immediately prior to the closing of this offering, will authorize only our board of directors to fill vacancies on our board of directors. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The classification of our board of directors may have the effect of delaying or preventing a change in control or management. See “Description of capital stock—Anti-Takeover Provisions of Delaware Law and our Charter Documents” for a discussion of other anti-takeover provisions that will be included in our second amended and restated certificate of incorporation.
Board leadership structure
Our board of directors does not have a formal policy with respect to the separation of the offices of Chief Executive Officer and Chairman of the board of directors. It is the board of directors’ view that rather than having a rigid policy, the board of directors, with the advice and assistance of the nominating and corporate governance committee, and upon consideration of all relevant factors and circumstances, will determine, as and when appropriate, whether the two offices should be separate. Currently, our leadership structure separates the offices of Chief Executive Officer and Chairman of the board of directors. Our board of directors believes that the separation of the positions of Chief Executive Officer and Chairman of the board of directors reinforces the independence of the board of directors from management, creates an environment that encourages objective oversight of management’s performance and enhances the effectiveness of our board of directors as a whole.
Role of board in risk oversight
Risk assessment and oversight are an integral part of our governance and management processes. Our board of directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings, and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews these risks with the board of directors at regular board meetings as part of management presentations that focus on particular business functions, operations or strategies, and presents the steps taken by management to mitigate or eliminate such risks.
Our board of directors does not have a standing risk management committee, but rather administers this oversight function directly through our board of directors as a whole, as well as through various standing committees of our board of directors that address the risks inherent in their respective areas of oversight. While our board of directors is responsible for monitoring strategic risk exposure, our audit committee oversees management of financial reporting, compliance and litigation risks, as well as the steps management has taken to monitor and control such exposures. Our nominating and corporate governance committee manages risks associated with the independence of our board of directors, potential conflicts of interest and the effectiveness of our board of directors and our compensation committee is responsible for overseeing the management of risks relating to our executive compensation policies, plans and arrangements and the extent to which those policies or practices increase or decrease risks for our company.
Director independence
In connection with this offering, we have applied to list our common stock on the Nasdaq Global Select Market. Under the Nasdaq listing rules, or the Listing Rules, independent directors must comprise a majority of a listed company’s board of directors within a specified period following the closing of this offering. In addition, the Listing Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and governance committees be independent. Under the Listing Rules, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors or any other board committee: (i) accept, directly or indirectly, any consulting, advisory, or other compensatory fees from the listed company or any of its subsidiaries; or (ii) be an affiliated person of the listed company or any of its subsidiaries. We intend to satisfy the audit committee independence requirements of Rule 10A-3 as of the closing of this offering.
Additionally, compensation committee members must not have a relationship with us that is material to the director’s ability to be independent from management in connection with the duties of a compensation committee member. We intend to satisfy the compensation committee independence requirements of Rule 10A-3 as of the closing of this offering.
Our board of directors has undertaken a review of the independence of each director and determined that all of our directors, other than Dr. Flores, qualify as “independent” directors in accordance with the Listing Rules. Dr. Flores is not considered independent by virtue of his position as our President and Chief Executive Officer. In making these determinations, our board of directors reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.
Board committees
Our board of directors has established an audit committee, a compensation committee, and a nominating and corporate governance committee, each of which will have the composition and responsibilities described below as of upon effectiveness of the Registration Statement of which this prospectus forms a part. Our board of directors may establish other committees to facilitate the management of our business. Members will serve on these committees until their resignation or until otherwise determined by our board of directors. Each committee intends to adopt a written charter that satisfies the applicable rules and regulations of the SEC and Listing Rules, which we will post on our website at www.centurytx.com prior to the closing of this offering.
Audit committee
Our audit committee will consist of Kimberly Blackwell, Cynthia Butitta, and Alessandro Riva. Our board of directors has determined that each of Kimberly Blackwell, Cynthia Butitta, and Alessandro Riva is independent
under the Listing Rules and Rule 10A-3(b)(1) of the Exchange Act. The chair of our audit committee will be Cynthia Butitta. Our board of directors has determined that each member of the audit committee can read and understand fundamental consolidated financial statements and that Cynthia Butitta is an “audit committee financial expert” as such term is currently defined in Item 407(d)(5) of Regulation S-K. Our audit committee will be responsible for, among other things:
•
appointing, evaluating, and overseeing a firm to serve as the independent registered public accounting firm to audit our consolidated financial statements;
•
ensuring the independence of the independent registered public accounting firm;
•
discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, our interim and year-end operating results;
•
establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters;
•
considering the adequacy of our internal controls and internal audit function;
•
monitoring and reviewing legal, regulatory, and administrative compliance to the extent affecting our financial results;
•
reviewing proposed waivers of the code of business conduct and ethics for directors and executive officers;
•
reviewing and recommending and changes or amendments to the code of business and conduct and ethics;
•
reviewing material related party transactions or those that require disclosure;
•determining and reviewing risk assessment guidelines and policies, including cybersecurity risks, financial risk exposure, and internal controls regarding information security; and
•
approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm.
Compensation committee
Our compensation committee will consist of Cynthia Butitta, Eli Casdin, Joseph Jimenez, and Carlo Rizzuto. Our board of directors has determined that each member of this committee is a non-employee director, as defined by Rule 16b-3 promulgated under the Exchange Act and meets the requirements for independence under the Listing Rules. The chair of our compensation committee will be Carlo Rizzuto. The compensation committee will be responsible for, among other things:
•
reviewing and approving the compensation of our executive officers and recommending that our board of directors approve the compensation of our Chief Executive Officer;
•
reviewing and recommending to our board of directors the compensation of our directors;
•
administering our stock and equity incentive plans and overseeing regulatory compliance related to such plans;
•
reviewing and approving, or making recommendations to our board of directors with respect to, incentive compensation and equity plans; and
•
reviewing our overall compensation philosophy.
Nominating and corporate governance committee
Our nominating and corporate governance committee will consist of Kimberly Blackwell, Eli Casdin, Joseph Jimenez, and Carlo Rizzuto. Our board of directors has determined that each member of the nominating and corporate governance committee meets the requirements for independence under the Listing Rules. The chair of our nominating and corporate governance committee will be Joseph Jimenez. The nominating and corporate governance committee will be responsible for, among other things:
•
developing and recommending selection criteria for new directors for our board of directors;
•
identifying and recommending candidates for membership on our board of directors;
•
reviewing and determining board director independence annually and, as needed, as potential conflicts of interest arise;
•
reviewing and recommending our corporate governance guidelines and policies;
•
overseeing the process of evaluating the performance of our board of directors; and
•
assisting our board of directors on corporate governance matters.
Compensation committee interlocks and insider participation
None of the members of our compensation committee is currently, or has been at any time, one of our executive officers or employees. None of our executive officers currently serves, or has served during the last year, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or on our compensation committee.
Non-employee director compensation
Prior to 2021, we did not regularly provide compensation to our non-employee directors and, as shown in the table below, did not provide any compensation to our non-employee directors in 2020. Dr. Flores, our President and Chief Executive Officer, does not receive additional compensation for his services as a director. We do reimburse our non-employee directors for reasonable travel and out-of-pocket expenses incurred in connection with attending board of directors and committee meetings.
2020 director compensation table
The following table sets forth information regarding the compensation earned for service on our board of directors during the year ended December 31, 2020.
|
Name
|
|
|
Fees earned
or paid in
cash
($)
|
|
|
Option
awards
($)
|
|
|
All other
compensation
($)
|
|
|
Total
($)
|
|
|
Toshikazu Ban
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Kimberly Blackwell, M.D.(2)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Cynthia Butitta(1)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Eli Casdin(1)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Juergen Eckhardt, M.D
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Joseph Jimenez
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Alessandro Riva, M.D.(2)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Carlo Rizzuto, Ph.D
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
(1) Cynthia Butitta and Eli Casdin joined our board of directors in February 2021.
(2) Kimberly Blackwell and Alessandro Riva joined our board of directors in May 2021.
2021 Director letter agreements
In February 2021, in connection with our Series C Financing, we entered into letter agreements with Ms. Butitta and Mr. Jimenez regarding their service as members of our board of directors and their compensation for that service. These letters each contemplate one-time stock option awards and annual cash retainers. The letter agreements provide for the issuance of stock options to purchase 375,465 and 683,601 shares of our common stock to Ms. Butitta and Mr. Jimenez, respectively. In each case, the exercise price of these options is equal to the fair market value per share of common stock on the grant date, as determined by our board of directors. Each
of these options will vest as follows: 25% on the first anniversary of the grant date and the remaining 75% in 36 equal monthly installments thereafter, subject to full acceleration upon the occurrence of a Sale Event (as defined in the 2018 Plan). In each case, vesting is subject to the grantee’s continuous service through each applicable vesting date of event.
The letter agreements also provide that we will pay annual cash retainers of $25,000 and $50,000 to Ms. Butitta and Mr. Jimenez, respectively. These annual retainers will be paid in quarterly installments. Following the completion of this offering, these annual cash retainers will be superseded by the compensation payable under the Non-Employee Director Compensation Policy described below.
In May 2021, we entered into letter agreements with Dr. Blackwell and Dr. Riva regarding their service as members of our board of directors and their compensation for that service. These letters contemplate one-time stock option awards and annual cash retainers. The letter agreements provide for the issuance of a stock option to purchase 250,310 shares of our common stock to each of Dr. Blackwell and Dr. Riva. The exercise price of these options is equal to the fair market value per share of common stock on the grant date, as determined by our board of directors. Each of these options will vest as follows: 25% on the first anniversary of the grant date and the remaining 75% in 36 equal monthly installments thereafter, subject to full acceleration upon the occurrence of a Sale Event (as defined in the 2018 Plan). In each case, vesting is subject to the grantee’s continuous service through each applicable vesting date of event.
The letter agreements also provide that we will pay an annual cash retainer of $25,000 to each of Dr. Blackwell and Dr. Riva. These annual retainers will be paid in quarterly installments. Following the completion of this offering, these annual cash retainers will be superseded by the compensation payable under the Non-Employee Director Compensation Policy described below.
Non-employee director compensation policy
Our board of directors intends to adopt a non-employee director compensation policy, to be effective upon the effectiveness of the Registration Statement of which this prospectus forms a part. The below table depicts this non-employee director compensation policy:
|
Compensation Elements: Non-Employee Director Compensation Policy
|
|
|
Cash
|
|
|
|
|
|
Member Annual Retainer
|
|
|
$ 35,000
|
|
|
Chairperson Annual Retainer
|
|
|
$ 30,000
|
|
|
Annual Committee Chair Retainer
|
|
|
|
|
|
Audit
|
|
|
$ 15,000
|
|
|
Compensation
|
|
|
$ 10,000
|
|
|
Nominating and Corporate Governance
|
|
|
$ 8,000
|
|
|
Annual Committee Member Retainer
|
|
|
|
|
|
Audit
|
|
|
$ 7,500
|
|
|
Compensation
|
|
|
$ 5,000
|
|
|
Nominating and Corporate Governance
|
|
|
$ 4,000
|
|
|
Equity
|
|
|
|
|
|
Initial Equity Grant
|
|
|
Option to purchase 100,000 shares of Common Stock, made to directors at the commencement of their director service, vesting monthly over a period of 36 months, subject to continued service with the Company
|
|
|
Compensation Elements: Non-Employee Director Compensation Policy
|
|
|
Annual Equity Retainer
|
|
|
Option to purchase 50,000 shares of Common Stock, vesting in full on the sooner of the first anniversary of the date of grant or the next annual shareholder meeting, subject to continued service with the Company
|
|
Each annual cash retainer will be paid quarterly in arrears. All equity awards granted under the non-employee director compensation policy will be granted under, and subject to the terms of, the 2021 Plan.
Initial public offering option grant
In connection with this offering, each of our non-employee directors serving on the board of directors upon the closing of the offering will be granted an option to purchase 50,000 shares of our common stock at the initial public offering price of $ per share. Each of the foregoing director equity grants will be granted under, and subject to the terms of, the 2021 Plan and will fully vest and become exercisable on the sooner of the first anniversary of the closing of the offering or the next annual shareholder meeting, subject to continued service with the Company.
Code of business conduct and ethics
In connection with this offering, our board of directors will adopt a written code of business conduct and ethics that will apply to all of our directors, officers, and employees. The code of business conduct and ethics will cover fundamental ethics and compliance-related principles and practices such as accurate accounting records and financial reporting, avoiding conflicts of interest, the protection and use of our property and information, and compliance with legal and regulatory requirements. Our code of business conduct and ethics will be posted on the investor relations section of our website at www.centurytx.com. We intend to disclose any amendments to our code of business conduct and ethics, or waivers of its requirements, on our website to the extent required by the applicable rules and exchange requirements.
Limitation on liability and indemnification matters
Our second amended and restated certificate of incorporation and our amended and restated bylaws, which will each become effective immediately prior to the closing of this offering, will limit our directors’ liability and may indemnify our directors and officers to the fullest extent permitted under the DGCL. The DGCL provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability for any:
•
any breach of the director’s duty of loyalty to us or our stockholders;
•
act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
•
unlawful payment of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or
•
any transaction from which the director derived an improper benefit.
The DGCL and our amended and restated bylaws provide that we will, in certain situations, indemnify our directors and officers and may indemnify other employees and other agents, to the fullest extent permitted by law.
We have entered or intend to enter into indemnification agreements with each of our directors and officers. These indemnification agreements may require us, among other things, to indemnify our directors and officers for some expenses, including attorneys’ fees, judgments, penalties, fines, and settlement amounts incurred by a director or officer in any action or proceeding arising out of his or her service as one of our directors or officers, or any of our subsidiaries or any other company or enterprise to which the person provides services at our
request. Subject to certain limitations, our indemnification agreements also require us to advance expenses incurred by our directors, officers, and key employees for the defense of any action for which indemnification is required or permitted.
We maintain a directors’ and officers’ insurance policy pursuant to which our directors and officers are insured against liability for actions taken in their capacities as directors and officers. We believe that these provisions in our second amended and restated certificate of incorporation and amended and restated bylaws and these indemnification agreements are necessary to attract and retain qualified persons as directors and officers.
The limitation of liability and indemnification provisions in our second amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and our stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions.
At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought and we are not aware of any threatened litigation that may result in claims for indemnification.
Insofar as indemnification for liabilities arising under the Securities Act, may be permitted to directors, officers or control persons, in the opinion of the SEC, such indemnification is against public policy, as expressed in the Securities Act and is therefore unenforceable.
Executive compensation
Our named executive officers, or NEOs, for the year ended December 31, 2020, which consist of our principal executive officer and our two most highly compensated executive officers, are:
•
Dr. Osvaldo Flores, our President and Chief Executive Officer;
•
Dr. Hyam Levitsky, our President of Research and Development; and
•
Dr. Michael Diem, our Chief Business Officer.
Summary compensation table
The following table provides information regarding the compensation earned by our NEOs for the year ended December 31, 2020.
|
Name and principal position
|
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Option
awards
($)(1)
|
|
|
Non-equity
incentive plan
compensation
($)(2)
|
|
|
All other
compensation
($)
|
|
|
Total
($)
|
|
|
Osvaldo Flores, Ph.D.
|
|
|
|
|
2020
|
|
|
|
|
|
461,250
|
|
|
|
|
|
—
|
|
|
|
|
|
741,750
|
|
|
|
|
|
185,400
|
|
|
|
|
|
2,250
|
|
|
|
|
|
1,390,650
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hyam Levitsky, M.D.
|
|
|
|
|
2020
|
|
|
|
|
|
384,375
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
115,875
|
|
|
|
|
|
1,875
|
|
|
|
|
|
502,125
|
|
|
|
President of R&D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Diem, M.D.
|
|
|
|
|
2020
|
|
|
|
|
|
123,958
|
|
|
|
|
|
125,000(4)
|
|
|
|
|
|
644,258
|
|
|
|
|
|
49,583
|
|
|
|
|
|
—
|
|
|
|
|
|
942,799
|
|
|
|
Chief Business
Officer(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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(1) Represents the aggregate grant date fair value of the stock options awarded to the NEO in fiscal year 2020. These values have been determined under the principles used to calculate the value of equity awards for purposes of our financial statements. For a discussion of the assumptions and methodologies used to calculate the amounts referred to above, please see the discussion of option awards contained in Note 14, Stock Based Compensation, to our financial statements included elsewhere in this prospectus. The amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the NEO upon exercise of the stock options.
(2) Amounts shown are cash incentive payments earned in respect of 2020 performance and paid in the first quarter of 2021.
(3) Dr. Diem commenced employment with us in September 2020.
(4) Amount shown is a sign-on bonus paid to Dr. Diem upon his hire.
Narrative disclosure to the summary compensation table
Elements of compensation
The compensation of our NEOs generally consists of base salary, annual cash bonus opportunities, long term incentive compensation in the form of equity awards, and other benefits, as described below.
Base salary
The base salary payable to each NEO is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role, responsibilities, and contributions. Each NEO’s initial base salary was specified in his offer letter or employment agreement, as described below, and is reviewed (and, if applicable, adjusted) from time to time by our board of directors or compensation committee.
The NEOs’ current annual base salary rates are: $477,405 for Dr. Flores, $397,838 for Dr. Levitsky, and $437,750 for Dr. Diem. These amounts reflect 3% increases to the executives’ annual base salary rates in effect at the end of 2020. Upon completion of this offering and in accordance with the terms of their new employment agreements described below, the NEOs annual base salary rates will increase to $557,000 for Dr. Flores, $430,700 for Dr. Levitsky, and $437,800 for Dr. Diem.
Annual Non-Equity Incentives
Each of our NEOs’ annual non-equity incentive opportunity is expressed as a percentage of base salary that can be earned based on the achievement of predetermined corporate and individual performance objectives. The 2020 target bonus opportunities for Dr. Flores, Dr. Levitsky, and Dr. Diem were 40%, 30%, and 40% of their respective base salaries.
The goals applicable to the NEOs’ 2020 annual non-equity incentives related to certain clinical milestones, pipeline, platform and manufacturing development, operations, financing, corporate development, human resources, scientific leadership, and intellectual property. Following a review of 2020 performance, our compensation committee approved 2020 non-equity incentive payments to Dr. Flores, Dr. Levitsky and Dr. Diem equal to 100% of their respective target amounts (pro-rated in the case of Dr. Diem, to account for his mid-year hire).
Long Term Equity Incentives
Our equity-based incentive awards are designed to align our interests and the interests of our stockholders with those of our employees and consultants, including our NEOs. Our board of directors or compensation committee approves equity grants. Dr. Flores and Dr. Diem each received options to purchase shares of our common stock in 2020 and 2021. See “—Outstanding Equity Awards at Fiscal Year-End” for more information regarding equity awards made in 2020 to our NEOs.
Employment Arrangements with our NEOs
Osvaldo Flores, Ph.D.
In August 2018, we entered into an employment offer letter with Dr. Flores. The offer letter provided for Dr. Flores’ at-will employment and set forth his initial annual base salary of $450,000 and his initial target annual bonus opportunity at 30% of base salary. The offer letter also provided for the issuance of a restricted stock award to Dr. Flores, or the 2018 Restricted Shares, and for an opportunity for Dr. Flores to receive certain stock options in the future, upon achievement of certain performance conditions. The 2018 Restricted Shares were granted to Dr. Flores in September 2018. In lieu of the stock options discussed in the offer letter, we granted stock options to Dr. Flores in October 2020. See “—Outstanding Equity Awards at Fiscal Year-End” for additional details regarding the 2018 Restricted Shares and the 2020 stock options.
Dr. Flores’ offer letter provides for severance benefits upon a termination of his employment by us without cause, or his resignation for good reason, subject to Dr. Flores’ execution of a general release of claims. The severance benefits are: (i) payment of all accrued and unpaid base salary, (ii) payment of any otherwise earned but unpaid annual bonus for the prior year, (iii) payment of pro-rata bonus for the year of termination, and (iv) continuation of his base salary and COBRA premiums paid by us for six (6) months. In addition, if such termination without “cause” or for “good reason” occurs within the twelve (12) month period immediately following a change in control, then in addition to the payments described in (i)-(iii) above, Dr. Flores’ salary and COBRA continuation period will be extended from six (6) months to twelve (12) months and the 2018 Restricted Shares (to the extent then unvested) shall become fully vested as of the date of termination.
Dr. Flores’ offer letter provides for severance benefits upon a termination of his employment by us without cause, or his resignation for good reason, subject to Dr. Flores’ execution of a general release of claims. The severance benefits are: (i) payment of all accrued and unpaid base salary, (ii) payment of any otherwise earned but unpaid annual bonus for the prior year, (iii) payment of pro-rata bonus for the year of termination, and (iv) continuation of his base salary and COBRA premiums paid by us for six (6) months. In addition, if such termination without “cause” or for “good reason” occurs within the twelve (12) month period immediately following a change in control, then in addition to the payments described in (i)-(iii) above, Dr. Flores’ salary and COBRA continuation period will be extended from six (6) months to twelve (12) months and the 2018 Restricted Shares (to the extent then unvested) shall become fully vested as of the date of termination.
In connection with this offering, we have entered into a new employment agreement with Dr. Flores, that will be effective upon closing of the offering, and replace his employment offer letter. The new employment agreement provides for Dr. Flores’ at-will employment and sets forth an annual base salary of $557,000, a target annual bonus opportunity at 50% of base salary, and eligibility to participate generally in our employee benefit plans. In addition, Dr. Flores has entered into a Proprietary Information and Assignment Agreement in connection with this offering, described below on page 164 in greater detail.
Dr. Flores’ new employment agreement provides for severance benefits upon a termination of his employment by us without cause, or his resignation for good reason, subject to Dr. Flores’ execution of a general release of claims. The severance benefits are: (i) payment of all accrued and unpaid base salary, (ii) payment of any otherwise earned but unpaid annual bonus for the prior year, (iii) payment of pro-rata bonus for the year of termination, and (iv) continuation of his base salary and COBRA premiums paid by us for twelve (12) months. In addition, if such termination without “cause” or for “good reason” occurs within the three (3) month period prior to or the twelve (12) month period immediately following a change in control, then Dr. Flores’ salary and COBRA continuation period will be extended from twelve (12) months to eighteen (18) months, and he will receive a lump sum payment in an amount equal to his target annual bonus, and all outstanding equity awards subject to vesting solely based on the passage of time and Dr. Flores’ continued employment will become vested on the later of Dr. Flores’ termination date and the change in control.
Hyam Levitsky, M.D.
In March 2019, we entered into an employment agreement with Dr. Levitsky. The agreement provided for Dr. Levitsky’s at-will employment and set forth his initial annual base salary of: (i) $500,000 if working at full-time capacity, or (ii) $375,000 if working at a 75% schedule, which requires an average minimum of 120 hours per month. The agreement also provides for an initial target annual bonus opportunity of up to 30% of base salary, a sign-on bonus of $100,000, equity incentive awards in the form of stock options to purchase shares of our common stock and eligibility to participate in our employee benefit plans. In lieu of the stock options discussed in the employment agreement, the Company sold to Dr. Levitsky an equivalent number of restricted shares in July 2019 at a price equal to what the option exercise price otherwise would have been. See “—Outstanding Equity Awards at Fiscal Year-End” for additional details regarding this restricted stock award. Dr. Levitsky’s employment agreement provides for a severance benefit of three (3) months of salary continuation following a termination of his employment by us without cause, subject to his execution of a general release of claims.
In connection with this offering, we have entered into a new employment agreement with Dr. Levitsky, that will be effective upon closing of the offering and replace his prior employment agreement. The new employment agreement provides for Dr. Levitsky’s at-will employment and sets forth his annual base salary of $430,700, a target annual bonus opportunity at 40% of base salary, and eligibility to participate generally in our employee benefit plans. In addition, Dr. Levitsky has entered into a new Proprietary Information and Assignment Agreement in connection with this offering, as described below on page 164.
Dr. Levitsky’s new employment agreement provides for severance benefits upon a termination of his employment by us without cause, or his resignation for good reason, subject to Dr. Levitsky’s execution of a general release of claims. The severance benefits are: (i) payment of all accrued and unpaid base salary, (ii) payment of any otherwise earned but unpaid annual bonus for the prior year, and (iii) payment of pro-rata bonus for the year of termination, and (iv) continuation of his base salary and COBRA premiums paid by us for nine (9) months. In addition, if such termination without “cause” or for “good reason” occurs within the three (3) month period prior to or twelve (12) month period immediately following a change in control, Dr. Levitsky’s salary and COBRA continuation period will be extended from nine (9) months to twelve (12) months, and he will receive a lump sum payment in an amount equal to his target annual bonus and all outstanding equity awards subject to vesting solely based on the passage of time and Dr. Levitsky’s continued employment will become vested on the later of Dr. Levitsky’s termination date and the change in control.
Michael Diem, M.D.
In August 2020, we entered into an employment offer letter with Dr. Diem. The offer letter provided for Dr. Diem’s at-will employment and set forth his initial annual base salary of $425,000, his initial target annual bonus opportunity of up to 40% of base salary (pro-rated for any partial years of employment), and a sign-on bonus of $125,000; however, if terminated for cause or if Dr. Diem resigns within 12 months of September 16, 2020, his start date, the sign-on bonus must be repaid in full (in the case of termination for cause) or on a pro-rata basis (in the case of resignation) within 30 days of his termination date. The offer letter also provided for the issuance of a stock option to purchase shares of our common stock and his eligibility to participate in our employee benefit plans. See “—Outstanding Equity Awards at Fiscal Year-End” for additional details regarding the stock option granted to Dr. Diem in connection with his hire.
In connection with this offering, we have entered into a new employment agreement with Dr. Diem, that will be effective upon closing of the offering and replace his employment offer letter. The new employment agreement provides for Dr. Diem’s at-will employment and sets forth an annual base salary of $437,800, a target annual bonus opportunity at 40% of base salary, and eligibility to participate generally in employee benefit plans. The new employment agreement also provides that, if Dr. Diem is terminated for cause or if Dr. Diem resigns prior to September 16, 2021 (the first anniversary of his start date), the sign-on bonus repayment obligation described in the preceding paragraph will apply. Dr. Diem’s new employment agreement provides for the same severance benefits as those provided under Dr. Levitsky’s new employment agreement, described on page 163 above. In addition, Dr. Diem has entered into a new Proprietary Information and Assignment Agreement in connection with this offering, as described immediately below.
Proprietary Information and Assignment Agreements
Each of Dr. Levitsky and Dr. Diem has previously entered into a Proprietary Information and Assignment Agreement with us that includes customary provisions regarding confidentiality and ownership of intellectual property, and certain restrictive covenants that apply for a period of one year following any cessation of employment. In connection with this offering and our entry into new employment agreements with the NEOs, each NEO entered into a new Proprietary Information and Assignment Agreement. These new Proprietary Information and Assignment Agreements include customary prohibitions against competition with us and solicitation of our customers and employees, both during employment and for one year following any cessation of employment for Dr. Flores and for nine months following cessation of employment for each of Dr. Levitsky and Dr. Diem. The Proprietary Information and Assignment Agreement are incorporated by reference into the new employment agreements and payment of any severance benefits under each executive’s new employment agreement is conditioned on continued compliance with his Proprietary Information and Assignment Agreement.
Outstanding Equity Awards at Fiscal Year-End
The following table provides information regarding the outstanding equity awards held by our NEOs as of December 31, 2020. All awards were granted pursuant to the 2018 Plan. See “—Equity Incentive Plans—2018 Plan” below for additional information.
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Option awards
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Stock awards
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Name and
Principal
Position
(a)
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Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
(b)
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Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
(c)
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Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
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Option
Exercise
Price
($)
(e)
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Option
expiration
date
($)
(f)
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Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)
(g)
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Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(1)
(h)
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Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested
(#)
(i)
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Equity
Incentive Plan
Awards: Market
or Payout Value
of Unearned
Shares, Units or
Other Rights
That Have Not
Vested
($)
(j)
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Osvaldo Flores,
Ph.D.
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—
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537,500(2)
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0.69
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10/1/2030
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—
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537,500(3)
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0.69
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10/1/2030
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1,219,785(4)
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841,651.66
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Hyam Levitsky, M.D.
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815,625(5)
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562,781.25
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Michael
Diem, M.D.
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933,707(6)
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0.69
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9/30/2030
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(1) For this purpose, the value of each share of Restricted Stock on December 31, 2020 was estimated to be $0.69, based on the most recent independent valuation of our common stock prior to that date.
(2) This option was granted on October 20, 2020 and vests as follows: 25% on the first anniversary of the grant date and the remaining 75% in 36 equal monthly installments thereafter. Vesting of the award requires continued employment through the applicable vesting date, provided that vesting will accelerate upon a termination without cause within 12 months following a sale event.
(3) This option will vest upon the first to occur of (a) our closing of a business development transaction prior to June 30, 2021 or (b) our closing of an initial public offering prior to August 13, 2021, in each case provided that specified financial metrics are achieved in connection with the closing. Vesting of the award requires continued employment through the applicable vesting date, provided that vesting will accelerate upon a termination without cause within 12 months following a sale event. If this offering is completed prior to August 13, 2021 and Dr. Flores remains in service through that time, this option will then become fully vested and exercisable.
(4) This restricted stock award was granted on September 10, 2018 and vests as follows: 25% on the first anniversary of the grant date and the remaining 75% in 36 equal monthly installments thereafter. Vesting of the award requires continued employment through the applicable vesting date, provided that vesting will accelerate in full upon a termination without cause or a resignation with good reason within 12 months following a change in control.
(5) This restricted stock award was granted on July 18, 2019 and vests as follows: 25% on May 1, 2020 and the remaining 75% in 36 equal monthly installments thereafter. Vesting of the award requires continued employment through the applicable vesting date. The shares subject to this restricted stock award are held by a trust for the benefit of Dr. Levitsky’s family. We authorized the transfer to facilitate Dr. Levitsky’s estate planning and that the shares remain subject to all the same transfer restrictions and vesting conditions as would have applied in the absence of such transfer.
(6) This option was granted on October 1, 2020 and vests as follows: 25% on September 16, 2021 and the remaining 75% in 36 equal monthly installments thereafter. Vesting of the award requires continued employment through the applicable vesting date. On February 24, 2021, Dr. Diem utilized the early exercise feature of his stock option to purchase 200,000 restricted shares of common stock subject to the same vesting schedule as the original option, leaving 733,707 options outstanding under this option award.
In addition to the equity awards shown in the table above, we made stock option awards on April 14, 2021 to each of Dr. Flores, Dr. Levitsky and Dr. Diem with respect to 1,956,060, 50,000 and 320,000 shares of our common stock, respectively. The exercise price of each option is $2.89 per share. Each such stock option will vest 25% upon the one-year anniversary of the closing of this offering and 2.0833% per month for the following 36 months, subject to the optionee’s continued service through the applicable vesting date. Our compensation committee made these awards, with input from its independent compensation consultant, to align the NEOs total potential ownership interests with market data.
Equity Incentive Plans
2021 Plan
Our 2021 Plan will become effective upon the execution of an underwriting agreement in connection with this offering. Upon the effectiveness of the 2021 Plan, we will cease granting awards under our 2018 Plan. A summary of the material terms of the 2021 Plan follows below.
The 2021 Plan authorizes the award of both equity-based and cash-based incentive awards, including: (i) stock options (both incentive stock options and nonqualified stock options), (ii) stock appreciation rights, or SARs, (iii) restricted stock awards, or RSAs, (iv) restricted stock units, or RSUs, and (v) cash or other stock based awards. Incentive stock options may be granted only to employees. All other types of awards may be issued to employees, directors, consultants and other service providers.
Shares Subject to 2021 Plan. We will initially reserve shares of our common stock for issuance under our 2021 Plan. The number of shares reserved for issuance under our 2021 Plan will increase automatically on January 1, 2022 and each anniversary of such date prior to the termination of the 2021 Plan, equal to the lesser of (i) 5% of our shares of common stock issued and outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares as determined by our board or compensation committee. No more than shares of our common stock may be issued under the 2021 Plan through incentive stock options.
The following shares will be added (or added back) to the shares available for issuance under the 2021 Plan:
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Shares subject to 2018 Plan or 2021 Plan awards that expire, terminate or are cancelled or forfeited for any reason after the effectiveness of the 2021 Plan;
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Shares that after the effectiveness of the 2021 Plan are withheld to satisfy the exercise price of an option issued under our 2018 Plan or 2021 Plan; and
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Shares that after the effectiveness of the 2021 Plan are withheld to satisfy tax withholding obligations related to any award under our 2018 Plan or 2021 Plan.
However, the total number of shares underlying 2018 Plan awards that may be recycled into the 2021 Plan pursuant to the above-described rules will not exceed shares.
Shares of our common stock issued by us through the assumption or substitution of awards in connection with a future acquisition of another entity will not reduce the shares available for issuance under the 2021 Plan.
Administration. We expect that our 2021 Plan will be administered by our compensation committee. The administrator of the plan will have the authority to, among other things, interpret the plan and award agreements, select grantees, determine the vesting, payment and other terms of awards, and modify or amend awards. Our compensation committee may delegate to one or more of our officers the authority to issue awards under the 2021 Plan to grantees who are not executive officers, subject to parameters established by the compensation committee.
Adjustments. In the event of certain corporate events or transactions (such as a merger, consolidation, reorganization, recapitalization, stock split, reverse stock split, spin-off, stock dividend, or similar transaction or change in our capital structure), our compensation committee will make adjustments or substitutions to the number and kind of shares that may be issued under the 2021 Plan, the number and kind of shares subject to outstanding awards, the exercise price or base price of outstanding awards, and/or any other affected terms and conditions of the 2021 Plan or outstanding awards, in each case as it deems appropriate and equitable.
Stock options. The 2021 Plan provides for the grant of both incentive stock options and non-qualified stock options to purchase shares of our common stock at a stated exercise price. The exercise price of stock options granted under the 2021 Plan must be at least equal to the fair market value of our common stock on the date of grant. The maximum term of options granted under our 2021 Plan is ten years.
Our compensation committee may provide in the terms of the applicable award agreement that the participant may exercise an unvested portion in exchange for restricted stock subject to the same vesting terms as the option.
Stock Appreciation Rights. An SAR provides for a payment, in cash or shares of our common stock or a combination of both, to the holder based upon the difference between the fair market value of our common stock on the date of exercise and a predetermined exercise price, multiplied by the number of shares. The base price
of a SAR must be at least the fair market value of a share of our common stock on the date of grant. SARs may not have a term that is longer than ten years from the date of grant.
Restricted Stock Awards. An RSA is an issuance of shares of our common stock subject to forfeiture restrictions that lapse based on the satisfaction of service and/or performance conditions. The price, if any, of each share subject to an RSA will be determined by the compensation committee. During the vesting period, a participant will have the right to vote and receive any dividends with respect to restricted stock, provided that our compensation committee may specify that any such dividends are subject to the same vesting schedule as the shares to which they relate.
Restricted Stock Units. RSUs represent the right to receive shares of our common stock (or cash equal to the value of such shares) at a specified time in the future, following the satisfaction of specified service and/or performance conditions.
Cash or Other Stock Based Awards. Cash or other stock based awards (including awards to receive unrestricted shares of our common stock or immediate cash payments) may be granted to participants. Our compensation committee will determine the terms and conditions of each such award, including, as applicable, the term, any exercise or purchase price, performance goals, vesting conditions, and other terms and conditions. Payment in respect of a cash or other stock based award may be made in cash, shares of our common stock, or a combination of both, at the discretion of our compensation committee.
Change in Control. Upon or in anticipation of a change in control (which includes certain merger, asset or stock transactions, certain changes in our board composition and any other event deemed by our board of directors to constitute a change in control), our compensation committee may take such actions as it deems appropriate with respect to outstanding awards under the 2021 Plan. Such actions may include (among other things) the acceleration of award vesting, the substitution of awards, the cancellation of unexercised or unvested awards and the redemption or cashout of awards. In the discretion of our compensation committee, any cash or other substitute consideration payable upon redemption or cashout of an award may be subjected to the same vesting terms that applied to the original award, or earn-out, escrow, holdback or similar arrangements comparable to those applicable to stockholders in connection with the change in control. The compensation committee need not treat all outstanding awards in an identical manner.
Repricing. The compensation committee may in its discretion: (i) cancel options or stock appreciation rights outstanding under the 2021 Plan in exchange for new options or stock appreciation rights with a lower exercise or base price per share; (ii) cancel underwater options or stock appreciation rights outstanding under the 2021 Plan in exchange for consideration payable in our equity securities or cash; or (iii) otherwise directly reduce the exercise or base price of options or stock appreciation rights outstanding under the 2021 Plan.
Director Compensation Limits. Beginning with the 2022 calendar year, the aggregate amount of equity and cash compensation payable to a non-employee director with respect to a calendar year for his or her service as a director may not exceed $750,000 (or $1,000,000, in the case of a newly appointed or newly elected non-employee director’s first year of service with us. This director compensation limit will not apply to (i) compensation earned by a non-employee director solely in his or her capacity as chairman of the Board or lead independent director, (ii) compensation earned by a non-employee director for services he or she performs outside of his or her role as a non-employee director (i.e. as an advisor or consultant), or (iii) compensation awarded by the Board to a non-employee director in extraordinary circumstances, as determined by the Board in its discretion, so long as, in each case, the non-employee director does not participate in the decision to award him- or herself the additional compensation.
Clawback. Awards under the 2021 Plan will be subject to clawback or recoupment pursuant to any applicable policy, law or exchange listing requirement in effect from time to time.
Transferability. Except for certain estate planning transfers authorized by the compensation committee, awards granted under the 2021 Plan are generally nontransferable except by will or by the laws of descent and distribution.
Amendment and Termination. Our board of directors may amend our 2021 Plan at any time, subject to stockholder approval if required by applicable law or exchange listing requirement. The 2021 Plan will terminate ten years after it becomes effective.
2018 Plan
The 2018 Plan was originally adopted on June 1, 2018 to enable the issuance of stock options, restricted stock awards, unrestricted stock awards, restricted stock units, and other awards to our employees, officers, directors, and consultants.
As noted above, we will cease granting awards under the 2018 Plan immediately prior to this offering. Any outstanding awards will continue to be subject to the terms of the 2018 Plan and the applicable award agreements.
A summary of the material terms of the 2018 Plan follows below.
Administration. Our board of directors, or a committee of our board of directors, is authorized to administer our 2018 Plan and is referred to as the ‘‘plan administrator’’ herein. Under our 2018 Plan, the plan administrator has the authority to determine award recipients, dates of grant, the numbers and types of awards to be granted, the applicable fair market value and the provisions of each award, including the period of their exercisability and the vesting schedule applicable to an award, among other powers under the 2018 Plan. We expect that our compensation committee will administer the 2018 Plan following the date of this offering.
Shares subject to 2018 Plan. The maximum number of shares that may be granted under the 2018 Plan is 23,498,781.
As of March 31, 2021, there were (i) 6,169,655 shares available for issuance in respect of new awards under the 2018 Plan, (ii) options outstanding under the 2018 Plan with respect to shares of our common stock, and (iii) shares of restricted common stock outstanding under the 2018 Plan (some of which were acquired upon early exercise of stock options).
Share Recycling. Under the terms of the 2018 Plan, shares underlying awards that are forfeited, canceled, reacquired by the company prior to vesting, satisfied in cash or otherwise terminated, and shares that are withheld in settlement of a tax withholding obligation associated with an award or in satisfaction of the exercise price of an award, will again become available for grant under the 2018 Plan. However, as noted above, following the effectiveness of the 2021 Plan, such shares will instead become available for grant under the 2021 Plan.
Options. The 2018 Plan provides for the grant of both incentive stock options and non-qualified stock options to purchase shares of our common stock at a stated exercise price. The exercise price of stock options granted under the 2018 Plan must be at least equal to the fair market value of our common stock on the date of grant. The maximum term of options granted under our 2018 Plan is ten years.
Certain stock options issued under the 2018 Plan allow for exercise prior to vesting in exchange for restricted shares of common stock subject to the same vesting schedule as the original option, and several optionees utilized this early exercise feature.
Restricted Stock. The 2018 Plan also allows for the grant or sale of RSAs. The price, if any, of each share subject to an RSA will be determined by the plan administrator. During the vesting period, a participant will have the right to vote and receive any dividends with respect to restricted stock, provided that the plan administrator may specify that any such dividends are subject to the same vesting schedule as the shares to which they relate.
Stock Appreciation Rights, Restricted Stock Units, Unrestricted Stock Awards. In addition, the 2018 Plan allows for the grant of SARs, RSUs and unrestricted stock awards, with terms as determined by the board in accordance with the 2018 Plan. However, as noted above, we have not granted any SARs, RSUs or unrestricted stock awards under the 2018 Plan.
Sale Event. If we are subject to a “sale event” (including certain dissolution, liquidation, asset sale or merger transactions), the plan administrator will determine how to treat outstanding awards under our 2018 Plan. This
may include: (i) the cancellation and/or forfeiture of outstanding awards, unless exercised prior to the sale event or assumed, substituted or continued by the surviving entity or its parent; or (ii) cashout or redemption of outstanding awards. The plan administrator need not treat all outstanding awards in an identical manner.
Adjustments. In the event of a stock dividend, reorganization, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification, merger, asset sale, or other similar event or transaction affecting our common stock, proportional adjustments will be made to the number of shares reserved for issuance under our 2018 Plan; the number and class of shares subject to outstanding awards; and the exercise or repurchase price applicable to outstanding awards.
Repricing. Without approval of stockholders, the plan administrator may reprice options outstanding under the 2018 Plan by reducing the exercise price of such options or cancelling such options in exchange for new awards.
Transferability. Unless otherwise determined by the plan administrator and/or specified in the applicable award agreement, 2018 Plan awards generally may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will, the laws of descent, and distribution.
Amendment and termination. Our board of directors may amend or terminate our 2018 Plan at any time; provided, however, our committee may condition any other amendment or modification on the approval of stockholders for any reason, including by reason of such approval being necessary or deemed advisable to satisfy any other tax, securities or other applicable laws, policies or regulations. As noted above, we will cease granting awards under the 2018 Plan immediately prior to this offering, although outstanding 2018 Plan awards will remain in effect in accordance with their terms.
ESPP
Our board of directors intends to adopt the Employee Stock Purchase Plan, or ESPP, prior to closing of this offering, under which we may provide our employees and employees of our participating subsidiaries with an opportunity to purchase shares of our common stock at a discounted purchase price. The ESPP will first become effective when our common stock begins trading publicly, although our compensation committee has not yet determined when the first purchase period under the ESPP will commence. The material terms of the ESPP are summarized below. The ESPP is intended to qualify as an “employee stock purchase plan” meeting the requirements of Section 423 of the Code.
Administration. Subject to the express provisions of the ESPP, our compensation committee will have the authority to construe and interpret the ESPP, prescribe, amend, and rescind rules relating to the ESPP’s administration and take any other actions necessary or desirable for the administration of the ESPP and to facilitate compliance with Section 423 of the Code and other applicable law.
Stock Subject to the ESPP. Subject to adjustment as provided in the ESPP, a total of will be authorized and reserved for issuance under the ESPP. In addition, subject to prior approval by our board of directors in each instance, on or about January 1, 2022 and each anniversary of such date thereafter prior to the termination of the ESPP, the number of shares of our common stock authorized and reserved for issuance under the ESPP will be increased by a number of shares of our common stock equal to the least of (i) shares of our common stock, (ii) 1% of the shares of our common stock outstanding on the final day of the immediately preceding calendar year, and (iii) such smaller number of shares of our common stock as determined by our board of directors. Such shares of our common stock may be newly issued shares, treasury shares or shares acquired on the open market. In the event that any dividend or other distribution (whether in the form of cash, our common stock, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, or exchange of our common stock or our other securities, or other change in our structure affecting our common stock occurs, then in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the ESPP, our compensation committee will, in such manner as it deems equitable, adjust the number of shares and class of common stock that may be delivered under the ESPP, the purchase price per share and the number of shares covered by each outstanding option under the ESPP, and the numerical limits described above.
Eligibility. Generally, our employees and employees of our participating subsidiaries who customarily are employed for at least twenty (20) hours per week will be eligible to participate in the ESPP. Notwithstanding the foregoing, our compensation committee may exclude from participation in the ESPP or any offering period employees who are (i) “highly compensated employees” within the meaning of Section 414(q) of the Code, or (ii) citizens or residents of a foreign jurisdiction where the grant of an option under the ESPP to such employee would be prohibited under the laws of such foreign jurisdiction or the grant of an option under the ESPP to such employee in compliance with the laws of such foreign jurisdiction would cause the ESPP to violate the requirements of Section 423 of the Code. No employee may be granted options to purchase shares of our common stock under the ESPP if such employee (x) immediately after the grant would own capital stock possessing 5% or more of the total combined voting power or value of all classes of our capital stock, or (y) holds rights to purchase shares of our common stock under all of our employee stock purchase plans (in accordance with Section 423(b)(8) of the Code) that accrue at a rate exceeding $25,000 (determined as of the option grant date) for each calendar year in which such rights are outstanding.
Grant and Exercise of Options. The ESPP provides for six (6) month offering periods, commencing on January 1st and July 1st of each year, unless specified otherwise by our compensation committee. Eligible employees may elect to become a participant in the ESPP by submitting an enrollment form, pursuant to which an employee may elect to enroll in the ESPP, authorize a new level of payroll deductions, or stop payroll deductions and withdraw from an offering period. However, a participant may not purchase more than shares of our common stock during each offering period.
During each offering period for which a participant has enrolled, the participant may contribute through payroll deductions in an amount equal to (i) between 1% and 15%, in whole percentages, of his or her compensation, or (ii) a fixed dollar amount, in each case, on each pay day occurring during such offering period. A participant’s compensation for purposes of the ESPP includes base salary and base wages (including overtime). No interest shall accrue on or be payable with respect to the payroll deductions of a participant in the ESPP. Payroll deductions would be made before deduction for any salary deferral contributions made by the employee to any tax-qualified or nonqualified deferred compensation plan, cafeteria plan, or similar arrangement.
On the last trading day of each offering period, a participant’s option to purchase shares of our common stock will be exercised automatically. The per-share purchase price will be the lesser of (i) eighty-five percent (85%) of the fair market value of one share of our common stock on the first trading day of the applicable offering period and (ii) eighty-five percent (85%) of the fair market value of one share of our common stock on the last trading day of the applicable offering period. As soon as reasonably practicable after the last day of each offering period, we will arrange for the delivery to each participant of the shares of our common stock purchased upon exercise of his or her option. We may require that the shares of our common stock be deposited and/or retained for a specified period of time with a financial services firm or other agent it designates as broker. Neither payroll deductions nor rights with respect to the exercise of an option or to receive shares of our common stock are transferable, other than by will, by the laws of descent and distribution, or by written designation of a beneficiary with our compensation committee.
Termination of Employment and Withdrawal from the ESPP. Participants may elect to withdraw from the ESPP at any time and receive back any of their contributions, without interest, not used to purchase shares of our common stock; provided that if a participant wishes to withdraw his or her funds prior to purchase, he or she must submit a revised enrollment form to our compensation committee at least fifteen (15) days prior to the end of the then-current offering period. Participants who terminate employment before the end of an offering period will be deemed to have withdrawn from the ESPP and the payroll deductions in the participant’s notional account that have not been used to purchase shares of our common stock will be returned to the participant.
Amendment and Termination of the ESPP. Our compensation committee may amend or terminate the ESPP at any time for any reason. If the ESPP is terminated, our compensation committee may elect to terminate the outstanding offering period either immediately, or after shares of our common stock have been purchased on the last trading day of the offering period (which may, in the discretion of our compensation committee, be accelerated) and all amounts that have not been used to purchase shares of our common stock will then be
returned to participants as soon as administratively practicable. In the event of a merger, consolidation, acquisition of property or stock, separation, reorganization, or other corporate event described in Section 424 of the Code, each outstanding option will be assumed or an equivalent option substituted by the successor corporation, or a parent, or subsidiary of such successor corporation. If the successor corporation refuses to assume or substitute the option, the offering period with respect to which the option relates will be shortened by setting a new purchase date that occurs before the date of the applicable transaction. Unless terminated earlier pursuant to the terms of the ESPP, the ESPP will have a term of 10 years following the ESPP’s effective date.
Other benefits
We currently provide welfare benefits that are available to all of our employees, including our NEOs, including health, dental, life, vision, and disability insurance.
In addition, we maintain, and the NEOs participate in, a 401(k) plan that provides eligible employees with an opportunity to save for retirement on a tax advantage basis and under which we make safe harbor matching employer contributions. We match 100% of the first 3% of the participating employee’s contributions and 50% of the next 2% of the participating employee’s contributions, and participants are always fully vested in their safe harbor matching employer contributions. Employees’ pre-tax contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participant’s directions. The 401(k) plan is intended to be qualified under Section 401(a) of the Code.
We do not maintain any defined benefit pension plans or nonqualified deferred compensation plans.
Rule 10b5-1 sales plans
Our directors and executive officers may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buy or sell our common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or officer when entering into the plan, without further direction from them. The director or officer may amend or terminate a Rule 10b5-1 plan subject to compliance with our insider trading policy. Our directors and executive officers also may buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material nonpublic information subject to compliance with our insider trading policy. Prior to 180 days after the date of this offering, subject to early termination, the sale of any shares under such plan would be prohibited by the lock-up agreement that the director or officer has entered into with the underwriters.
Certain relationships and related party transactions
The following includes a summary of transactions since January 1, 2019 and any currently proposed transactions to which we were or are expected to be a participant in which (1) the amount involved exceeded or will exceed the lesser of $120,000 or one percent of our average total assets at year end for the last two completed fiscal years, and (2) any of our directors, executive officers, or holders of more than 5% of our capital stock, or any affiliate or member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest, other than compensation and other arrangements that are described under the section titled “Executive compensation” and “Management—Non-employee director compensation.”
Bayer HealthCare LLC
Bayer is a holder of greater than 5% of our securities. Below is a summary of the transactions entered into between Bayer and us since January 1, 2019.
Commitment Agreement and Option Agreement
In June 2019, we entered into a Commitment Agreement by and among Prior Century, Bayer and us, or the Commitment Agreement, pursuant to which Bayer agreed to make an aggregate capital contribution of up to $215 million, upon the achievement of certain milestones. In June 2019, Bayer invested $75 million in consideration for 26,143,709 units in Century Therapeutics, LLC. Bayer invested an additional $70 million in 2020 and 2021, for no additional consideration. The Commitment Agreement terminated on February 25, 2021 in connection with the Series C Financing and Bayer has no continuing obligation to invest any additional amounts under the Commitment Agreement.
In June 2019, we entered into an Option Agreement by and among Prior Century, Bayer and us, which, following the 2021 Reorganization, was subsequently amended and restated in February 2021, or the Option Agreement. For a description of the Option Agreement, see “Business—Licensing, Partnerships and Collaborations—Bayer Option Agreement.” No payments were made under the Option Agreement in 2019 or 2020.
Series C Financing
Bayer participated in our Series C Financing in February 2021. For a description of the Series C Financing and Bayer’s participation therein, see “—Series C Financing.”
FUJIFILM Cellular Dynamics, Inc.
FCDI is a holder of greater than 5% of our securities. Below are the transactions entered into between FCDI and us since January 1, 2019.
Reprogramming License Agreement
In September 2018, we entered into a License Agreement, or the Reprogramming License, with FCDI pursuant to which FCDI granted us a non-exclusive, sublicensable, worldwide (excluding Japan) license under certain patents and know-how related to the reprogramming of human cells to iPSCs. For a description of the Reprogramming License, see “Business—Licensing, Partnerships and Collaborations—FUJIFILM Cellular Dynamics.” No payments were made under the Reprogramming License in 2019 or 2020.
Differentiation License Agreement
In September 2018, we entered into a License Agreement, or the Differentiation License, with FCDI pursuant to which FCDI granted us an exclusive, sublicensable, worldwide (excluding Japan) license under certain patents and know-how for the research, development and commercialization of certain cancer immunotherapy products consisting of cells that are, or are modifications of, NK cells, T cells, dendritic cells, and macrophages derived from human iPSCs for cancer immunotherapeutic use. As consideration for the Differentiation License, Prior Century issued FCDI 7,500,000 shares of its common stock, which converted into an equivalent number of shares of our
common stock in the 2021 Reorganization. For a description of the Differentiation License Agreement, see “Business—Licensing, Partnerships and Collaborations—FUJIFILM Cellular Dynamics.” No payments were made under the Differentiation License in 2019 or 2020.
Master Collaboration Agreement
In October 2019, we entered into a Master Collaboration Agreement, or the Collaboration Agreement, with FCDI pursuant to which FCDI agreed to provide certain development, testing, and manufacturing services to us with respect to our sale of certain licensed products pursuant to the Reprogramming License and Differentiation License. For a description of the Master Collaboration Agreement, see “Business—Licensing, Partnerships and Collaborations—FUJIFILM Cellular Dynamics.” We have made payments to FCDI under the Master Collaboration Agreement totaling $4.8 million in 2019 and $5.3 million in 2020.
Manufacturing agreement
In March 2021, we entered into a Manufacturing and Supply Agreement with FCDI, or the Manufacturing Agreement, pursuant to which FCDI will provide certain analytical testing, process and analytical development and manufacturing services to us with respect to clinical supply of our product candidates. For a description of the Manufacturing Agreement, see “Business—Licensing, Partnerships and Collaborations—FUJIFILM Cellular Dynamics.”
Series C Financing
Following the 2021 Reorganization, on February 25, 2021, we completed the Series C Financing. Certain holders of more than 5% of our capital stock (or their affiliates) participated in the Series C Financing. Versant Vantage II, L.P. invested $10 million for a total of 1,545,125 shares of Series C preferred stock and Bayer invested $25 million for a total of 3,862,813 shares of Series C preferred stock, each at a price of approximately $6.472 per share.
Investors’ Rights Agreement
In connection with the Series C Financing, we entered into an investors’ rights agreement, or the investors’ rights agreement, with certain holders of our common stock and each holder of our preferred stock, which includes each holder of more than 5% of our capital stock. The investors’ rights agreement imposes certain affirmative obligations on us, including with respect to financial reporting obligations and investor inspections, and also grants certain rights to certain of the holders of our capital stock party thereto, including rights of first offer, demand, and piggyback registration rights and, if we are eligible, Form S-3 registration rights, with respect to the registrable securities held by them. See the section titled “Description of capital stock—Registration Rights” for additional information. Certain provisions of the investors’ rights agreement, including our affirmative obligations and the right of first offer rights will terminate immediately prior to the closing of this offering, while the registration rights set forth in the investors’ rights agreement will continue in effect after the closing of this offering until they expire in accordance with their terms.
Voting Agreement
In connection with the Series C Financing, we entered into a voting agreement with certain holders of our common stock and each holder of our preferred stock, which includes each holder of more than 5% of our capital stock. The voting agreement, including all rights thereunder, will automatically terminate upon the closing of this offering.
Right of First Refusal and Co-Sale Agreement
In connection with the Series C Financing, we entered into a right of first refusal and co-sale agreement with certain holders of our common stock and each holder of our preferred stock, which includes each holder of more
than 5% of our capital stock. The right of first refusal and co-sale agreement, including all rights thereunder, will automatically terminate immediately prior to the closing of this offering.
Executive officer and director compensation
Please see “Executive compensation” and “Management—Non-employee director compensation” for information regarding the compensation of our directors and executive officers.
Employment agreements
We have entered into employment agreements or offer letter agreements with certain of our executive officers that, among other things, provide for certain compensatory and change in control benefits, as well as severance benefits. For a description of these agreements with our NEOs, see the section titled “Executive compensation—Employment Arrangements with our NEOs.”
Indemnification agreements
We have entered and intend to continue to enter into indemnification agreements with each of our directors and officers. These indemnification agreements may require us, among other things, to indemnify our directors and officers for some expenses, including attorneys’ fees, judgments, fines, and settlement amounts incurred by a director or officer in any action or proceeding arising out of his or her service as one of our directors or officers, or any of our subsidiaries or any other company or enterprise to which the person provides services at our request. For more information regarding these indemnification agreements, see “Management—Limitation on liability and indemnification matters.”
Policies and procedures for related party transactions
Our board of directors will adopt a written related party transaction policy, which will become effective upon the effectiveness of the Registration Statement, setting forth the policies and procedures for the review and approval or ratification of related-party transactions. This policy will cover any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant and a related party had or will have a direct or indirect material interest, as determined by the audit committee of our board of directors, including, without limitation, purchases of goods or services by or from the related party or entities in which the related party has a material interest, and indebtedness, guarantees of indebtedness or employment by us of a related party.
All related party transactions described in this section occurred prior to adoption of this policy and as such, these transactions were not subject to the approval and review procedures set forth in the policy. However, these transactions were reviewed and approved by our board of directors.
Principal stockholders
The following table sets forth, as of May 24, 2021, information regarding beneficial ownership of our capital stock by:
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each person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock;
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each of our NEOs;
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each of our directors; and
•
all of our May 24, 2021 executive officers and directors as a group.
The percentage ownership information under the column titled “Beneficial ownership prior to this offering” is based on 110,371,553 shares of common stock outstanding as of May 24, 2021, assuming the automatic conversion of all outstanding shares of our convertible preferred stock into an aggregate of 85,865,789 shares of common stock upon the closing of this offering. The percentage ownership information under the column titled “After Offering” is based on the sale of shares of common stock in this offering (assuming an initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus). The percentage ownership information assumes no exercise of the underwriters’ option to purchase additional shares.
Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power of that security. In addition, shares of common stock issuable upon the exercise of stock options or warrants that are currently exercisable or exercisable within 60 days of May 24, 2021 are included in the following table. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. The information contained in the following table does not necessarily indicate beneficial ownership for any other purpose. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
Unless otherwise noted below, the address for each beneficial owner listed in the table below is c/o Century Therapeutics, Inc., 3675 Market Street, Philadelphia, Pennsylvania, 19104.
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Beneficial ownership prior to
this offering
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Beneficial ownership after
this offering
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Name of Beneficial Owner
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Number of
shares
beneficially
owned
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Percentage
of
beneficial
ownership
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Number of
shares
beneficially
owned
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Percentage
of
beneficial
ownership
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5% and Greater Stockholders:
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Versant Entities(1)
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34,045,125
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30.8%
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FUJIFILM Cellular Dynamics, Inc.(2)
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17,500,000
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15.9%
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Bayer World Investments B.V.(3)
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30,006,603
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27.2%
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Casdin Entities(4)
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6,180,500
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5.6%
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Named Executive Officers and Directors:
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Osvaldo Flores, Ph.D.(5)
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3,863,080
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3.5%
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Michael Diem, M.D.(6)
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933,707
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*
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Hyam Levitsky, M.D.(7)
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1,350,000
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1.2%
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Carlo Rizzuto, Ph.D.
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—
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*
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Toshikazu Ban
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—
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*
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Joseph Jimenez
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1,243,825
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1.1%
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Juergen Eckhart, M.D.
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—
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*
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Eli Casdin(4)
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6,180,500
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5.6%
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Cynthia Butitta
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—
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*
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Kimberly Blackwell, M.D.
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—
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*
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Alessandro Riva, M.D.
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—
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*
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All current directors and executive officers as a group (14 persons)
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15,468,357
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14.0%
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(1) Consists of (i) 25,000,000 shares of common stock issuable upon conversion of 25,000,000 shares of Series A preferred stock upon the closing of this offering held by Versant Venture Capital VI, L.P., or Versant VI, (ii) 7,500,000 shares of common stock held by Versant VI and (iii) 1,545,125 shares of common stock issuable upon conversion of 1,545,125 shares of Series C preferred stock upon the closing of this offering held by Versant Vantage II, L.P., or Versant II. Versant Ventures VI GP, L.P., or Versant VI GP LP, is the sole general partner of Versant VI and Versant Ventures VI GP-GP, LLC is the sole general partner of Versant VI GP LP and has voting and dispositive control over the shares held by Versant VI. Jerel Davis, Brad Bolzon, Tom Woiwode, Clare Ozawa, Kirk Nielsen and Robin Praeger, the managing directors of Versant Ventures VI GP-GP, LLC, may be deemed to possess voting and dispositive control over the shares held by Versant VI and may be deemed to have indirect beneficial ownership of the shares held by Versant VI but disclaims beneficial ownership of such securities, except to the extent of their respective pecuniary interest therein, if any. Versant Vantage II GP, L.P., or Versant II GP LP, is the sole general partner of Versant II and Versant Vantage II GP-GP, LLC is the sole general partner of Versant II GP LP and has voting and dispositive control over the shares held by Versant II. Dr. Davis, Mr. Bolzan, Mr. Woiwode, Ms. Owaza, Alex Mayweg and Ms. Praeger, the managing directors of Versant Vantage II GP-GP, LLC, may be deemed to possess voting and dispositive control over the shares held by Versant II and may be deemed to have indirect beneficial ownership of the shares held by Versant II but disclaims beneficial ownership of such securities, except to the extent of their respective pecuniary interest therein, if any. The business address for each of Versant VI, Versant VI GP LP, Versant Ventures VI GP-GP, LLC, Versant II, Versant II GP LP and Versant Vantage II GP-GP, LLC is One Sansome Street, Suite 3630, San Francisco, CA 94104.
(2) Consists of (i) 10,000,000 shares of common stock issuable upon the conversion of 10,000,000 shares of Series A preferred stock upon the closing of this offering held by FCDI and (ii) 7,500,000 shares of common stock held by FCDI. FCDI is an indirect, wholly owned subsidiary of FUJIFILM Holdings Corporation, which has sole voting and investment power over the Century shares held by FCDI. The address for FUJIFILM Holdings Corporation is 7-3, Akasaka 9-chome, Minato-ku, Tokyo 107-0052, Japan.
(3) Consists of (i) 26,143,790 shares of common stock issuable upon the conversion of 26,143,790 shares of Series B preferred stock upon the closing of this offering, and (ii) 3,862,813 shares of common stock issuable upon the conversion of 3,862,813 shares of Series C preferred stock upon the closing of this offering held by Bayer World Investments B.V. Bayer World Investments B.V. is a subsidiary of Bayer AG and voting and investment decisions with respect to these shares are made by Bayer AG’s Board of Management, which consists of Werner Baumann, Liam Condom, Serena Lin, Wolfgang Nickl, Stefan Oelrich, and Heiko Schipper. Each of Messrs. Baumann, Condon, Nickl, Oelrich, Schipper, and Ms. Lin disclaim beneficial ownership over the shares held by Bayer World Investments B.V. The address for Bayer World Investments B.V. is Bayer AG, Kaiser-Wilhelm-Allee 3, 51373 Leverkusen, Germany.
(4) Consists of (i) 3,090,250 shares of common stock issuable upon the conversion of 3,090,250 shares of Series C preferred stock upon the closing of this offering held by Casdin Partners Master Fund, L.P., or Casdin PMF, and (ii) 3,090,250 shares of common stock issuable upon the conversion of 3,090,250 shares of Series C preferred stock upon the closing of this offering held by Casdin Private Growth Equity Fund, L.P., or Casdin PGEF. Casdin Capital, LLC is the investment adviser to each of Casdin PMF and Casdin PGEF. Casdin Partners GP, LLC, or Casdin GP, is the general partner of Casdin PMF and Casdin Private Growth Equity Fund GP, LLC, or Casdin PGEF GP, is the general partner of Casdin PGEF. Mr. Casdin is the managing member of Casdin Capital, LLC and Casdin Partners GP, LLC. As such, each of Casdin Capital, LLC, Casdin Partners GP, LLC, and Mr. Casdin may be deemed to beneficially own the securities held by Casdin PMF by virtue of their shared voting and investment control over Casdin PMF and each of Casdin Capital, LLC, Casdin PGEF GP, and Mr. Casdin may be deemed to beneficially own the securities held by Casdin PGEF by virtue of their shared voting and investment
control over Casdin PGEF. Each of Casdin Capital, LLC, Casdin Partners GP, Casdin PGEF GP, and Mr. Casdin disclaims beneficial ownership of such securities except to the extent of their respective pecuniary interest therein. The address of each of Casdin PMF, Casdin PGEF, Casdin Capital, LLC, Casdin GP, Casdin PGEF GP, and Mr. Casdin is 1350 Avenue of the Americas, Suite 2600, New York, New York 10019.
(5) Consists of (i) 1,325,580 shares of common stock; and (ii) 537,500 shares of common stock issuable pursuant to options that are exercisable within 60 days of May 24, 2021 assuming the achievement of the milestones applicable to the Performance Option by virtue of this offering held by Dr. Flores, 1,000,000 shares of common stock held by Nancy Stone, Dr. Flores’ wife, and 1,000,000 shares of common stock held by the Flores Family Trust for Gabriel O. Flores dated October 27, 2016, or the Flores Trust. Ms. Stone is trustee of the Flores Trust. Dr. Flores disclaims beneficial ownership of the shares held by each of Ms. Stone and the Flores Trust.
(6) Consists of (i) 200,000 shares of common stock; and (ii) 733,707 shares of common stock that are issuable as shares of restricted stock pursuant to options that are exercisable within 60 days of May 24, 2021.
(7) Consists of 1,350,000 shares of common stock held by the Irrevocable Spousal Trust for Rhonda L. Zuckerman dated December 22, 2020, or the Trust. Dr. Levitsky’s daughter, Abby Miller, serves as Trustee of the Trust and the shares are held by the Trust for the benefit of Dr. Levitsky’s family. Dr. Levitsky disclaims beneficial ownership over the shares held by the Trust.
Description of capital stock
The following descriptions are summaries of the material terms of our second amended and restated certificate of incorporation, amended and restated bylaws, the investor rights agreement to which we and certain of our stockholders are parties and of the DGCL. Because the following is only a summary, it does not contain all of the information that may be important to you. For a complete description, you should refer to our form of second amended and restated certificate of incorporation, form of amended and restated bylaws, and investors’ rights agreement, copies of which have been filed as exhibits to the registration statement of which this prospectus is part.
General
Upon the closing of this offering and the filing of our second amended and restated certificate of incorporation, our authorized capital stock will consist of shares of common stock, par value $0.0001 per share, and shares of preferred stock, par value $0.0001 per share. All of our outstanding shares of common stock are, and the shares of common stock to be issued in this offering will be, fully paid and nonassessable.
Common Stock
Outstanding Shares
As of May 24, 2021, there would have been 110,367,274 shares of common stock outstanding, held by stockholders of record, after giving effect to the automatic conversion of all our preferred stock outstanding into an aggregate of 85,865,789 shares of our common stock immediately upon the closing of this offering.
Voting Rights
Each holder of our common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. Our stockholders do not have cumulative voting rights in the election of directors. Accordingly, holders of a majority of the voting shares are able to elect all of the directors. In addition, the affirmative vote of holders of 662∕3% of the voting power of all of the then outstanding voting stock will be required to take certain actions, including amending certain provisions of our second amended and restated certificate of incorporation, such as the provisions relating to amending our amended and restated bylaws, procedures for our stockholder meetings, the classified board, director liability, and exclusive forum for proceedings.
Dividends
Subject to preferences that may be applicable to any then outstanding preferred stock, holders of our common stock are entitled to receive dividends, if any, as may be declared from time to time by our board of directors out of legally available funds.
Liquidation
In the event of our liquidation, dissolution or winding up, holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of our debts and
other liabilities and the satisfaction of any liquidation preference granted to the holders of any then outstanding shares of preferred stock.
Rights and Preferences
Holders of our common stock have no preemptive, conversion, subscription or other rights, and there are no redemption or sinking fund provisions applicable to our common stock. The rights, preferences and privileges of the holders of our common stock are subject to and may be adversely affected by the rights of the holders of shares of any series of our preferred stock that we may designate in the future.
Preferred Stock
Upon the closing of this offering, all outstanding shares of our preferred stock will be automatically converted into an aggregate of 85,865,789 shares of common stock. Under the terms of our second amended and restated certificate of incorporation that will become effective immediately prior to the closing of this offering, our board of directors is authorized to direct us to issue shares of preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges, and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges, and liquidation preferences, of each series of preferred stock.
The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions, future financings, and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or could discourage a third party from seeking to acquire, a majority of our outstanding voting stock. Upon the closing of this offering, there will be no shares of preferred stock outstanding, and we have no present plans to issue any shares of preferred stock.
Warrants
Pursuant to our warrant agreement between us and Hercules Technology Management Co II, Inc., or Hercules, as of April 30, 2021, Hercules held warrants to purchase an aggregate of 40,540 shares of our common stock at an exercise price of $5.55 per share, subject to customary adjustments provided in the warrant agreement. These warrants may be exercised at any time and from time to time, in whole or in part, prior to September 14, 2030.
Stock Options and Grant Plan Shares
As of May 24, 2021, 10,118,185 shares of common stock were issuable upon the exercise of outstanding stock options, at a weighted average exercise price of $0.82 per share. For additional information regarding terms of our equity incentive plans, see the section titled “Executive compensation—Equity incentive plans.”
Registration Rights
The investors’ rights agreement grants certain of the holders of our capital stock party thereto certain registration rights in respect of the “registrable securities” held by them, which securities include (1) the shares of our common stock issued upon the conversion of shares of our preferred stock, (2) the shares of common stock issued upon the conversion of any other security, (3) shares of common stock held by certain of the holders of our capital stock party thereto as of the date of the investors’ rights agreement, and (4) any shares of our common stock issued as a dividend or other distribution with respect to the shares described in the foregoing clause (1), (2), and (3). The registration of shares of our common stock pursuant to the exercise of these registration rights would enable the holders thereof to sell such shares without restriction under the Securities Act when the applicable registration statement is declared effective.
Holders of shares of our common stock (including shares issuable upon the conversion of our preferred stock) are entitled to such registration rights pursuant to the investors’ rights agreement.
Expenses of Registration
Subject to specified conditions and limitations, we are required to pay all expenses, other than underwriting discounts and commissions and stock transfer taxes incurred in connection with any exercise of these registration rights.
Expiration of Registration Rights
These registration rights will expire on the earlier to occur of (1) such time after the consummation of this offering in which all of such holders registrable shares can be sold without limitation during a three-month period without registration, and (2) the third anniversary of the closing of this offering.
Demand Registration Rights
At any time beginning six months after the closing of this offering, the holders of a majority of the common stock issued or issuable upon conversion of our preferred stock then outstanding may, on not more than two occasions, request that we prepare, file, and maintain a registration statement on Form S-1 to register the sale of their registrable securities, provided such registrable securities represent at least 40% of all registrable securities then outstanding. Once we are eligible to use a registration statement on Form S-3, the stockholders party to the investors’ rights agreement representing at least 30% of the registrable securities then outstanding may, not more than twice in any twelve-month period, request that we prepare, file, and maintain a registration statement on Form S-3 covering the sale of their registrable securities, but only if the anticipated offering price, net of underwriting discounts and commissions, would exceed $5.0 million.
Piggyback Registration Rights
In the event that we propose to register any of our securities under the Securities Act, either for our own account or for the account of other security holders, the stockholders party to the investors’ rights agreement will be entitled to certain “piggyback” registration rights allowing them to include their registrable securities in such registration, subject to certain marketing and other limitations. As a result, whenever we propose to file a registration statement under the Securities Act other than with respect to a demand registration or a registration statement on Form S-8, these holders will be entitled to notice of the registration and will have the right to include their registrable securities in the registration subject to certain limitations.
Indemnification
The investors’ rights agreement contains customary cross-indemnification provisions, pursuant to which we are obligated to indemnify the selling holders of registrable securities in the event of either material misstatements or omissions in the applicable registration statement attributable to us or our violation of the Securities Act, and the selling stockholders are obligated to indemnify us for material misstatements or omission in the registration statement attributable to them, subject to certain limitations.
Anti-Takeover Provisions of Delaware Law and Our Charter Documents
Some provisions of Delaware law and our second amended and restated certificate of incorporation and our amended and restated bylaws that will become effective immediately prior to the closing of this offering contain provisions that could make the following transactions more difficult: acquisition of us by means of a tender offer; acquisition of us by means of a proxy contest or otherwise; or removal of our incumbent officers and directors. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions that might result in a premium over the market price for our shares.
These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our potential ability
to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms.
Section 203 of the Delaware General Corporation Law
We are subject to Section 203 of the DGCL, which prohibits persons deemed “interested stockholders” from engaging in a “business combination” with a publicly-held Delaware corporation for three years following the date these persons become interested stockholders unless the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years prior to the determination of interested stockholder status did own, 15% or more of a corporation’s voting stock. Generally, a “business combination” includes a merger, asset, or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, such as discouraging takeover attempts that might result in a premium over the market price of our common stock.
Elimination of Stockholder Action by Written Consent
Our second amended and restated certificate of incorporation, which will be in effect immediately prior to the closing of this offering, will provide that all stockholder actions must be effected at a duly called meeting of stockholders and not by consent in writing. A special meeting of stockholders may be called only by a majority of our board of directors, the chair of our board of directors, or our chief executive officer.
Undesignated Preferred Stock
The ability to authorize undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These and other provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of our company.
Amendment of Charter Provisions
Our second amended and restated certificate of incorporation will further provide that the affirmative vote of holders of at least 662∕3% of the voting power of all of the then outstanding shares of voting stock, voting as a single class, will be required to amend certain provisions of our second amended and restated certificate of incorporation, including provisions relating to the size of the board, removal of directors, special meetings, actions by written consent, and cumulative voting. The affirmative vote of holders of at least 662∕3% of the voting power of all of the then outstanding shares of voting stock, voting as a single class, will be required to amend or repeal our amended and restated bylaws, although our amended and restated bylaws may be amended by a simple majority vote of our board of directors.
Classified Board; Election and Removal of Directors
Our second amended and restated certificate of incorporation will further provide that our board of directors is divided into three classes, Class I, Class II, and Class III, with each class serving staggered terms, and will give our board of directors the exclusive right to expand the size of our board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director.
Choice of Forum
Our second amended and restated certificate of incorporation will provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court located within the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) will be the sole
and exclusive forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, stockholder, employee, or agent of ours to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our second amended and restated certificate of incorporation or our amended and restated bylaws (in each case, as may be amended from time to time), (iv) any action asserting a claim governed by the internal affairs doctrine of the State of Delaware, or (v) any other action asserting an “internal corporate claim,” as defined in Section 115 of the DGCL, in all cases subject to the court having personal jurisdiction over all indispensable parties named as defendants.
In addition, our second amended and restated certificate of incorporation will further provide that, unless we consent in writing to the selection of an alternative forum (which consent may be given at any time, including during the pendency of litigation), the federal district courts of the United States of America shall be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities will be deemed to have notice of and consented to this provision.
Limitation on Liability and Indemnification Matters
For a discussion of liability and indemnification, see “Management—Limitation on Liability and Indemnification Matters.”
Listing
We have applied to list our common stock on The Nasdaq Global Select Market under the trading symbol “IPSC.”
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is .
Shares eligible for future sale
Prior to this offering, there has been no public market for our common stock, and a liquid trading market for our common stock may not develop or be sustained after this offering. Future sales of our common stock, including shares issued upon the exercise of outstanding options or warrants, in the public market after the closing of this offering, or the perception that those sales may occur, could adversely affect the prevailing market price for our common stock from time to time or impair our ability to raise equity capital in the future.
Based on the number of shares of common stock outstanding as of December 31, 2020, upon the closing of this offering and assuming (i) the completion of the 2021 Reorganization, (ii) completion of the Series C Financing, (iii) the automatic conversion of all our preferred stock outstanding as of May 24, 2021 into an aggregate of 85,865,789 shares of our common stock upon the closing of this offering, (iv) no exercise of the underwriters’ option to purchase additional shares of common stock, and (v) no exercise of outstanding options or warrants, we will have outstanding an aggregate of approximately 110,247,171 shares of common stock. All of the shares sold in this offering will be freely tradable unless purchased by our “affiliates” as such term is defined in Rule 144 or purchased by existing stockholders and their affiliated entities that are subject to lock-up agreements. All remaining shares of common stock held by existing stockholders immediately prior to the consummation of this offering will be “restricted securities,” as such term is defined in Rule 144. These restricted securities were issued and sold in private transactions and are eligible for public sale only if registered under the Securities Act or if they qualify for an exemption from registration under the Securities Act, including the exemptions provided by Rule 144 or Rule 701, which rules are summarized below.
As a result of the lock-up agreements referred to below and the provisions of Rule 144 and Rule 701, based on the number of shares of our common stock outstanding as of , 2021, the remaining shares of our common stock will generally become for sale in the public market are as follows:
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Approximate Number of Shares
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First Date Available for Sale on the Public Markets
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shares
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181 days after the date of this prospectus, upon expiration of the lock-up
agreements referred to below, subject in some cases to applicable volume,
manner of sale and other limitations under Rule 144 and Rule 701.
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We may issue shares of common stock from time to time as consideration for future acquisitions, investments, or other corporate purposes.
In the event that any such acquisition, investment, or other transaction is significant, the number of shares of common stock that we may issue may in turn be significant. We may also grant registration rights covering those shares of common stock issued in connection with any such acquisition and investment.
In addition, the shares of common stock reserved for future issuance under the 2018 Plan and 2021 Plan will become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, the lock-up agreements, a registration statement under the Securities Act, or an exemption from registration, including Rule 144 and Rule 701.
Rule 144
Under Rule 144, as currently in effect, once we have been subject to the public company reporting requirements of the Exchange Act for at least 90 days, and we are current in our Exchange Act reporting at the time of sale, a person (or persons whose shares are required to be aggregated) who is not deemed to have been one of our “affiliates” for purposes of Rule 144 at any time during the 90 days preceding a sale and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months, including the holding period of any prior owner other than one of our “affiliates,” is entitled to sell those shares in the public market (subject to the lock-up agreement referred to below, if applicable) without complying with the manner of sale, volume limitations, or notice provisions of Rule 144, but subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year,
including the holding period of any prior owner other than “affiliates,” then such person is entitled to sell such shares in the public market without complying with any of the requirements of Rule 144 (subject to the lock-up agreement referred to below, if applicable).
In general, under Rule 144, as currently in effect, once we have been subject to the public company reporting requirements of the Exchange Act for at least 90 days, our “affiliates,” as defined in Rule 144, who have beneficially owned the shares proposed to be sold for at least six months, are entitled to sell in the public market, upon expiration of any applicable lock-up agreements and within any three-month period, a number of those shares of our common stock that does not exceed the greater of:
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1% of the number of shares of common stock then outstanding, which will equal approximately shares of common stock immediately upon the closing of this offering (calculated as of , 2021 on the basis of the assumptions described above and assuming no exercise of the underwriter’s option to purchase additional shares and no exercise of outstanding options or warrants subsequent to , 2021); or
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the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.
Such sales under Rule 144 by our “affiliates” or persons selling shares on behalf of our “affiliates” are also subject to certain manner of sale provisions, notice requirements and requirements related to the availability of current public information about us. Notwithstanding the availability of Rule 144, the holders of substantially all of our restricted securities have entered into lock-up agreements as referenced above and their restricted securities will become eligible for sale (subject to the above limitations under Rule 144) upon the expiration of the restrictions set forth in those agreements.
Rule 701
In general, under Rule 701, any of our employees, directors, officers, consultants, or advisors who acquired common stock from us in connection with a written compensatory stock or option plan or other written agreement in compliance with Rule 701 before the effective date of the Registration Statement of which this prospectus is a part (to the extent such common stock is not subject to a lock-up agreement) and who are not our “affiliates” as defined in Rule 144 during the immediately preceding 90 days, is entitled to rely on Rule 701 to resell such shares beginning 90 days after the date of this prospectus in reliance on Rule 144, but without complying with the notice, manner of sale, public information requirements, or volume limitation provisions of Rule 144. Persons who are our “affiliates” may resell those shares beginning 90 days after the date of this prospectus without compliance with minimum holding period requirements under Rule 144 (subject to the terms of the lock-up agreement referred to below, if applicable).
Lock-up agreements
In connection with this offering, we, our directors, our executive officers, and the holders of substantially all of our common stock, stock options, and other securities convertible into, exercisable or exchangeable for our common stock, have agreed, subject to certain exceptions, with the underwriters not to directly or indirectly offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, or enter into any hedging, swap or other agreement or transaction that transfers any of the economic consequences of ownership of shares of our common stock, or any options to purchase shares of our common stock, or any securities convertible into or exchangeable for shares of common stock, during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives of the underwriters, and certain other limited exceptions. These agreements are described in the section titled “Underwriting.”
In addition to the restrictions contained in the lock-up agreements described above, we have entered into agreements with certain security holders, including the amended and restated investors’ rights agreement, our standard form of option agreement, our standard form of restricted stock agreement and our standard form of
restricted stock purchase agreement, that contain market stand-off provisions or incorporate market stand-off provisions from our equity incentive plan imposing restrictions on the ability of such security holders to offer, sell, or transfer our equity securities for a period of 180 days following the date of this prospectus.
Following the lock-up periods set forth in the agreements described above, and assuming that the representatives of the underwriters do not release any parties from these agreements, all of the shares of our common stock that are restricted securities or are held by our affiliates as of the date of this prospectus will be eligible for sale in the public market in compliance with Rule 144.
Registration rights
Upon the closing of this offering, the holders of up to approximately million shares of our common stock (which includes all of the shares of common stock issuable upon the automatic conversion of our preferred stock upon the closing of this offering), or their transferees will be entitled to rights with respect to the registration of their shares under the Securities Act, subject to the lock-up agreements described under “Lock-up agreements” above. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration statement registering such shares, except for shares purchased by affiliates.
Following the closing of our initial public offering, we intend to enter into a registration rights agreement with Hercules Capital, Inc. granting Hercules Capital, Inc. rights with respect to the registration of their shares under the Securities Act in connection with the common stock issued in connection with the exercise of warrants to purchase shares of our common stock held by Hercules Capital, Inc.
Any sales of securities by these stockholders could have a material adverse effect on the trading price of our common stock. The requisite percentage of these stockholders have waived all such stockholders’ rights to notice of this offering and to include their shares of registrable securities in this offering.
See the section titled “Description of capital stock—Registration rights” for additional information. Shares covered by a registration statement will be eligible for sale on the public market upon the expiration or release from the terms of any applicable lock-up agreement.
Equity incentive plans
We intend to file with the SEC a registration statement on Form S-8 under the Securities Act covering the shares of common stock reserved for issuance under the 2018 Plan, the 2021 Plan, and the ESPP. Such registration statement is expected to be filed and become effective as soon as practicable after the closing of this offering. Accordingly, shares registered under such registration statement will be available for sale in the open market following its effective date, subject to Rule 144 volume limitations and the lock-up agreements described above, if applicable.
Material U.S. federal income tax consequences to Non-U.S. holders
The following discussion is a summary of the material U.S. federal income tax consequences to Non-U.S. Holders (as defined below) of the purchase, ownership, and disposition of our common stock issued pursuant to this offering, but does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local, or non-U.S. tax laws are not discussed. This discussion is based on the Code, Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service, or the IRS, in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a Non-U.S. Holder of our common stock. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the purchase, ownership, and disposition of our common stock.
This discussion is limited to Non-U.S. Holders that hold our common stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a Non- U.S. Holder’s particular circumstances, including the impact of the Medicare contribution tax on net investment income. In addition, it does not address consequences relevant to Non-U.S. Holders subject to special rules, including, without limitation:
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U.S. expatriates and former citizens or long-term residents of the United States;
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persons subject to the alternative minimum tax;
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persons holding our common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction, or other integrated investment;
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banks, insurance companies, and other financial institutions;
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brokers, dealers, or traders in securities;
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“controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;
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partnerships, other entities, or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
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tax-exempt organizations or governmental organizations;
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persons deemed to sell our common stock under the constructive sale provisions of the Code;
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persons who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation;
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tax-qualified retirement plans;
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“qualified foreign pension funds” and entities, all of the interests of which are held by qualified foreign pension funds; and
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persons subject to special tax accounting rules as a result of any item of gross income with respect to our common stock being taken into account in an applicable financial statement.
If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership, and certain determinations made at the partner level. Accordingly, partnerships holding our common stock and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.
THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS
TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL, OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
Definition of a Non-U.S. holder
For purposes of this discussion, a “Non-U.S. Holder” is any beneficial owner of our common stock that is neither a “U.S. person” nor an entity treated as a partnership for U.S. federal income tax purposes. A U.S. person is any person that, for U.S. federal income tax purposes, is or is treated as any of the following:
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an individual who is a citizen or resident of the United States;
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a corporation or entity treated as a corporation that is created or organized under the laws of the United States, any state thereof, or the District of Columbia;
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an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
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a trust that (i) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code), or (ii) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.
Distributions
As described in the section titled “Dividend policy,” we do not currently intend to pay any cash dividends on our capital stock in the foreseeable future. However, if we make distributions of cash or property on our common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and first be applied against and reduce a Non-U.S. Holder’s adjusted tax basis in its common stock, but not below zero. Any excess will be treated as capital gain and will be treated as described below under “—Sale or Other Taxable Disposition.”
Subject to the discussions below on effectively connected income, backup withholding and the Foreign Account Tax Compliance Act, or FATCA, dividends paid to a Non-U.S. Holder of our common stock will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends (or such lower rate specified by an applicable income tax treaty, provided the Non-U.S. Holder furnishes a valid IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) certifying qualification for the lower treaty rate). A Non-U.S. Holder that does not timely furnish the required documentation, but that qualifies for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. Holders should consult their tax advisors regarding their entitlement to benefits under any applicable income tax treaty.
If dividends paid to a Non-U.S. Holder are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment or fixed base in the United States to which such dividends are attributable), the Non-U.S. Holder will be exempt from the U.S. federal withholding tax described above. To claim the exemption, the Non-U.S. Holder must furnish to the applicable withholding agent a valid IRS Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States.
Any such effectively connected dividends generally will be subject to U.S. federal income tax on a net income basis at the regular rates. A Non-U.S. Holder that is a corporation also generally will be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on its effectively connected earnings and profits attributable to such dividends, as adjusted for certain items. Non-U.S. Holders should consult their tax advisors regarding any applicable tax treaties that may provide for different rules.
Sale or Other Taxable Disposition
Subject to the discussions below regarding backup withholding and FATCA, a Non-U.S. Holder will not be subject to U.S. federal income tax on any gain realized upon the sale or other taxable disposition of our common stock unless:
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the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment or fixed base in the United States to which such gain is attributable);
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the Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or
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our common stock constitutes a U.S. real property interest, or USRPI, by reason of our status as a U.S. real property holding corporation, or USRPHC, for U.S. federal income tax purposes.
Gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular rates. A Non-U.S. Holder that is a corporation also generally will be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on its effectively connected earnings and profits attributable to such gain, as adjusted for certain items.
Gain described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses of the Non-U.S. Holder (even though the individual is not considered a resident of the United States), provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.
With respect to the third bullet point above, we believe we currently are not, and do not anticipate becoming, a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our USRPIs relative to the fair market value of our non-U.S. real property interests and our other business assets, there can be no assurance we currently are not a USRPHC or will not become one in the future. Even if we are or were to become a USRPHC, gain arising from the sale or other taxable disposition by a Non-U.S. Holder of our common stock will not be subject to U.S. federal income tax if our common stock is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market, and such Non-U.S. Holder owned, actually and constructively, 5% or less of our common stock throughout the shorter of the five-year period ending on the date of the sale or other taxable disposition or the Non-U.S. Holder’s holding period. If we are a USRPHC and either our common stock is not regularly traded on an established securities market or a Non-U.S. Holder holds more than 5% of our common stock, actually or constructively, during the applicable testing period, such Non-U.S. Holder will generally be taxed on any gain in the same manner as gain that is effectively connected with the conduct of a U.S. trade or business, except that the branch profits tax generally will not apply.
Non-U.S. Holders should consult their tax advisors regarding any applicable income tax treaties that may provide for different rules.
Information Reporting and Backup Withholding
Payments of dividends on our common stock will not be subject to backup withholding, provided the holder either certifies its non-U.S. status by furnishing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI or otherwise establishes an exemption. However, information returns are required to be filed with the IRS in connection with any dividends on our common stock paid to the Non-U.S. Holder, regardless of whether any tax was actually withheld. In addition, proceeds of the sale or other taxable disposition of our common stock within the United States or conducted through certain U.S.-related brokers generally will not be subject to backup withholding or information reporting, if the applicable withholding agent receives the certification described above or the holder otherwise establishes an exemption. Proceeds of a disposition of our common stock conducted through a non-U.S. office of a non-U.S. broker that does not have certain enumerated relationships with the United States generally will not be subject to backup withholding or information reporting.
Copies of information returns that are filed with the IRS also may be made available under the provisions of an applicable treaty or agreement to the tax authorities of the country in which the Non-U.S. Holder resides or is established.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a Non-U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
Additional Withholding Tax on Payments Made to Foreign Accounts
Withholding taxes may be imposed under Sections 1471 to 1474 of the Code (commonly referred to as FATCA) on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, or (subject to the proposed Treasury Regulations discussed below) gross proceeds from the sale or other disposition of, our common stock paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code), unless (i) the foreign financial institution undertakes certain diligence and reporting obligations, (ii) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States owner or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in clause (i) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertakes to identify accounts held by certain “specified United States persons” or “United States-owned foreign entities” (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.
Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies currently to payments of dividends on our common stock. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition of our common stock on or after January 1, 2021, proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued.
Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our common stock.
Underwriting
We are offering the shares of common stock described in this prospectus through a number of underwriters. J.P. Morgan Securities LLC, BofA Securities, Inc., SVB Leerink LLC, and Piper Sandler & Co. are acting as joint book-running managers of the offering and representatives of the underwriters. We have entered into an underwriting agreement with the underwriters. Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus, the number of shares of common stock listed next to its name in the following table:
|
Name
|
|
|
Number of
shares of
common stock
|
|
|
J.P. Morgan Securities LLC
|
|
|
|
|
|
BofA Securities, Inc.
|
|
|
|
|
|
SVB Leerink LLC
|
|
|
|
|
|
Piper Sandler & Co.
|
|
|
|
|
|
Total
|
|
|
|
|
The underwriters are committed to purchase all the shares of common stock offered by us if they purchase any shares of common stock. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may also be increased or the offering may be terminated.
The underwriters propose to offer the shares of common stock directly to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $ per share. After the initial offering of the shares of common stock to the public, if all of the shares of common stock are not sold at the initial public offering price, the underwriters may change the offering price and the other selling terms. Sales of any shares of common stock made outside of the United States may be made by affiliates of the underwriters.
The underwriters have an option to buy up to additional shares of common stock from us to cover sales of shares of common stock by the underwriters which exceed the number of shares of common stock specified in the table above. The underwriters have 30 days from the date of this prospectus to exercise this option to purchase additional shares of common stock. If any shares of common stock are purchased with this option to purchase additional shares of common stock, the underwriters will purchase shares of common stock in approximately the same proportion as shown in the table above. If any additional shares of common stock are purchased, the underwriters will offer the additional shares of common stock on the same terms as those on which the shares of common stock are being offered.
The underwriting fee is equal to the public offering price per common share less the amount paid by the underwriters to us per common share. The underwriting fee is $ per share. The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters assuming both no exercise and full exercise of the underwriters’ option to purchase additional shares of common stock.
|
|
|
|
Without
option to
purchase
additional
shares of
common stock
exercise
|
|
|
With full
option to
purchase
additional
shares of
common stock
exercise
|
|
|
Per Common Share
|
|
|
|
$
|
|
|
|
|
|
$
|
|
|
|
|
Total
|
|
|
|
$
|
|
|
|
|
|
$
|
|
|
|
We estimate that the total expenses of this offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding the underwriting discounts and commissions, will be approximately $ million.
A prospectus in electronic format may be made available on the web sites maintained by one or more underwriters, or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of shares of common stock to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters and selling group members that may make Internet distributions on the same basis as other allocations. We have also agreed to reimburse the underwriters for certain of their expenses in an amount of up to $ .
Our directors and executive officers, and substantially all of our stockholders (such persons, “lock-up parties”) will enter into lock-up agreements with the underwriters prior to the commencement of this offering pursuant to which each lock-up party, with limited exceptions, for a period of 180 days after the date of this prospectus (such period, the “Restricted Period”), may not (and may not cause any of their direct or indirect affiliates to), without the prior written consent of J.P. Morgan Securities, BofA Securities, Inc., SVB Leerink LLC, and Piper Sandler & Co., (i) offer, pledge, sell, contract to sell, sell any option, or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of common stock of the Company or any securities convertible into or exercisable or exchangeable for common stock (including without limitation, common stock or such other securities which may be deemed to be beneficially owned by the lock-up party in accordance with the rules and regulations of the SEC and securities which may be issued upon exercise of a stock option or warrant) (collectively with the common stock, the “Lock-Up Securities”), (ii) enter into any hedging, swap, or other agreement or transaction that transfers, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Lock-Up Securities, in cash or otherwise, (iii) make any demand for or exercise any right with respect to the registration of any Lock-Up Securities, or (iv) publicly disclose the intention to do any of the foregoing (and, for the avoidance of doubt, the lock-up party has waived any and all notice requirements and rights with respect to the registration of any securities pursuant to any agreement, instrument, understanding or otherwise, including any stockholders or registration rights agreement or similar agreement, to which the lock-up party is a party or under which the lock-up party is entitled to any right or benefit; provided, however, that such waiver shall apply only to this offering). Each lock-up party has further acknowledged that the foregoing precludes the lock-up party from engaging in any hedging or other transactions or arrangements (including, without limitation, any short sale or the purchase or sale of, or entry into, any put or call option, or combination thereof, forward, swap or any other derivative transaction or instrument, however described or defined) designed or intended, or which could reasonably be expected to lead to or result in, a sale or disposition or transfer (whether by the lock-up party or any other person) of any economic consequences of ownership, in whole or in part, directly or indirectly, of any Lock-Up Securities, whether any such transaction or arrangement (or instrument provided for thereunder) would be settled by delivery of Lock-Up Securities, in cash or otherwise. Each lock-up party will further confirm that it will furnish the representatives with the details of any transaction the lock-up party, or any of its affiliates, is a party to as of the date hereof, which transaction would have been restricted by the lock-up agreement if it had been entered into by the lock-up party during the Restricted Period.
The restrictions described in the immediately preceding paragraph and contained in the lock-up agreements to be entered into between the underwriters and the lock-up parties do not apply, subject in certain cases to various conditions, to certain transactions, including (a) transfer the lock-up party’s Lock-Up Securities: (i) as a bona fide gift or gifts, or for bona fide estate planning purposes, (ii) by will, other testamentary document or intestacy, (iii) to an immediate family member (as defined in the lock-up agreement) of the lock-up party or any trust for the direct or indirect benefit of the lock-up party or the immediate family of the lock-up party, or if the lock-up party is a trust, to a trustor or beneficiary of the trust or to the estate of a beneficiary of such trust, (iv) to a partnership, limited liability company, or other entity of which the lock-up party and/or the immediate family of the lock-up party are the legal and beneficial owner of all of the outstanding equity securities or similar interests, (v) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses
(i) through (iv) above, (vi) if the lock-up party is a corporation, partnership, limited liability company, trust, or other business entity, (A) to another corporation, partnership, limited liability company, trust, or other business entity that is an affiliate (as defined in Rule 405 promulgated under the Securities Act) of the lock-up party, or to any investment fund or other entity controlling, controlled by, managing or managed by, or under common control with the lock-up party or affiliates of the lock-up party (including, for the avoidance of doubt, where the lock-up party is a partnership, to its general partner or a successor partnership or fund, or any other funds managed by such partnership), or (B) as part of a distribution to members, partners, stockholders, or other equity holders of the lock-up party, (vii) by operation of law, such as pursuant to a qualified domestic order, divorce settlement, divorce decree, separation agreement, or other court order, (viii) to the Company from an employee or other service provider of the Company upon death, disability or termination of employment or service, in each case, of such employee or service provider, (ix) in connection with a sale of the lock-up party’s Lock-Up Securities after the closing date of this offering acquired (A) in open market transactions after the closing date of this offering or (B) from the underwriters in this offering; (x) to the Company in connection with the vesting, settlement, or exercise of restricted stock units, options, warrants, or other rights to purchase shares of common stock (including, in each case, by way of “net” or “cashless” exercise), including for the payment of exercise price and tax withholdings and remittance payments due as a result of the vesting, settlement, or exercise of such restricted stock units, options, warrants, or rights, provided that any such shares of common stock received upon such exercise, vesting, or settlement shall be subject to the terms of the lock-up agreement, and provided further that any such restricted stock units, options, warrants, or rights are held by the lock-up party pursuant to an agreement or equity awards granted under a stock incentive plan or other equity award plan, each such agreement or plan which is described in this prospectus, or (xi) pursuant to a bona fide third-party tender offer, merger, consolidation, or other similar transaction that is approved by the Board of Directors of the Company and made to all holders of the Company’s capital stock involving a Change of Control (as defined below) of the Company (for purposes hereof, “Change of Control” shall mean the transfer (whether by tender offer, merger, consolidation, or other similar transaction), in one transaction or a series of related transactions, to a person or group of affiliated persons, of shares of capital stock if, after such transfer, such person or group of affiliated persons would hold at least a majority of the outstanding voting securities of the Company (or the surviving entity)); provided that in the event that such tender offer, merger, consolidation, or other similar transaction is not completed, the lock-up party’s Lock-Up Securities shall remain subject to the provisions of the lock-up agreement; provided that (A) in the case of any transfer, distribution, or other distribution pursuant to clause (a)(i), (ii), (iii), (iv), (v), (vi) , and (vii), such transfer shall not involve a disposition for value and each donee, devisee, transferee, or distributee shall execute and deliver to the representatives a lock-up letter in the form of the lock-up agreement, (B) in the case of any transfer or distribution pursuant to clause (a) (i), (ii), (iii), (iv), (v), and (vi), no filing by any party (donor, donee, devisee, transferor, transferee, distributer, or distributee) under the Exchange Act or other public announcement shall be required or shall be made voluntarily in connection with such transfer or distribution (other than a filing on a Form 5 made after the expiration of the Restricted Period referred to above) and (C) in the case of any transfer or distribution pursuant to clause (a)(vii), (viii), (ix) , and (x) it shall be a condition to such transfer that no public filing, report, or announcement shall be voluntarily made and if any filing under Section 16(a) of the Exchange Act, or other public filing, report, or announcement reporting a reduction in beneficial ownership of shares of common stock in connection with such transfer or distribution shall be legally required during the Restricted Period, such filing, report or announcement shall clearly indicate in the footnotes thereto the nature and conditions of such transfer; (b) exercise options, settled restricted stock units, or other equity awards or exercise warrants pursuant to plans described in this prospectus; provided that any Lock-Up Securities received upon such exercise, vesting, or settlement shall be subject to the terms of the lock-up agreement; (c) convert outstanding preferred stock, warrants to acquire preferred stock, or convertible securities into shares of common stock or warrants to acquire shares of common stock; provided that any such shares of common stock or warrants received upon such conversion shall be subject to the terms of the lock-up agreement; and
(d) establish trading plans pursuant to Rule 10b5-1 under the Exchange Act for the transfer or disposition of shares of Lock-Up Securities; provided that (1) such plans do not provide for the transfer of Lock-Up Securities during the Restricted Period and (2) no filing by any party under the Exchange Act or other public announcement shall be required or made voluntarily in connection with such trading plan during the Restricted Period.
J.P. Morgan Securities LLC, BofA Securities, Inc., SVB Leerink LLC, and Piper Sandler & Co., in their sole discretion, may release the securities subject to any of the lock-up agreements with the underwriters described above, in whole or in part at any time.
We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act.
We have applied to have our shares of common stock approved for listing on Nasdaq under the symbol “IPSC”.
In connection with this offering, the underwriters may engage in stabilizing transactions, which involves making bids for, purchasing and selling shares of common stock in the open market for the purpose of preventing or retarding a decline in the market price of the shares of common stock while this offering is in progress. These stabilizing transactions may include making short sales of shares of common stock, which involves the sale by the underwriters of a greater number of shares of common stock than they are required to purchase in this offering, and purchasing shares of common stock on the open market to cover positions created by short sales. Short sales may be “covered” shorts, which are short positions in an amount not greater than the underwriters’ option to purchase additional shares of common stock referred to above, or may be “naked” shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their option to purchase additional shares of common stock, in whole or in part, or by purchasing shares of common stock in the open market. In making this determination, the underwriters will consider, among other things, the price of shares of common stock available for purchase in the open market compared to the price at which the underwriters may purchase shares of common stock through the option to purchase additional shares of common stock. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares of common stock in the open market that could adversely affect investors who purchase in this offering. To the extent that the underwriters create a naked short position, they will purchase shares of common stock in the open market to cover the position.
The underwriters have advised us that, pursuant to Regulation M of the Securities Act, they may also engage in other activities that stabilize, maintain, or otherwise affect the price of the shares of common stock, including the imposition of penalty bids. This means that if the representatives of the underwriters purchase shares of common stock in the open market in stabilizing transactions or to cover short sales, the representatives can require the underwriters that sold those shares of common stock as part of this offering to repay the underwriting discount received by them.
These activities may have the effect of raising or maintaining the market price of the shares of common stock or preventing or retarding a decline in the market price of the shares of common stock, and, as a result, the price of the shares of common stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on Nasdaq, in the over-the-counter market or otherwise.
Prior to this offering, there has been no public market for our shares of common stock. The initial public offering price will be determined by negotiations between us and the representatives of the underwriters. In determining the initial public offering price, we and the representatives of the underwriters expect to consider a number of factors including:
•
the information set forth in this prospectus and otherwise available to the representatives;
•
our prospects and the history and prospects for the industry in which we compete;
•
an assessment of our management;
•
our prospects for future earnings;
•
the general condition of the securities markets at the time of this offering;
•
the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and
•
other factors deemed relevant by the underwriters and us.
Neither we nor the underwriters can assure investors that an active trading market will develop for our shares of common stock, or that the shares of common stock will trade in the public market at or above the initial public offering price.
Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
Certain of the underwriters and their affiliates have provided in the past to us and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking, and other services for us and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. In addition, from time to time, certain of the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future.
Notice to prospective investors in the European Economic Area
In relation to each Member State of the European Economic Area (each a “Relevant State”), no shares of our common stock have been offered or will be offered pursuant to the offering to the public in that Relevant State prior to the publication of a prospectus in relation to the shares of our common stock which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation), except that offers of Shares may be made to the public in that Relevant State at any time under the following exemptions under the Prospectus Regulation:
a) to any legal entity which is a qualified investor as defined under the Prospectus Regulation;
b) to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the underwriters for any such offer; or
c) in any other circumstances falling within Article 1(4) of the Prospectus Regulation,
provided that no such offer of shares of common stock shall require the Issuer or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.
Each person in a Relevant State who initially acquires any shares of common stock or to whom any offer is made will be deemed to have represented, acknowledged and agreed to and with the Company and the underwriters that it is a qualified investor within the meaning of the Prospectus Regulation.
In the case of any shares of common stock being offered to a financial intermediary as that term is used in Article 5(1) of the Prospectus Regulation, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the shares of common stock acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer to the public other than their offer or resale in a Relevant State to qualified investors, in circumstances in which the prior consent of the underwriters has been obtained to each such proposed offer or resale.
The Company, the underwriters and their affiliates will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements.
For the purposes of this provision, the expression an “offer to the public” in relation to any shares of common stock in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any Shares to be offered so as to enable an investor to decide to purchase or subscribe for any Shares, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.
Notice to prospective investors in the United Kingdom
In relation to the United Kingdom (“UK”), no shares of our common stock have been offered or will be offered pursuant to the offering to the public in the UK prior to the publication of a prospectus in relation to the shares of common stock which has been approved by the Financial Conduct Authority in the UK in accordance with the UK Prospectus Regulation and the FSMA, except that offers of shares of common stock may be made to the public in the UK at any time under the following exemptions under the UK Prospectus Regulation and the FSMA:
a) to any legal entity which is a qualified investor as defined under the UK Prospectus Regulation;
b) to fewer than 150 natural or legal persons (other than qualified investors as defined under the UK Prospectus Regulation), subject to obtaining the prior consent of the underwriters for any such offer; or
c) at any time in other circumstances falling within section 86 of the FSMA,
provided that no such offer of shares of common stock shall require the Issuer or any underwriter to publish a prospectus pursuant to Section 85 of the FSMA or Article 3 of the UK Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.
Each person in the UK who initially acquires any shares of common stock or to whom any offer is made will be deemed to have represented, acknowledged and agreed to and with the Company and the underwriters that it is a qualified investor within the meaning of the UK Prospectus Regulation.
In the case of any shares of common stock being offered to a financial intermediary as that term is used in Article 5(1) of the UK Prospectus Regulation, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the Shares acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer to the public other than their offer or resale in the UK to qualified investors, in circumstances in which the prior consent of the underwriters has been obtained to each such proposed offer or resale.
The Company, the underwriters and their affiliates will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements.
For the purposes of this provision, the expression an “offer to the public” in relation to any shares of our common stock in the UK means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase or subscribe for any shares of our common stock, the expression “UK Prospectus Regulation” means Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018, and the expression “FSMA” means the Financial Services and Markets Act 2000.
This document is for distribution only to persons who (i) have professional experience in matters relating to investments and who qualify as investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Financial Promotion Order”), (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000, as amended, or FSMA, in connection with the issue or sale of any securities may otherwise
lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This document is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this document relates is available only to relevant persons and will be engaged in only with relevant persons.
Notice to prospective investors in Canada
The shares of common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the shares of common stock must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.
Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Notice to prospective investors in Switzerland
The shares of common stock may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document does not constitute a prospectus within the meaning of, and has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares of common stock or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this document nor any other offering or marketing material relating to the offering, the Company, the shares of common stock have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares of common stock will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, or FINMA, and the offer of shares of common stock has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares of common stock.
Notice to prospective investors in Hong Kong
The shares of common stock have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong), or SFO, of Hong Kong and any rules made thereunder; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong), or CO, or which do not constitute an offer to the public within the meaning of the CO. No advertisement, invitation or document relating to the shares of common stock has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to
be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares of common stock which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made thereunder.
Notice to prospective investors in Singapore
Each joint book-running manager has acknowledged that this prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each joint book-running manager has represented and agreed that it has not offered or sold any shares of common stock or caused the shares of common stock to be made the subject of an invitation for subscription or purchase and will not offer or sell any shares of common stock or cause the shares of common stock to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares of common stock, whether directly or indirectly, to any person in Singapore other than:
(a) to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time, or the SFA) pursuant to Section 274 of the SFA;
(b) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA; or
(c) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the shares of common stock are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
(d) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
(e) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities, or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares of common stock pursuant to an offer made under Section 275 of the SFA except:
(i) to an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(ii) where no consideration is or will be given for the transfer;
(iii) where the transfer is by operation of law;
(iv) as specified in Section 276(7) of the SFA; or
(v) as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018.
Singapore SFA Product Classification—In connection with Section 309B of the SFA and the CMP Regulations 2018, unless otherwise specified before an offer of shares of common stock, we have determined, and hereby notify all relevant persons (as defined in Section 309A(1) of the SFA), that the shares of common stock are “prescribed capital markets products” (as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).
Notice to prospective investors in Japan
The shares of common stock have not been and will not be registered pursuant to Article 4, Paragraph 1 of the Financial Instruments and Exchange Act. Accordingly, none of the shares of common stock nor any interest therein may be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any “resident” of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to or for the benefit of a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and any other applicable laws, regulations and ministerial guidelines of Japan in effect at the relevant time.
Notice to prospective investors in the United Arab Emirates
The shares of common stock have not been, and are not being, publicly offered, sold, promoted, or advertised in the United Arab Emirates (including the Dubai International Financial Centre) other than in compliance with the laws of the United Arab Emirates (and the Dubai International Financial Centre) governing the issue, offering, and sale of securities. Further, this prospectus does not constitute a public offer of securities in the United Arab Emirates (including the Dubai International Financial Centre) and is not intended to be a public offer. This prospectus has not been approved by or filed with the Central Bank of the United Arab Emirates, the Securities and Commodities Authority, or the Dubai Financial Services Authority.
Notice to prospective investors in Israel
In the State of Israel this prospectus shall not be regarded as an offer to the public to purchase shares of common stock under the Israeli Securities Law, 5728—1968, which requires a prospectus to be published and authorized by the Israel Securities Authority, if it complies with certain provisions of Section 15 of the Israeli Securities Law, 5728-1968, including, inter alia, if: (i) the offer is made, distributed or directed to not more than 35 investors, subject to certain conditions, or the Addressed Investors; or (ii) the offer is made, distributed or directed to certain qualified investors defined in the First Addendum of the Israeli Securities Law, 5728—1968, subject to certain conditions, or the “Qualified Investors”. The Qualified Investors shall not be taken into account in the count of the Addressed Investors and may be offered to purchase securities in addition to the 35 Addressed Investors. We have not and will not take any action that would require it to publish a prospectus in accordance with and subject to the Israeli Securities Law, 5728—1968. We have not and will not distribute this prospectus or make, distribute or direct an offer to subscribe for our shares of common stock to any person within the State of Israel, other than to Qualified Investors and up to 35 Addressed Investors.
Qualified Investors may have to submit written evidence that they meet the definitions set out in of the First Addendum to the Israeli Securities Law, 5728—1968. In particular, we may request, as a condition to be offered shares of common stock, that Qualified Investors will each represent, warrant and certify to us and/or to anyone acting on our behalf: (i) that it is an investor falling within one of the categories listed in the First Addendum to the Israeli Securities Law, 5728—1968; (ii) which of the categories listed in the First Addendum to the Israeli Securities Law, 5728—1968 regarding Qualified Investors is applicable to it; (iii) that it will abide by all provisions set forth in the Israeli Securities Law, 5728—1968 and the regulations promulgated thereunder in connection with the offer to be issued shares of common stock; (iv) that the shares of common stock that it will be issued are, subject to exemptions available under the Israeli Securities Law, 5728—1968: (a) for its own account; (b) for investment purposes only; and (c) not issued with a view to resale within the State of Israel, other than in accordance with the provisions of the Israeli Securities Law, 5728—1968; and (v) that it is willing to provide further evidence of its Qualified Investor status. Addressed Investors may have to submit written evidence in respect of their identity and may have to sign and submit a declaration containing, inter alia, the Addressed Investor’s name, address and passport number or Israeli identification number.
Notice to prospective investors in Australia
This prospectus:
(i) does not constitute a disclosure document or a prospectus under Chapter 6D.2 of the Corporations Act 2001 (Cth), or the Corporations Act;
(j) has not been, and will not be, lodged with the Australian Securities and Investments Commission, or ASIC, as a disclosure document for the purposes of the Corporations Act and does not purport to include the information required of a disclosure document for the purposes of the Corporations Act; and
(k) may only be provided in Australia to select investors who are able to demonstrate that they fall within one or more of the categories of investors, available under section 708 of the Corporations Act, or Exempt Investors.
The shares of common stock may not be directly or indirectly offered for subscription or purchased or sold, and no invitations to subscribe for or buy the shares of common stock may be issued, and no draft or definitive offering memorandum, advertisement, or other offering material relating to any shares of common stock may be distributed in Australia, except where disclosure to investors is not required under Chapter 6D of the Corporations Act or is otherwise in compliance with all applicable Australian laws and regulations. By submitting an application for the shares of common stock, you represent and warrant to us that you are an Exempt Investor.
As any offer of shares of common stock under this document will be made without disclosure in Australia under Chapter 6D.2 of the Corporations Act, the offer of those securities for resale in Australia within 12 months may, under section 707 of the Corporations Act, require disclosure to investors under Chapter 6D.2 if none of the exemptions in section 708 applies to that resale. By applying for the shares of common stock you undertake to us that you will not, for a period of 12 months from the date of issue of the shares of common stock, offer, transfer, assign, or otherwise alienate those shares of common stock to investors in Australia except in circumstances where disclosure to investors is not required under Chapter 6D.2 of the Corporations Act or where a compliant disclosure document is prepared and lodged with ASIC.
Notice to prospective investors in China
This prospectus will not be circulated or distributed in the PRC and the shares of common stock will not be offered or sold, and will not be offered or sold to any person for re-offering or resale directly or indirectly to any residents of the PRC except pursuant to any applicable laws and regulations of the PRC. Neither this prospectus nor any advertisement or other offering material may be distributed or published in the PRC, except under circumstances that will result in compliance with applicable laws and regulations.
Notice to prospective investors in Korea
The shares of common stock have not been and will not be registered under the Financial Investments Services and Capital Markets Act of Korea and the decrees and regulations thereunder, or the FSCMA, and the shares of common stock have been and will be offered in Korea as a private placement under the FSCMA. None of the shares of common stock may be offered, sold, or delivered directly or indirectly, or offered or sold to any person for re-offering or resale, directly or indirectly, in Korea or to any resident of Korea except pursuant to the applicable laws and regulations of Korea, including the FSCMA and the Foreign Exchange Transaction Law of Korea and the decrees and regulations thereunder, or FETL. Furthermore, the purchaser of the shares of common stock shall comply with all applicable regulatory requirements (including but not limited to requirements under the FETL) in connection with the purchase of the shares of common stock. By the purchase of the shares of common stock, the relevant holder thereof will be deemed to represent and warrant that if it is in Korea or is a resident of Korea, it purchased the shares of common stock pursuant to the applicable laws and regulations of Korea.
Notice to prospective investors in Saudi Arabia
This document may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations as issued by the board of the Saudi Arabian Capital Market Authority, or CMA, pursuant to resolution number 2-11-2004 dated 4 October 2004 as amended by resolution number 1-28-2008, as amended, or the CMA Regulations. The CMA does not make any representation as to the accuracy or completeness of this document and expressly disclaims any liability whatsoever for any loss arising from, or
incurred in reliance upon, any part of this document. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If you do not understand the contents of this document, you should consult an authorized financial adviser.
Notice to prospective investors in the Dubai International Financial Centre (DIFC)
This document relates to an Exempt Offer in accordance with the Markets Rules 2012 of the Dubai Financial Services Authority, or DFSA. This document is intended for distribution only to persons of a type specified in the Markets Rules 2012 of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus supplement nor taken steps to verify the information set forth herein and has no
responsibility for this document. The securities to which this document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If you do not understand the contents of this document, you should consult an authorized financial advisor.
In relation to its use in the DIFC, this document is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the securities may not be offered or sold directly or indirectly to the public in the DIFC.
Notice to prospective investors in Bermuda
Shares of common stock may be offered or sold in Bermuda only in compliance with the provisions of the Investment Business Act of 2003 of Bermuda which regulates the sale of securities in Bermuda. Additionally, non-Bermudian persons (including companies) may not carry on or engage in any trade or business in Bermuda unless such persons are permitted to do so under applicable Bermuda legislation.
Legal matters
The validity of the issuance of our common stock offered in this prospectus will be passed upon for us by Troutman Pepper Hamilton Sanders LLP. Certain legal matters in connection with this offering will be passed upon for the underwriters by Davis Polk & Wardwell LLP.
Experts
The consolidated financial statements of Century Therapeutics, Inc. and subsidiary at December 31, 2020 and 2019 (Successor), and for the year ended December 31, 2020 (Successor), the period June 21, 2019 through December 31, 2019 (Predecessor), and January 1, 2019 through June 20, 2019 (Predecessor), appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
Where you can find additional information
We have filed with the SEC this Registration Statement on Form S-1, including exhibits and schedules, under the Securities Act, with respect to the shares of common stock being offered by this prospectus. This prospectus, which constitutes part of the Registration Statement, does not contain all of the information in the Registration Statement and its exhibits. For further information with respect to us and the common stock offered by this prospectus, we refer you to the Registration Statement and its exhibits. Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the Registration Statement. Each of these statements is qualified in all respects by this reference.
You may read our SEC filings, including this Registration Statement, over the Internet at the SEC’s website at www.sec.gov. Upon the closing of this offering, we will be subject to the information reporting requirements of the Exchange Act and we will file reports, proxy statements, and other information with the SEC. These reports, proxy statements and other information will be available for review at the SEC’s website referred to above. We also maintain a website at www.centurytx.com, at which, following the closing of this offering, you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on or accessible through our website is not a part of this prospectus or the Registration Statement of which it forms a part, and the inclusion of our website address in this prospectus is an inactive textual reference only. You should not consider the contents of our website in making an investment decision with respect to our common stock.
Century Therapeutics, Inc. and Subsidiary
Table of Contents
As of and for the years ended December 31, 2020 and 2019
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F-2
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Consolidated financial statements
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F-3
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F-4
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F-5
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F-6
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F-7
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Report of independent registered public accounting firm
To the Stockholders and the Board of Directors of
Century Therapeutics, Inc.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Century Therapeutics, Inc. and subsidiary (the Company) as of December 31, 2020 and 2019 (Successor), the related consolidated statements of operations and comprehensive loss, changes in convertible preferred stock and stockholders’ deficit and cash flows for the year ended December 31, 2020 (Successor), the period June 21, 2019 through December 31, 2019 (Successor) and the period January 1, 2019 through June 20, 2019 (Predecessor), and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019 (Successor), and the results of its operations and its cash flows for the year ended December 31, 2020 (Successor), the period June 21, 2019 through December 31, 2019 (Successor) and the period January 1, 2019 through June 20, 2019 (Predecessor), in conformity with U.S. generally accepted accounting principles.
Adoption of new accounting standard
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in 2020 due to the adoption of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), and related amendments.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2019.
Philadelphia, Pennsylvania
May 5, 2021
Century Therapeutics, Inc. and Subsidiary
Consolidated balance sheets
(In thousands, except share amounts)
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Successor
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December 31, 2020
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December 31, 2019
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Assets
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Current assets:
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Cash and cash equivalents
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$
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27,211
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$
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44,064
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Short-term investments
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48,542
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37,475
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Escrow deposits, current
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783
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—
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Prepaid expenses and other current assets
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2,261
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2,583
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Total current assets
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78,797
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84,122
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Property and equipment, net
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15,385
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2,488
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Operating lease right-of-use asset, net
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9,392
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—
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Restricted cash
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517
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—
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Escrow deposits, non-current
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723
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—
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Long-term investments
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1,053
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4,080
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Security deposits
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909
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206
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Total assets
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$
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106,776
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$
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90,896
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Liabilities, convertible preferred stock, and stockholders’ deficit
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Current liabilities:
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Accounts payable
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$
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8,082
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$
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1,548
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Accrued expenses and other liabilities
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4,030
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1,446
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Total current liabilities
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12,112
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2,994
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Operating lease liability, long-term
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11,679
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—
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Long-term debt, net
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9,636
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—
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Total liabilities
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33,427
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2,994
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Commitments and contingencies (Note 11)
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Non-cumulative convertible preferred stock, Series A, $0.0001 par value, 35,000,000 shares authorized, issued and outstanding at December 31, 2020 and 2019
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34,922
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34,922
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Non-cumulative convertible preferred stock, Series B, $0.0001 par value, 26,143,790 shares authorized, issued and outstanding at December 31, 2020 and 2019
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144,839
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144,839
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Stockholders' deficit
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Common stock, $0.0001 par value, 125,236,190 shares authorized;
18,825,136 shares issued and outstanding at December 31, 2020
and 2019
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2
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2
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Additional paid-in capital
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217,831
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216,909
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Subscription receivable
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(31,900)
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(70,000)
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Accumulated deficit
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(292,342)
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(238,767)
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Accumulated other comprehensive loss
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(3)
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(3)
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Total stockholders’ deficit
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(106,412)
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(91,859)
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Total liabilities, convertible preferred stock and stockholders’ deficit
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$
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106,776
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$
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90,896
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See accompanying notes to the consolidated financial statements.
Century Therapeutics, Inc. and Subsidiary
Consolidated statements of operations and comprehensive loss
(In thousands, except share and per share amounts)
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Successor
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Predecessor
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For the Year Ended
December 31, 2020
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For the period June 21,
2019 through December
31, 2019
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For the period January
1, 2019 through June 20,
2019
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Operating expenses
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Research and development
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$
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39,681
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$
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10,107
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$
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4,159
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General and administrative
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9,495
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3,622
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2,145
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Write off of in-process research and development asset
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4,722
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225,946
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—
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Total operating expenses
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|
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53,898
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239,675
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6,304
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Loss from operations
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(53,898)
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(239,675)
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(6,304)
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Interest expense
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(381)
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—
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—
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Other income, net
|
|
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704
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|
|
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|
|
908
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|
|
|
|
|
|
302
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Net loss
|
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|
$
|
(53,575)
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|
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|
$
|
(238,767)
|
|
|
|
|
|
$
|
(6,002)
|
|
|
|
Net loss per common share
Basic and Diluted
|
|
|
|
$
|
(2.85)
|
|
|
|
|
$
|
(12.68)
|
|
|
|
|
|
$
|
(0.40)
|
|
|
|
Weighted average common shares outstanding
Basic and Diluted
|
|
|
|
|
18,825,136
|
|
|
|
|
|
18,825,136
|
|
|
|
|
|
|
15,029,240
|
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(53,575)
|
|
|
|
|
$
|
(238,767)
|
|
|
|
|
|
$
|
(6,002)
|
|
|
|
Unrealized gain (loss) on short-term
investments
|
|
|
|
|
8
|
|
|
|
|
|
(3)
|
|
|
|
|
|
|
—
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
(8)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
Comprehensive loss
|
|
|
|
$
|
(53,575)
|
|
|
|
|
$
|
(238,770)
|
|
|
|
|
|
$
|
(6,002)
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
Century Therapeutics, Inc. and Subsidiary
Consolidated statements of changes in convertible preferred stock and stockholders’ deficit
For the year ended December 31, 2020 (Successor), the periods
June 21, 2019 through December 31, 2019 (Successor) and
January 1, 2019 through June 20, 2019 (Predecessor)
(In thousands, except unit and share amounts)
|
|
|
|
Predecessor
|
|
|
Successor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
Series A
Convertible
Preferred Stock
|
|
|
Series B
Convertible
Preferred Stock
|
|
|
Predecessor
|
|
|
Successor
|
|
|
Additional
Paid-In
Capital
|
|
|
Subscription
Receivable
|
|
|
Predecessor
|
|
|
Successor
|
|
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
|
|
Total
Stockholders’
(Deficit)
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Common
Stock
|
|
|
Amount
|
|
|
Common
Units
|
|
|
Amount
|
|
|
Common
Stock
|
|
|
Amount
|
|
|
Accumulated
Deficit
|
|
|
Accumulated
Deficit
|
|
|
Balance, December 31, 2018, Predecessor
|
|
|
|
|
35,000,000
|
|
|
|
|
$
|
34,922
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
15,000,000
|
|
|
|
|
$
|
2
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
153
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(1,894)
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(1,739)
|
|
|
|
Issuance of common stock
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
58,479
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Stock based compensation expense
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
14
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
14
|
|
|
|
Net loss
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(6,002)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(6,002)
|
|
|
|
Balance, June 20, 2019, Predecessor
|
|
|
|
|
35,000,000
|
|
|
|
|
$
|
34,922
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
15,058,479
|
|
|
|
|
$
|
2
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
167
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(7,896)
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(7,727)
|
|
|
|
Balance, June 21, 2019, Successor
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
Issuance of common units for cash, net of equity issuance costs
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
26,143,790
|
|
|
|
|
|
144,839
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(70,000)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
74,839
|
|
|
|
Issuance of common units for acquired assets,
net of equity issuance costs
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
67,226,891
|
|
|
|
|
|
251,700
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
251,700
|
|
|
|
Cancellation of LLC Units (Note 2)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(93,370,681)
|
|
|
|
|
|
(396,539)
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(396,539)
|
|
|
|
Capital restructuring (Note 2)
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
35,000,000
|
|
|
|
|
|
34,922
|
|
|
|
|
|
26,143,790
|
|
|
|
|
|
144,839
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
18,825,136
|
|
|
|
|
|
2
|
|
|
|
|
|
216,776
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
216,778
|
|
|
|
Unrealized loss on short-term investments
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(3)
|
|
|
|
|
|
(3)
|
|
|
|
Stock based compensation
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
133
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
133
|
|
|
|
Net loss
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(238,767)
|
|
|
|
|
|
—
|
|
|
|
|
|
(238,767)
|
|
|
|
Balance, December 31, 2019
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
35,000,000
|
|
|
|
|
|
34,922
|
|
|
|
|
|
26,143,790
|
|
|
|
|
|
144,839
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
18,825,136
|
|
|
|
|
|
2
|
|
|
|
|
|
216,909
|
|
|
|
|
|
(70,000)
|
|
|
|
|
|
—
|
|
|
|
|
|
(238,767)
|
|
|
|
|
|
(3)
|
|
|
|
|
|
(91,859)
|
|
|
|
Receipt of subscription receivable
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
38,100
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
38,100
|
|
|
|
Unrealized gain on short-term investments
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
8
|
|
|
|
|
|
8
|
|
|
|
Warrants on long term debt
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
46
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
46
|
|
|
|
Foreign currency translation
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(8)
|
|
|
|
|
|
(8)
|
|
|
|
Stock based compensation
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
876
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
876
|
|
|
|
Net loss
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(53,575)
|
|
|
|
|
|
—
|
|
|
|
|
|
(53,575)
|
|
|
|
Balance, December 31, 2020, Successor
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
35,000,000
|
|
|
|
|
$
|
34,922
|
|
|
|
|
|
26,143,790
|
|
|
|
|
$
|
144,839
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
18,825,136
|
|
|
|
|
$
|
2
|
|
|
|
|
$
|
217,831
|
|
|
|
|
$
|
(31,900)
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(292,342)
|
|
|
|
|
$
|
(3)
|
|
|
|
|
$
|
(106,412)
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
Century Therapeutics, Inc. and Subsidiary
Consolidated statements of cash flows
(In thousands)
|
|
|
|
Successor
|
|
|
|
Predecessor
|
|
|
|
|
|
For the year ended
December 31, 2020
|
|
|
For the period June 21,
2019 to December 31,
2019
|
|
|
|
For the period
January 1, 2019 to
June 20, 2019
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(53,575)
|
|
|
|
|
$
|
(238,767)
|
|
|
|
|
|
$
|
(6,002)
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write off of in-process research and development asset
|
|
|
|
|
4,722
|
|
|
|
|
|
225,946
|
|
|
|
|
|
|
—
|
|
|
|
Depreciation
|
|
|
|
|
1,402
|
|
|
|
|
|
179
|
|
|
|
|
|
|
70
|
|
|
|
Amortization of deferred financing cost
|
|
|
|
|
92
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
Non-cash operating lease expense
|
|
|
|
|
352
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
Stock based compensation
|
|
|
|
|
876
|
|
|
|
|
|
133
|
|
|
|
|
|
|
14
|
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Escrow deposit
|
|
|
|
|
(1,506)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
Prepaid expenses and other assets
|
|
|
|
|
(203)
|
|
|
|
|
|
(969)
|
|
|
|
|
|
|
832
|
|
|
|
Operating lease liability
|
|
|
|
|
2,175
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
Accounts payable
|
|
|
|
|
2,062
|
|
|
|
|
|
1,548
|
|
|
|
|
|
|
(315)
|
|
|
|
Accrued expenses and other liabilities
|
|
|
|
|
2,334
|
|
|
|
|
|
162
|
|
|
|
|
|
|
1,001
|
|
|
|
Net cash used in operating activities
|
|
|
|
|
(41,269)
|
|
|
|
|
|
(11,768)
|
|
|
|
|
|
|
(4,400)
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property and equipment
|
|
|
|
|
(9,825)
|
|
|
|
|
|
(1,633)
|
|
|
|
|
|
|
(827)
|
|
|
|
Payments for purchase of fixed maturity securities, available for sale
|
|
|
|
|
(49,860)
|
|
|
|
|
|
(41,540)
|
|
|
|
|
|
|
—
|
|
|
|
Asset acquisition, net of cash acquired
|
|
|
|
|
(4,722)
|
|
|
|
|
|
24,166
|
|
|
|
|
|
|
—
|
|
|
|
Sale of fixed maturity securities, available for sale
|
|
|
|
|
41,650
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
(22,757)
|
|
|
|
|
|
(19,007)
|
|
|
|
|
|
|
(827)
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt and warrants, net
|
|
|
|
|
9,734
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
Payments of deferred financing cost
|
|
|
|
|
(144)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from subscription receivable
|
|
|
|
|
38,100
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
Proceeds from issuance of common units
|
|
|
|
|
—
|
|
|
|
|
|
74,839
|
|
|
|
|
|
|
—
|
|
|
|
Net cash provided by financing activities
|
|
|
|
|
47,690
|
|
|
|
|
|
74,839
|
|
|
|
|
|
|
—
|
|
|
|
Net (decrease) increase in cash, cash equivalents, and restricted cash
|
|
|
|
|
(16,336)
|
|
|
|
|
|
44,064
|
|
|
|
|
|
|
(5,227)
|
|
|
|
Cash, cash equivalents and restricted cash, beginning of period
|
|
|
|
|
44,064
|
|
|
|
|
|
—
|
|
|
|
|
|
|
31,424
|
|
|
|
Cash, cash equivalents and restricted cash, end of
period
|
|
|
|
$
|
27,728
|
|
|
|
|
$
|
44,064
|
|
|
|
|
|
$
|
26,197
|
|
|
|
Supplemental disclosure of cash and non-cash operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
|
$
|
207
|
|
|
|
|
$
|
—
|
|
|
|
|
|
$
|
—
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common units in exchange for asset
acquisition
|
|
|
|
$
|
—
|
|
|
|
|
$
|
251,700
|
|
|
|
|
|
$
|
—
|
|
|
|
Purchase of property and equipment, accrued and unpaid
|
|
|
|
$
|
4,472
|
|
|
|
|
$
|
—
|
|
|
|
|
|
$
|
—
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
Century Therapeutics, Inc. and Subsidiary
Notes to the consolidated financial statements
December 31, 2020 and 2019
(In thousands, except unit, share and per share amounts)
Note 1—Organization and description of the business
Century Therapeutics, Inc. (“Prior Century” or “Predecessor”), was incorporated in the state of Delaware on March 5, 2018. Since inception, Prior Century has devoted substantially all of its time and efforts to performing research and development activities and raising capital.
On June 5, 2019, Century Therapeutics, LLC (the “Company” or “Successor”) was formed by Prior Century and entered into an LLC Agreement (“Agreement”). On June 21, 2019, Prior Century, through the execution of a commitment agreement and other transaction documents (altogether the “Commitment Agreement”) with Bayer Health, LLC (“Bayer”), financed the creation of the Company and amended the Agreement to account for the provisions in the Commitment Agreement that outlined the rights, obligations, and capital contributions of both Bayer and Prior Century in accordance with the newly executed and amended Agreement and related Commitment Agreement (the “Transaction”). The Transaction resulted in Prior Century contributing substantially all of its assets, liabilities, and operations in exchange for a retained 72% equity interest in the Company. Subsequent to June 21, 2019, Prior Century has no significant operations and accounts for its interest in the Company under the equity method of accounting.
As discussed in Note 17, Subsequent Events, on February 25, 2021, the Company converted from a Delaware limited liability company to a Delaware corporation, and changed its name to “CenturyTx, Inc.” Upon completion of this conversion, Prior Century merged with and into CenturyTx, Inc., with CenturyTx, Inc. as the surviving entity and CenturyTx, Inc. changed its name to “Century Therapeutics, Inc.” In connection with this merger, the holders of equity interests in Prior Century received equivalent equity interests in Century Therapeutics, Inc.
In June 2020, the Company formed Century Therapeutics Canada ULC (“Century Canada”), a wholly owned subsidiary, to acquire the assets of Empirica Therapeutics, Inc. (“Empirica”).
The Company’s headquarters are located in Philadelphia, Pennsylvania. Prior to the conversion of the Company from an LLC to a Delaware corporation noted above, the Company’s capital structure was comprised of common limited liability membership interests, issued in the form of a single class of common units, with no stated limit to a members’ liability or a finite life to the Company.
Principles of Consolidation
The consolidated financial statements include the consolidated financial position and consolidated results of operations of the Company and Century Canada. All intercompany balances and transactions have been eliminated in consolidation.
Going concern and liquidity
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has limited operating history and its prospects are subject to risks, expenses, and uncertainties frequently encountered by companies in the pharmaceutical industry. These risks include, but are not limited to, the uncertainty of availability of additional financing and the uncertainty of achieving future profitability.
Since inception, both the Company and Prior Century have incurred net losses and negative cash flows from operations. During the Successor year ended December 31, 2020, the Company incurred a net loss of $53,575 and used $41,269 of cash for operations. During the Successor period June 21, 2019 through December 31, 2019, the Company incurred a net loss of $238,767 and used $11,768 of cash for operations. During the Predecessor
period January 1, 2019 through June 20, 2019, Prior Century incurred a net loss of $6,002 and used $4,400 of cash for operations. Management expects to incur additional losses in the future to fund its operations and conduct product research and development and recognizes the need to raise additional capital to fully implement its business plan. As further described in Note 3, the Company obtained a cash capital commitment from Bayer totaling $215,000, from which net proceeds of $74,839 were received in June 2019, $38,100 were received in November 2020 and $31,900 were received in January 2021. Bayer has no continuing obligation to invest any additional amounts under its commitment, which terminated on February 25, 2021. As further described in Note 9, the Company entered into a Loan Agreement pursuant to which it received net proceeds of $9,734 in September 2020. As described in Note 16, in February 2021 the Company issued shares of Series C Preferred Stock (“Series C preferred”) resulting in gross proceeds of $160,000. The Company believes it has adequate cash and financial resources to operate for at-least the next 12 months from the date of issuance of these consolidated financial statements.
Note 2—Summary of significant accounting policies and basis of presentation
Basis of presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which contemplate the continued existence of the Company. Since commencing principal activities, the Company has been engaged primarily in research and development activities and raising capital.
Merger and capital restructuring
Upon the conversion of the LLC to a corporation and the merger of the newly converted corporation with Prior Century, the existing capital structure of the LLC was restructured with no consideration transferred. In accordance with ASC 505-10-S99-4, such a restructuring requires retroactive effect within the balance sheets presented as the restructuring was affected after the balance sheet date but prior to the effective date of this Registration Statement. As such, the Company retroactively adjusted its consolidated balance sheets to cancel the existing LLC units and give effect to their conversion into capital stock of the Company as if those effects happened at the beginning of the successor period, June 21, 2019. See Note 10 for further information on the Company’s capital restructuring.
Segment information
Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions on how to allocate resources and assess performance. The Company views its operations and manages the business as one operating segment.
Use of estimates
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Estimates and assumptions are primarily made in relation to the valuations supporting stock compensation and the estimation of the incremental borrowing rate for operating leases. If actual results differ from the Company’s estimates, or to the extent these estimates are adjusted in future periods, the Company’s results of operations could either benefit from, or be adversely affected by, any such change in estimate.
Concentration of credit risk and other risks and uncertainties
Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist of cash, cash equivalents, U.S. Treasury bills and bonds, as well as corporate bonds. Cash and cash equivalents, as well as short and long-term investments include a checking account and asset management accounts held by a
limited number of financial institutions. At times, such deposits may be in excess of insured limits. As of December 31, 2020 and 2019, the Company has not experienced any losses on its deposits of cash and cash equivalents.
The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, uncertainty of market acceptance of its products, competition from substitute products and larger companies, protection of proprietary technology, strategic relationships, and dependence on key individuals.
Products developed by the Company require clearances from the U.S. Food and Drug Administration or other international regulatory agencies prior to commercial sales. There can be no assurance the Company’s future products will receive the necessary clearances. If the Company was denied clearance, clearance was delayed, or if the Company was unable to maintain clearance, it could have a material adverse impact on the Company.
In January 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a “Public Health Emergency of International Concern,” which continues to spread throughout the world and has adversely impacted global commercial activity and contributed to significant declines and volatility in financial markets. The COVID-19 outbreak and government responses are creating disruption in global supply chains and adversely impacting many industries. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The Company continues to monitor the impact of the COVID-19 outbreak closely. The extent to which the COVID-19 outbreak will impact its operations or financial results is uncertain.
Deferred financing costs
Deferred financing costs represent costs incurred in connection with the issuance of debt instruments and equity financings. Deferred financing costs related to the issuance of debt are amortized over the term of the financing instrument using the effective interest method and are presented in the consolidated balance sheets as an offset against the related debt. Offering costs from equity financings are netted against the gross proceeds received from the equity financings.
Fair value of financial instruments
The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:
Level 1
Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date;
Level 2
Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active;
Level 3
Inputs are unobservable in which there is little or no market data available, which require the reporting entity to develop its own assumptions that are unobservable.
Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.
Cash and cash equivalents
Management considers all highly liquid investments with an insignificant interest rate risk and original maturities of three months or less to be cash equivalents.
Restricted cash
As of December 31, 2020, the Company has $517 in cash on deposit to secure certain lease commitments. Restricted cash is recorded separately in the Company’s consolidated balance sheets.
The following provides a reconciliation of the Company’s cash, cash equivalents, and restricted cash as reported in the consolidated balance sheets to the amounts reported in the consolidated statements of cash flows:
|
|
|
|
Successor
|
|
|
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
27,211
|
|
|
|
|
$
|
44,064
|
|
|
|
Restricted cash
|
|
|
|
|
517
|
|
|
|
|
|
—
|
|
|
|
Cash, cash equivalents, and restricted cash
|
|
|
|
$
|
27,728
|
|
|
|
|
$
|
44,064
|
|
|
Fixed maturity securities
The Company invests in fixed maturity securities including U.S. Treasury bills and bonds as well as corporate bonds. The investments are classified as available-for-sale and reported at fair value. Unrealized gains or losses are determined by comparing the fair market value of the securities with their cost or amortized cost. Realized gains and losses on investments are recorded on the trade date and are included in the statement of operations. The cost of securities sold is based on the specified identification method. Investment income is recognized as earned and discounts or premiums arising from the purchase of debt securities are recognized in investment income using the interest method over the remaining term of the security. Securities with an original maturity date greater than three months that mature within one year of the balance sheet date are classified as short-term, while investments with a maturity date greater than one year are classified as long-term.
Property and equipment, net
Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is generally five years. Leasehold improvements are amortized over the shorter of the asset’s useful life or the remaining term of the lease.
Expenditures for major additions and improvements are capitalized, while minor replacements, maintenance, and repairs are charged to expense as incurred. When property is retired or otherwise disposed of, the costs and accumulated depreciation are removed from the respective accounts, with any resulting gain or loss recognized concurrently.
Research and development expenses
Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, stock compensation, materials, supplies, rent, depreciation on and maintenance of research equipment, and the cost of services provided by outside contractors. All costs associated with research and development are expensed as incurred.
Stock-based compensation
Employees and members of the board of managers of the Company have received stock options and restricted stock of Prior Century. The Company recognizes the cost of the stock-based compensation incurred by Prior Century on its behalf as its employees and board members vest in the awards. Prior Century accounts for stock-based compensation arrangements in accordance with provisions of Accounting Standards Codification (“ASC”) 718,
Compensation—Stock Compensation. ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. Prior Century uses the Black-Scholes option-pricing model (“Black Scholes”) to determine the fair value of options granted. Prior Century’s stock-based awards are subject to service-based vesting conditions and performance-based vesting conditions. Compensation expense related to awards to employees and directors with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. For performance-based awards, the Company reassesses at each reporting date whether achievement of the performance condition is probable and accrues compensation expense if and when achievement of the performance condition is probable.
Black-Scholes requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to the lack of a public market for Prior Century’s common stock and lack of company-specific historical and implied volatility data, Prior Century has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to Prior Century, including stage of product development and life science industry focus. The historical volatility is calculated based on a period of time commensurate with expected term assumption. Prior Century uses the simplified method to calculate the expected term for options granted to employees and board members whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the options due to its lack of sufficient historical data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as Prior Century has never paid dividends and has no current plans to pay any dividends on its common stock. Forfeitures are recognized as they occur.
Due to the absence of an active market for Prior Century’s common stock, Prior Century utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, to estimate the fair value of its common stock. In determining the exercise prices for options granted, Prior Century has considered the estimated fair value of the common stock as of the measurement date. The estimated fair value of the common stock has been determined at each grant date based upon a variety of factors, including the illiquid nature of the common stock, arm’s-length sales of the common stock, the effect of the rights and preferences of the preferred shareholders, and the prospects of a liquidity event. Among other factors are Prior Century’s financial position and historical financial performance, the status of technological developments within Prior Century’s research, the composition and ability of the current research and management team, an evaluation or benchmark of Prior Century’s competition, and the current business climate in the marketplace. Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date.
Warrants
The Company has issued warrants that have been recognized as equity, and the fair value is recorded into additional paid-in capital in the accompanying consolidated balance sheets. Warrants are accounted for in accordance with applicable accounting guidance provided in ASC Topic 815, Derivatives and Hedging—Contracts in Entity’s Own Equity, as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement. The Company’s warrants issued in connection with its long-term debt are equity classified on the accompanying consolidated balance sheets. Equity classified warrants are accounted for at fair value on the issuance date, using Black Scholes, with no changes in fair value recognized after the issuance date.
Non-cumulative convertible preferred stock
The Company’s non-cumulative convertible preferred stock is classified outside of stockholders’ deficit because the shares contain deemed liquidation rights that are a contingent redemption feature not solely within the control of the Company. The Company’s policy is not to accrete the carrying value and related issuance costs of the non-cumulative convertible preferred stock to its redemption value until it is probable that the security will become redeemable.
Net loss per common share
Our basic and diluted net loss per common share is calculated by dividing the net loss by the weighted average number of shares of common shares outstanding during the periods presented. Stock options, restricted stock, stock purchase warrants and preferred stock are included in the diluted earnings per share calculations, unless the effects are anti-dilutive.
Foreign currency translation
The reporting currency of the Company is the U.S. dollar. The functional currency of Century Canada is the Canadian dollar. Assets and liabilities of Century Canada are translated into U.S. dollars based on exchange rates at the end of each reporting period. Expenses are translated at average exchange rates during the reporting period. Gains and losses arising from the translation of assets and liabilities are included as a component of accumulated other comprehensive loss or income on the company’s consolidated balance sheets. Gains and losses resulting from foreign currency transactions are reflected within the Company’s consolidated statements of operations and comprehensive loss. The Company has not utilized any foreign currency hedging strategies to mitigate the effect of its foreign currency exposure.
Intercompany payables and receivables are considered to be long-term in nature and any change in balance due to foreign currency fluctuation is included as a component of the Company’s consolidated comprehensive loss and accumulated other comprehensive loss within the Company’s consolidated balance sheets.
Income taxes
The Company was organized as a limited liability company until February 25, 2021, which is considered a passthrough entity for federal and state income tax purposes. As such, any taxable income or loss realized by the Company is allocated to the Members’ in accordance with their respective membership interest and reported on their individual tax returns. Therefore, no provisions or liability for income taxes is necessary in the accompanying consolidated financial statements. Prior Century was a C-Corporation in the predecessor period and had losses of $6,002 and a full valuation allowance as realization of the related tax benefits was not more likely than not.
The Company records uncertain tax positions as liabilities in accordance with ASC 740 and adjusts these liabilities when judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of December 31, 2020 and 2019, the Company has not recorded any uncertain tax positions in its consolidated financial statements.
The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying statement of operations. As of December 31, 2020 and 2019, no accrued interest or penalties are recorded in the consolidated balance sheets.
Recent accounting pronouncements
Recently Adopted Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-03, “Codification Improvements to Financial Instruments” (“ASU 2020-03”). ASU 2020-03 improves and clarifies various financial instruments topics. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to U.S. GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The Company adopted ASU 2020-03, effective January 1, 2020, which did not have a material effect on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02 Leases (ASC 842). In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” (ASU 2018-10), which provides narrow
amendments to clarify how to apply certain aspects of the new lease standard, and ASU No. 2018-11, “Leases (Topic 842)—Targeted Improvements” (ASU 2018-11), which addressed implementation issues related to the new lease standard. These and certain other lease-related ASUs have generally been codified in ASC 842. ASC 842 supersedes the lease accounting requirements in Topic 840, Leases. ASC 842 establishes a right-of-use model that requires a lessee to record a right-of-use (“ROU”) asset and a lease liability on the balance sheet for all leases. Under ASC 842, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The standard also requires disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. The Company adopted ASC 842 on January 1, 2020 using the modified retrospective transition method. Prior period results continue to be presented under ASC 840 based on the accounting standards originally in effect for such periods.
The Company has elected certain practical expedients permitted under the transition guidance within ASC 842 to leases that commenced before January 1, 2020, including the package of practical expedients. The election of the package of practical expedients resulted in the Company not reassessing prior conclusions under ASC 840 related to lease identification, lease classification and initial direct costs for expired and existing leases prior to January 1, 2020. The Company also elected the practical expedient to not record short-term leases on its consolidated balance sheet and to combine lease and non-lease components into a single lease component when measuring its leases. The adoption of ASU 2016-02 did not have a significant impact on the Company’s consolidated results of operations or cash flows. Upon adoption, the Company did not recognize a ROU asset and lease liability as no leases with an original term greater than 12 months commenced prior to January 1, 2020. For the Successor period ended December 31, 2020, the initial ROU asset and lease liability recognized was $9,735.
Recent Accounting 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”), which eliminates, adds, and modifies certain disclosure requirements for fair value measurements. ASU 2018-13 is effective for the Company for fiscal years beginning after December 15, 2020, and earlier adoption is permitted. The Company adopted ASU 2018-13, effective January 1, 2021, which did not have a material effect on the Company’s consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. The update also requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. The new guidance is effective for annual periods beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update can be adopted on either a fully retrospective or a modified retrospective basis. The Company is currently evaluating the impact the adoption of ASU 2020-06 will have on the consolidated financial statements.
In October 2020, the FASB issued ASU No. 2020-08, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs (“ASU 2020-08”), and ASU No. 2020-10, Codification Improvements (“ASU 2020-10”). ASU 2020-08 and ASU 2020-10 provide changes to clarify or improve existing guidance. This guidance is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is not permitted. The Company is currently evaluating the impact that ASU 2020-08 and ASU 2020-10 will have on our consolidated financial statements and disclosures.
Note 3—Initial capitalization
On June 21, 2019, Prior Century and Bayer entered into a Commitment Agreement to initially capitalize the Company. The Commitment Agreement called for capital contributions from Prior Century and Bayer as follows:
Century Capital Contributions
In exchange for issuing 67,226,891 common units to Prior Century, the Company acquired substantially all of Prior Century’s assets, assumed all of its liabilities and assumed the operations of Prior Century.
The Company evaluated the acquisition under the guidance within ASU 2017-01, “Clarifying the Definition of a Business” and concluded that the group of assets acquired did not meet the definition of a business, and, as such, the acquisition was accounted for under the asset acquisition model. The definition of a business was not met because substantially all the fair value of the assets acquired were concentrated in an in-process research and development (“IPR&D”) asset. In an asset acquisition, the total transaction cost is allocated between the acquired identified tangible and intangible assets based on relative fair value.
Total transaction costs for the assets acquired were $252,107, which was the fair value of the equity interests issued to Prior Century, with no additional capitalizable transaction costs. Equity issuance costs related to Prior Century were $407, which were recorded as a reduction to members’ equity. The relative fair value allocation was as follows:
|
|
|
|
As of June 21, 2019
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
25,163
|
|
|
|
IPR&D
|
|
|
|
|
225,946
|
|
|
|
Property and equipment
|
|
|
|
|
1,034
|
|
|
|
Other current assets
|
|
|
|
|
578
|
|
|
|
Other non-current assets
|
|
|
|
|
669
|
|
|
|
Current liabilities
|
|
|
|
|
(1,283)
|
|
|
|
Total
|
|
|
|
$
|
252,107
|
|
|
Under the asset acquisition model, an entity that acquires IPR&D assets follows the guidance in ASC 730, which requires that both tangible and intangible identifiable research and development assets with no alternative future use be initially allocated a portion of the consideration transferred and then charged to expense at the acquisition date. The IPR&D asset acquired was Prior Century’s comprehensive allogeneic cell therapy platform. As the IPR&D asset has no alternative future use to the Company, the Company charged $225,946 to expense within its consolidated statements of operations.
The valuation of the equity interests issued to Prior Century was based on an assessment of the total purchase consideration implied by the transaction between Bayer and the Company at the formation of the Company for Bayer’s 28% equity interest. In determining the implied fair value of the Company, the Company first determined whether Bayer received anything incremental to its 28% equity interest in the Company and considered that Bayer received a disproportionate tax benefit given their allocation of 100 percent of the tax losses of the Company until Bayer’s tax basis in the Company is equal to their ownership interest in the equity of the Company, per the terms of the LLC operating agreement. Given this benefit, the Company estimated the fair value of these additional tax savings over the expected period Bayer would receive this disproportionate benefit. After adjusting for the tax benefits Bayer receives, an implied fair value for the Company was estimated at the date the Company was formed which was used to value the equity interests issued to Prior Century.
Bayer Capital Contributions
In accordance with the Commitment Agreement, Bayer agreed to provide an aggregate cash capital contribution of $215,000. The Bayer cash commitment is split into capital contributions of $145,000 (“Tranche 1”) and $70,000 (“Tranche 2”). The funding of Tranche 2 is dependent on certain contingent events and, as a result, is
not recorded as a subscription receivable as of December 31, 2020 or 2019. Tranche 2 was eliminated in connection with the Series C preferred financing. See Note 17.
Bayer Rights
In connection with the Commitment Agreement, Bayer was granted approval and veto rights over certain decisions related to the operations of the Company through its manager representation on the Company’s Board of Managers. Prior Century holds similar rights.
Management determined that Prior Century did not retain control of the Company as Prior Century did not have the power to direct the activities of the Company that would most significantly impact its economic performance as a result of the rights provided to Bayer. These rights included, but weren’t limited to, (1) approval rights over the Company’s initial business plan and budget, including the need for the Company to obtain consent from both Bayer and Prior Century to alter the budget prospectively by more than 20 percent. This had the effect of requiring both Bayer and Prior Century to approve the Company’s research and development plan, as the allocation of funds to the research and development plan are determined within the Company’s operating budget. This also included the decision-making around the FCDI collaboration agreement (Note 16) within the research plan; (2) approval rights over hiring and termination decisions of the Company’s Chief Executive Officer, which required consent from both Bayer and Prior Century; and (3) approval rights over equity and debt capital raising decisions. In the event of a disagreement over these decisions, independent mediation is required, providing no tie-breaking authority to Bayer or Prior Century. For the foregoing reasons, Prior Century determined it did not retain control of the Company.
Tranche 1 was funded in exchange for 26,143,790 common units, with $75,000 paid at closing and the remaining $70,000 due upon the Company meeting certain development milestones or in 3 years.
During 2019, the Company received $74,839 from Tranche 1, net of equity issuance costs of $161. The Company accounts for the $70,000 as a subscription receivable, which is recorded as contra-equity within its consolidated statements of members’ equity until received from Bayer.
On June 18, 2020, the Company, Prior Century and Bayer executed an amendment to the Commitment Agreement to modify the terms for the Company to receive the remaining Tranche 1 subscription receivable of $70,000. In November 2020, the Company received proceeds of $38,100 of the Tranche 1 subscription receivable. The remaining $31,900 was received in January 2021. The Commitment Agreement terminated in connection with the Series C Preferred financing, and Bayer has no obligation to invest any additional amounts.
Bayer Option Agreement
As a condition of the Tranche 1 closing, Bayer and Prior Century were required to enter into an Option Agreement, pursuant to which Bayer was provided the right of first refusal to acquire certain products researched and developed by the Company.
Note 4—Asset purchase by Century Therapeutics Canada ULC
On June 9, 2020, Century Canada and the Company entered into an agreement with Empirica, a company focused on the development of adoptive immunotherapies against aggressive and treatment-resistant forms of cancers, including glioblastoma and brain metastasis. Under the terms of the Empirica Agreement, the Company acquired an IPR&D asset. Cash of $4,519 was paid at closing and transaction expenses totaled $203. The Company also deposited $1,506 in escrow (the “Escrow Deposit”). Release of the Escrow Deposit is subject to the terms of a promissory note, which provides for the funds to be released in equal annual installments over a three-year period related to continuing services by certain Empirica shareholders who are employed by the Company. As of December 31, 2020, accrued compensation expense on the promissory note was $282, which is presented within accrued expenses and other liabilities on the consolidated balance sheets.
Total consideration of the asset acquisition was as follows:
|
|
|
|
June 9, 2020
|
|
|
Cash paid to Sellers at close
|
|
|
|
$
|
4,516
|
|
|
|
Seller expenses paid by the Company
|
|
|
|
|
3
|
|
|
|
Buyer transaction expenses
|
|
|
|
|
203
|
|
|
|
Total consideration
|
|
|
|
$
|
4,722
|
|
|
|
IPR&D
|
|
|
|
$
|
4,722
|
|
|
The Company evaluated the acquisition under the guidance within ASU 2017-01, “Clarifying the Definition of a Business” and concluded that the group of assets acquired did not meet the definition of a business, and, as such, the acquisition was accounted for under the asset acquisition model. The definition of a business was not met because substantially all the fair value of the asset acquired was concentrated in an IPR&D asset.
As the IPR&D asset has no alternative future use, the Company charged $4,722 to expense within its consolidated statements of operations for the year ended December 31, 2020.
Note 5—Financial instruments and fair value measurements
The following table sets forth the Company’s assets that were measured at fair value as of December 31, 2020, by level within the fair value hierarchy:
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Cash equivalents
|
|
|
|
$
|
24,284
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
24,284
|
|
|
|
U.S. Treasury
|
|
|
|
|
9,525
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
9,525
|
|
|
|
Corporate bonds
|
|
|
|
|
—
|
|
|
|
|
|
40,070
|
|
|
|
|
|
—
|
|
|
|
|
|
40,070
|
|
|
|
Total
|
|
|
|
$
|
33,809
|
|
|
|
|
$
|
40,070
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
73,879
|
|
|
The following table sets forth the Company’s assets that were measured at fair value as of December 31, 2019, by level within the fair value hierarchy:
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Cash equivalents
|
|
|
|
$
|
42,010
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
42,010
|
|
|
|
U.S. Treasury
|
|
|
|
|
7,612
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,612
|
|
|
|
Corporate bonds
|
|
|
|
|
—
|
|
|
|
|
|
33,943
|
|
|
|
|
|
—
|
|
|
|
|
|
33,943
|
|
|
|
Total
|
|
|
|
$
|
49,622
|
|
|
|
|
$
|
33,943
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
83,565
|
|
|
There were no transfers between levels during the period ended December 31, 2020 and 2019. The Company uses the services of its investment manager, which uses widely accepted models for assumptions in valuing securities with inputs from major third-party data providers.
The Company classifies all of its investments in fixed maturity debt securities as available-for-sale and, accordingly, are carried at estimated fair value.
The amortized cost, gross unrealized gains and losses, and fair value of investments in fixed maturity securities are as follows as of December 31, 2020:
|
|
|
|
Amortized Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair Value
|
|
|
U.S. Treasury
|
|
|
|
$
|
9,518
|
|
|
|
|
$
|
7
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
9,525
|
|
|
|
Corporate bonds
|
|
|
|
|
40,069
|
|
|
|
|
|
8
|
|
|
|
|
|
(7)
|
|
|
|
|
|
40,070
|
|
|
|
Total
|
|
|
|
$
|
49,587
|
|
|
|
|
$
|
15
|
|
|
|
|
$
|
(7)
|
|
|
|
|
$
|
49,595
|
|
|
The amortized cost, gross unrealized gains and losses, and fair value of investments in fixed maturity securities are as follows as of December 31, 2019:
|
|
|
|
Amortized Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair Value
|
|
|
U.S. Treasury
|
|
|
|
$
|
7,612
|
|
|
|
|
$
|
1
|
|
|
|
|
$
|
(1)
|
|
|
|
|
$
|
7,612
|
|
|
|
Corporate bonds
|
|
|
|
|
33,946
|
|
|
|
|
|
3
|
|
|
|
|
|
(6)
|
|
|
|
|
|
33,943
|
|
|
|
Total
|
|
|
|
$
|
41,558
|
|
|
|
|
$
|
4
|
|
|
|
|
$
|
(7)
|
|
|
|
|
$
|
41,555
|
|
|
The following table provides the maturities of our fixed maturity available-for-sale securities:
|
|
|
|
Successor
|
|
|
|
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
Less than one year
|
|
|
|
$
|
48,542
|
|
|
|
|
$
|
37,475
|
|
|
|
One to five years
|
|
|
|
|
1,053
|
|
|
|
|
|
4,080
|
|
|
|
|
|
|
|
$
|
49,595
|
|
|
|
|
$
|
41,555
|
|
|
The Company has evaluated the unrealized losses on the fixed maturity securities and determined that they are not attributable to credit risk factors. For fixed maturity securities, losses in fair value are viewed as temporary if the fixed maturity security can be held to maturity and it is reasonable to assume that the issuer will be able to service the debt, both as to principal and interest.
Note 6—Prepaid expenses and other current assets
The following is a summary of prepaid expenses and other current assets:
|
|
|
|
Successor
|
|
|
|
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
Research and development
|
|
|
|
$
|
97
|
|
|
|
|
$
|
2,140
|
|
|
|
Software licenses and other
|
|
|
|
|
760
|
|
|
|
|
|
196
|
|
|
|
Miscellaneous receivables
|
|
|
|
|
908
|
|
|
|
|
|
123
|
|
|
|
Warranties
|
|
|
|
|
240
|
|
|
|
|
|
—
|
|
|
|
Other
|
|
|
|
|
256
|
|
|
|
|
|
124
|
|
|
|
Total prepaid expenses and other current assets
|
|
|
|
$
|
2,261
|
|
|
|
|
$
|
2,583
|
|
|
Note 7—Property and equipment, net
The following is a summary of property and equipment, net:
|
|
|
|
Successor
|
|
|
|
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
Lab equipment
|
|
|
|
$
|
8,941
|
|
|
|
|
$
|
2,633
|
|
|
|
Leasehold improvements
|
|
|
|
|
1,964
|
|
|
|
|
|
34
|
|
|
|
Construction in progress
|
|
|
|
|
5,771
|
|
|
|
|
|
—
|
|
|
|
Computer software and equipment
|
|
|
|
|
214
|
|
|
|
|
|
—
|
|
|
|
Furniture and fixtures
|
|
|
|
|
76
|
|
|
|
|
|
—
|
|
|
|
Total
|
|
|
|
|
16,966
|
|
|
|
|
|
2,667
|
|
|
|
|
|
|
Successor
|
|
|
|
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
Less: Accumulated depreciation
|
|
|
|
|
(1,581)
|
|
|
|
|
|
(179)
|
|
|
|
Property and equipment, net
|
|
|
|
$
|
15,385
|
|
|
|
|
$
|
2,488
|
|
|
Depreciation expense was $1,402 and $179 for the Successor period ended December 31, 2020 and the Successor period June 21, 2019 through December 31, 2019, respectively. Depreciation expense for the Predecessor period January 1, 2019 through June 20, 2019 was $70.
Note 8—Accrued expenses and other liabilities
The following is a summary of accrued expenses:
|
|
|
|
Successor
|
|
|
|
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
Payroll and bonuses
|
|
|
|
$
|
3,132
|
|
|
|
|
$
|
1,028
|
|
|
|
Interest
|
|
|
|
|
82
|
|
|
|
|
|
—
|
|
|
|
Professional and legal fees
|
|
|
|
|
524
|
|
|
|
|
|
365
|
|
|
|
Operating lease liability, current
|
|
|
|
|
240
|
|
|
|
|
|
—
|
|
|
|
Other
|
|
|
|
|
52
|
|
|
|
|
|
53
|
|
|
|
Total accrued expenses and other liabilities
|
|
|
|
$
|
4,030
|
|
|
|
|
$
|
1,446
|
|
|
Note 9—Long-term debt
The following is a summary of the Company’s indebtedness:
|
|
|
|
Successor
|
|
|
|
|
|
December 31, 2020
|
|
|
Principal
|
|
|
|
$
|
10,000
|
|
|
|
Less: Debt discount attributable to warrants, net of accretion
|
|
|
|
|
(43)
|
|
|
|
Less: Unamortized deferred financing cost, net of accretion
|
|
|
|
|
(321)
|
|
|
|
Long-term debt, net
|
|
|
|
$
|
9,636
|
|
|
On September 14, 2020, the Company entered into a $10.0 million Term Loan Agreement (the “Loan Agreement”) with Hercules Capital, Inc. (“Hercules”). Pursuant to the terms of the Loan Agreement, the Company borrowed $10.0 million (the “Tranche 1 Advance”) from the Lenders at closing. Beginning January 1, 2021 and upon the achievement of certain development milestones and continuing through September 30, 2021 the Company may borrow an additional $10.0 million (the “Tranche 2 Advance”). The remaining $10.0 million tranche (“Tranche 3 Advance”) is subject to Hercules’ investment committee’s sole discretion.
The Loan Agreement has a four-year term, has a minimum cash covenant and an interest-only period of up to 24 months. If the Tranche 2 Advance is not drawn or the Company has achieved certain development milestones by September 30, 2021, then there is no minimum cash requirement. The Company was in compliance with all provisions of the Loan Agreement as of December 31, 2020. Amounts borrowed under the Loan Agreement accrue interest at a floating rate per annum (based on a year of 360 days) equal to (i) the sum of (a) the greater of 6.30% plus (b) the prime rate as reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue or (ii) 9.55%. The interest rate as of December 31, 2020 was 9.55%.
The Company incurred $410 in deferred financing costs. The Company is also required to pay the Lenders an end of term fee of 3.95% of loan proceeds upon repayment or prepayment of any loans made under the Loan
Agreement. The end of term fee is being recognized as interest expense and accreted over the term of the Loan Agreement using the effective interest method. The Company is also required to pay Hercules a prepayment charge equal to 2.00% of the loan amounts prepaid during the interest-only period and 1.00% thereafter on any loans made under the Loan Agreement.
The Company granted Hercules a lien on substantially all of the Company’s assets, excluding intellectual property.
The Company issued to Hercules warrants to purchase up to an aggregate of 40,540 Units of the Company’s limited liability membership interests, issued in the form of common units. The warrants are exercisable for a period of ten years from the date of the issuance of each warrant at a per-unit exercise price equal to $5.55, subject to certain adjustments as specified in the warrants. The fair value of the warrants at issuance was $46. The Company accounted for the warrants as equity, and the fair value is recorded in additional paid-in capital. The warrant value is also recorded as a debt discount and classified as a contra-liability on the consolidated balance sheet and amortized to interest expense. If the Company borrows on the remaining two tranche advances outlined above, the Company will be required to issue warrants to Hercules equal to 2.25% of the aggregate amount funded.
Interest expense of the Loan Agreement is as follows:
|
|
|
|
Successor
|
|
|
|
|
|
For the Year Ended
December 31, 2020
|
|
|
Interest expense
|
|
|
|
$
|
289
|
|
|
|
Amortization of debt issuance costs, including end of term fee accretion
|
|
|
|
|
92
|
|
|
|
|
|
|
|
$
|
381
|
|
|
Included in accrued expenses in the accompanying consolidated balance sheet as of December 31, 2020 is $82 of accrued interest. There was no accrued interest as of December 31, 2019.
Future principal payments due (including the end of term fee) under the Loan Agreement are as follows (in thousands):
|
|
|
|
Principal
Payments
|
|
|
2021
|
|
|
|
$
|
—
|
|
|
|
2022
|
|
|
|
|
1,039
|
|
|
|
2023
|
|
|
|
|
6,603
|
|
|
|
2024
|
|
|
|
|
2,753
|
|
|
|
Total future payments
|
|
|
|
$
|
10,395
|
|
|
|
|
Note 10—Stockholders’ Deficit
The Company’s capital structure was comprised of common limited liability membership interests, issued in the form of common units. The common units can be issued with the authorization of the Company’s Board of Managers, as governed by the Company’s Limited Liability Company Agreement. As of December 31, 2020 and 2019, 93,370,681 common units were issued and outstanding.
For the Predecessor period January 1, 2019 through June 20, 2019, the Prior Century had 35,000,000 of Series A Preferred Stock and Series A-1 Preferred Stock (“Preferred Stock”), with a par value of $0.0001 per share, issued and outstanding. Prior Century had 15,058,479 shares of common stock with a par value of $0.0001 per share issued and outstanding for the Predecessor period January 1, 2019 through June 20, 2019.
On February 25, 2021, pursuant to a Plan of Conversion Agreement, the Company converted from a Delaware limited liability company (Century Therapeutics LLC or “Successor”) to a Delaware corporation. Upon completion of this conversion, Prior Century merged with and into CenturyTx, Inc., with CenturyTx, Inc. as the surviving entity that changed its name to “Century Therapeutics, Inc.”
The holders of equity interests, including Series A Preferred Stock, common stock, restricted common stock and stock options in Prior Century received equivalent equity interests in Century Therapeutics, Inc. Bayer’s common units in the Company were converted into Series B Preferred Stock. See Note 17.
Note 11—Commitments and contingencies
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when future expenditures are probable and such expenditures can be reasonably estimated.
Distributed Bio Master Service Agreement
On July 24, 2019, the Company entered into a Master Service Agreement with Distributed Bio, Inc (“DBio”), whereby DBio will screen for protein binders that bind to specific therapeutic targets. The Company pays for such services according to a payment schedule, and if the Company brings the protein binders into the clinic for further development, DBio will receive milestone payments of up to $16,100 in total for each product as the products move through the clinical development and regulatory approval processes.
The Company had accrued expenses of $244 and $327 within accrued expenses and other liabilities for the period ended December 31, 2020 and 2019, respectively, in its consolidated balance sheets related to the Master Service Agreement.
iCELL Inc. Sublicense Agreement
In March 2020, the Company entered into a Sublicense Agreement with iCELL Inc (“iCELL”) whereby iCELL granted the Company a license of certain patents and technology. The Company will pay iCELL royalties in the low single digits on net sales of the licensed product. In addition to the earned royalties, the Company will pay one-time sales milestones for the first time sales of the licensed product exceeding thresholds in a single calendar year, to a maximum of $70,000. iCELL will receive payments of up to $4,250 in development and regulatory approval milestone payments.
Note 12—Leases
The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and non-lease components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable.
Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company has no finance leases. The Company primarily leases buildings which are classified as operating leases. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in the Company’s leases, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
The lease term for all the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met. For certain leases, the options for renewals have been included in the lease term as the reasonably certain threshold is met due to the Company having significant economic incentive for extending the lease.
Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on an index or rate and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset, if reasonably certain.
Variable lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the events, activities, or circumstances in the lease agreement on which those payments are assessed are probable. Variable lease payments are presented as operating expense in the Company’s consolidated statements of operations and comprehensive loss in the same line item as expense arising from fixed lease payments.
The Company has commitments under operating leases for certain facilities used in its operations. The Company maintains security deposits on certain leases in the amounts of $909 and $206 within security deposits in its consolidated balance sheets at December 31, 2020 and 2019, respectively. The Company’s leases have initial lease terms ranging from 5 to 16 years. Certain lease agreements contain provisions for future rent increases.
The following table reflects the components of lease expense:
|
|
|
|
Successor
|
|
|
|
Predecessor
|
|
|
|
|
|
For the Year Ended
December 31, 2020
|
|
|
Period from
June 21, 2019 through
December 31, 2019
|
|
|
|
Period from
January 1, 2019
through June 20, 2019
|
|
|
Operating lease expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed lease cost
|
|
|
|
$
|
935
|
|
|
|
|
$
|
—
|
|
|
|
|
|
$
|
—
|
|
|
|
Variable lease cost
|
|
|
|
|
131
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
Short term lease expense
|
|
|
|
|
2,352
|
|
|
|
|
|
379
|
|
|
|
|
|
|
243
|
|
|
|
Total operating lease expense
|
|
|
|
$
|
3,418
|
|
|
|
|
$
|
379
|
|
|
|
|
|
$
|
243
|
|
|
|
|
The following table reflects supplemental balance sheet information related to leases:
|
|
|
|
|
|
|
Successor
|
|
|
|
|
|
Location in Balance Sheet
|
|
|
As of December 31, 2020
|
|
|
Operating lease right-of-use asset, net
|
|
|
Operating lease right-of-use asset, net
|
|
|
$9,392
|
|
|
Operating lease liability, current
|
|
|
Accrued expenses and other liabilities
|
|
|
$240
|
|
|
Operating lease liability, long-term
|
|
|
Operating lease liability, long-term
|
|
|
11,679
|
|
|
Total operating lease liability
|
|
|
|
|
|
$11,919
|
|
The following table reflects supplement lease term and discount rate information related to leases as of December 31, 2020:
|
|
|
|
Successor
|
|
|
|
|
|
As of December 31, 2020
|
|
|
Weighted-average remaining lease terms—operating leases
|
|
|
10.2 years
|
|
|
Weighted-average discount rate—operating leases
|
|
|
|
|
9.0%
|
|
|
|
|
The following table reflects supplemental cash flow information related to leases as of the periods indicated:
|
|
|
|
Successor
|
|
|
|
|
|
For the Year Ended
December 31, 2020
|
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases
|
|
|
|
$
|
2,175
|
|
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
|
$
|
9,735
|
|
|
The following table reflects future minimum lease payments under noncancelable leases as of December 31, 2020:
|
|
|
|
Operating Leases
|
|
|
2021
|
|
|
|
$
|
1,220
|
|
|
|
2022
|
|
|
|
|
1,594
|
|
|
|
2023
|
|
|
|
|
1,753
|
|
|
|
2024
|
|
|
|
|
1,801
|
|
|
|
2025
|
|
|
|
|
1,828
|
|
|
|
Thereafter
|
|
|
|
|
13,207
|
|
|
|
Total lease payments
|
|
|
|
|
21,403
|
|
|
|
Less: Imputed Interest
|
|
|
|
|
(9,484)
|
|
|
|
Total
|
|
|
|
$
|
11,919
|
|
|
The Company entered into three leases that had not commenced at December 31, 2020. As a result, future lease payments of approximately $26.6 million are not recorded on the Company’s consolidated balance sheets. These leases commence during January 2021 and April 2022 with non-cancelable terms ranging from 29 months to 10 years.
Note 13—Defined contribution plan
The Company has a 401(k) Employee Savings Plan (“401(k) Plan”) that is available to all employees of the Company. The Company has elected a Safe-Harbor provision for the 401(k) Plan in which participants are always fully vested in their employer contributions. Prior Century matches 100% of the first 3% of participating employee contributions and 50% of the next 2% of participating employee contributions. Contributions are made in cash. Contributions were approximately $301, $89 and $33 for the Successor period ended December 31, 2020, the Successor period June 21, 2019 through December 31, 2019, and the Predecessor period January 1, 2019 through June 20, 2019, respectively. Such contribution expense has been recognized in the consolidated statement of operations for each period.
Note 14—Stock-based compensation
In June 2018, Prior Century, adopted the 2018 Stock Option and Grant Plan (the “Plan”). The Plan provides for Prior Century to sell or issue common stock or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the Board of Directors, and consultants of Prior Century under terms and provisions established by the Board of Directors. Under the terms of the Plan, options may be granted at an exercise price not less than fair market value. Prior Century generally grants stock based awards with service conditions only. Stock awards granted typically vest over a four-year period but may be granted with different vesting terms. As of December 31, 2020 and 2019, Prior Century had shares authorized for issuance under the Plan of 19,498,781 and 15,260,038, respectively.
During the Successor period June 21, 2019 through December 31, 2019 and the year ended December 31, 2020, equity awards were granted from Prior Century to employees of the Company. The Company recognizes the costs of the stock based payments incurred by Prior Century on its behalf as the employees vest in the awards
(i.e., the Company recognizes expense measured on the same basis as its investor, Prior Century). The Company also records a corresponding capital contribution from Prior Century.
For the Successor year ended December 31, 2020, the Company recognized $876 of stock based compensation expense of which $675 was recorded within research and development expenses and $201 was recorded within general and administrative expense within the consolidated statement of operations. For the Successor period June 21, 2019 through December 31, 2019, the Company recognized $133 of stock based compensation expense within general and administrative expense of the consolidated statement of operations. A corresponding capital contribution from Prior Century was recorded within the Company’s consolidated balance sheets as of December 31, 2020 and 2019. For the Predecessor period January 1, 2019 through June 20, 2019, Prior Century recognized $14 of stock based compensation within general and administrative expense in its consolidated statements of operations.
Stock Options
The following table summarizes stock option activity for the year ended December 31, 2020:
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
Remaining
Contractual
Term
(years)
|
|
|
Outstanding January 1, 2020
|
|
|
|
|
4,393,185
|
|
|
|
|
$
|
0.27
|
|
|
|
|
|
9.45
|
|
|
|
Granted
|
|
|
|
|
6,132,580
|
|
|
|
|
|
0.54
|
|
|
|
|
|
—
|
|
|
|
Exercised—vested
|
|
|
|
|
(358,464)
|
|
|
|
|
|
0.41
|
|
|
|
|
|
—
|
|
|
|
Exercised—unvested
|
|
|
|
|
(396,149)
|
|
|
|
|
|
0.41
|
|
|
|
|
|
—
|
|
|
|
Forfeited
|
|
|
|
|
(1,590)
|
|
|
|
|
|
0.41
|
|
|
|
|
|
—
|
|
|
|
Cancelled
|
|
|
|
|
(1,236)
|
|
|
|
|
|
0.41
|
|
|
|
|
|
—
|
|
|
|
Outstanding, December 31, 2020
|
|
|
|
|
9,768,326
|
|
|
|
|
$
|
0.42
|
|
|
|
|
|
9.11
|
|
|
|
Exercisable at December 31, 2020, Successor
|
|
|
|
|
5,981,228
|
|
|
|
|
$
|
0.42
|
|
|
|
|
|
8.93
|
|
|
|
|
The following table summarizes stock option activity for the year ended December 31, 2019:
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
Remaining
Contractual
Term
(years)
|
|
|
Outstanding January 1, 2019, Predecessor
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
—
|
|
|
|
Granted
|
|
|
|
|
1,929,820
|
|
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
Outstanding June 21, 2019, Successor
|
|
|
|
|
1,929,820
|
|
|
|
|
|
0.01
|
|
|
|
|
|
—
|
|
|
|
Granted
|
|
|
|
|
3,363,626
|
|
|
|
|
|
0.41
|
|
|
|
|
|
—
|
|
|
|
Exercised—vested
|
|
|
|
|
(187,316)
|
|
|
|
|
|
0.01
|
|
|
|
|
|
—
|
|
|
|
Exercised—unvested
|
|
|
|
|
(712,945)
|
|
|
|
|
|
0.01
|
|
|
|
|
|
—
|
|
|
|
Outstanding, December 31, 2019
|
|
|
|
|
4,393,185
|
|
|
|
|
$
|
0.27
|
|
|
|
|
|
9.45
|
|
|
|
Exercisable at December 31, 2019, Successor
|
|
|
|
|
3,795,617
|
|
|
|
|
$
|
0.30
|
|
|
|
|
|
9.44
|
|
|
|
|
The weighted average grant date fair value of awards for options granted during the Successor year and period ended December 31, 2020 and 2019 was $0.32 and $0.25, respectively. As of December 31, 2020, there was $1,862 of total unrecognized compensation expense related to unvested stock options with time-based vesting terms, which is expected to be recognized over a weighted average period of 2.87 years.
During 2020, Prior Century issued 537,500 performance-based awards that vest upon contingent events. Prior Century determined the performance condition for these awards is not probable of being achieved. As a result, the Company has not recorded any compensation cost related to the awards. As of December 31, 2020, there was $213 of total unrecognized compensation expense related to the performance-based awards.
Prior Century estimates the fair value of its option awards to employees and directors using Black-Scholes, which requires inputs and subjective assumptions, including (i) the expected stock price volatility, (ii) the calculation of the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to the lack of substantial company-specific historical and implied volatility data of its common stock, Prior Century has based its estimate of expected volatility on the historical volatility of a group of similar public companies. When selecting these companies on which it has based its expected stock price volatility, Prior Century selected companies with comparable characteristics to it, including enterprise value, risk profiles, position within the industry and with historical share price information sufficient to meet the expected term of the stock-based awards. Prior Century will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.
Prior Century has never paid dividends and does not expect to in the foreseeable future. The expected term of the options granted to employees is derived from the “simplified” method as described in Staff Accounting Bulletin 107 relating to stock-based compensation. The risk-free interest rates for periods within the expected term of the option are based on the U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. Prior Century will account for actual forfeitures as they occur.
The weighted-average assumptions used to calculate the fair value of stock options granted are as follows:
|
|
|
|
Successor
|
|
|
|
|
|
Year ended
December 31, 2020
|
|
|
Period ended
June 21, 2019 through
December 31, 2019
|
|
|
Expected dividend rate
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Expected option term (years)
|
|
|
|
|
5.85
|
|
|
|
|
|
5.97
|
|
|
|
Expected volatility
|
|
|
|
|
68.38%
|
|
|
|
|
|
65.63%
|
|
|
|
Risk-free interest rate
|
|
|
|
|
0.58%
|
|
|
|
|
|
1.77%
|
|
|
Restricted Stock
The following table summarizes restricted stock activity for the year ended December 31, 2020 and December 31, 2019:
|
|
|
|
Shares
|
|
|
Weighted Average
Grant Date Fair Value
|
|
|
Unvested January 1, 2019, Predecessor
|
|
|
|
|
4,288,080
|
|
|
|
|
$
|
0.01
|
|
|
|
Issued
|
|
|
|
|
701,754
|
|
|
|
|
|
0.01
|
|
|
|
Vested
|
|
|
|
|
(58,479)
|
|
|
|
|
|
0.01
|
|
|
|
Unvested June 21, 2019, Successor
|
|
|
|
|
4,931,355
|
|
|
|
|
$
|
0.01
|
|
|
|
Issued
|
|
|
|
|
1,437,719
|
|
|
|
|
|
0.41
|
|
|
|
Repurchased
|
|
|
|
|
(750,000)
|
|
|
|
|
|
0.01
|
|
|
|
Vested
|
|
|
|
|
(1,299,455)
|
|
|
|
|
|
0.01
|
|
|
|
Total Unvested December 31, 2019, Successor
|
|
|
|
|
4,319,619
|
|
|
|
|
|
0.14
|
|
|
|
Vested
|
|
|
|
|
(1,668,895)
|
|
|
|
|
|
0.15
|
|
|
|
Total Unvested December 31, 2020, Successor
|
|
|
|
|
2,650,724
|
|
|
|
|
$
|
0.14
|
|
|
|
|
During 2018, Prior Century issued 1,500,000 shares of common stock at a purchase price of $0.01 per share. Also, during 2018, Prior Century issued 2,788,080 shares of restricted common stock. Pursuant to certain stock purchase agreements containing vesting and other provisions, Prior Century has the right to repurchase unvested shares. In October 2019, Prior Century repurchased 750,000 shares at $0.41 per share for a cost of $307.
As of December 31, 2020, there was $372 of total unrecognized compensation expense related to the unvested restricted stock with time-based vesting terms, which is expected to be recognized over a weighted average period of 1.94 years. All restricted stock vests over a four-year period.
Note 15—Basic and diluted net loss per common share
Basic and diluted net loss per common share is calculated as follows:
|
|
|
|
Successor
|
|
|
|
Predecessor
|
|
|
|
|
|
For the Year Ended
December 31, 2020
|
|
|
For the period June
21, 2019 through
December 31, 2019
|
|
|
|
For the period
January 1, 2019
through June 20, 2019
|
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(53,575)
|
|
|
|
|
$
|
(238,767)
|
|
|
|
|
|
$
|
(6,002)
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common share for basic
and diluted net loss per share
|
|
|
|
|
18,825,136
|
|
|
|
|
|
18,825,136
|
|
|
|
|
|
|
15,029,240
|
|
|
|
Basic and diluted net loss per common share
|
|
|
|
$
|
(2.85)
|
|
|
|
|
$
|
(12.68)
|
|
|
|
|
|
$
|
(0.40)
|
|
|
|
|
The following table summarizes the potentially dilutive securities convertible into common shares that were excluded from the calculation of diluted net loss per common share because their inclusion would have been antidilutive:
|
|
|
|
Successor
|
|
|
|
Predecessor
|
|
|
|
|
|
For the Year Ended
December 31, 2020
|
|
|
For the period June
21, 2019 through
December 31, 2019
|
|
|
|
For the period
January 1, 2019
through June 20, 2019
|
|
|
Stock options to purchase common stock
|
|
|
|
|
9,768,326
|
|
|
|
|
|
4,393,185
|
|
|
|
|
|
|
1,929,820
|
|
|
|
Early exercised stock options subject to future
vesting
|
|
|
|
|
831,896
|
|
|
|
|
|
712,945
|
|
|
|
|
|
|
—
|
|
|
|
Restricted stock award subject to future vesting
|
|
|
|
|
2,650,724
|
|
|
|
|
|
4,319,619
|
|
|
|
|
|
|
4,931,355
|
|
|
|
Warrants on long term debt
|
|
|
|
|
40,540
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
Convertible preferred stock
|
|
|
|
|
61,143,790
|
|
|
|
|
|
61,143,790
|
|
|
|
|
|
|
35,000,000
|
|
|
|
Total
|
|
|
|
|
74,435,276
|
|
|
|
|
|
70,569,539
|
|
|
|
|
|
|
41,861,175
|
|
|
|
|
Note 16—Related party transactions
License Agreements and Collaborative Agreements with Shareholder of Equity Method Investor
As part of the Commitment Agreement, the Company acquired licenses and other contracts from Prior Century that were originally entered into by Prior Century and FUJIFILM Cellular Dynamics, Inc. (“FCDI”). FCDI is a shareholder of Prior Century. The acquired licenses and other contracts with FCDI are as follows:
Acquired FCDI Licenses
The Company acquired from Prior Century a non-exclusive license agreement with FCDI. The license provides the Company with certain patents and know-how related to the reprogramming of human somatic cells to induce
pluripotent stem cell(s) (“iPSCs”) (“License Agreement”). Under this agreement, the Company is required to make certain developmental and regulatory milestone payments as well as royalty payments upon commercialization. Royalties are in the low single digits on the sale of all licensed products.
The Company also acquired from Prior Century an exclusive license agreement with FCDI. The license provides the Company with patents and know-how related to human iPSC exclusively manufactured by FCDI.
The potential development and regulatory milestone payments to be paid by the Company to FCDI are $6,000.
FCDI Collaboration Agreement
In October 2019, the Company entered into the Master Collaboration Agreement with FCDI, whereby FCDI will provide certain services to the Company to develop and manufacture T-cell-derived iPSCs and immune cells derived therefrom. FCDI will provide services in accordance with the approved research plan and related research budget. The initial research plan covers the period from October 2019 through March 31, 2022. The original research budget of $19,700 was increased to $30,400 in March 2021.
During the Successor period ended December 31, 2020, the Company made payments of $5,311 and incurred research and development expenses of $9,002 and legal fees of $52 recorded within general and administrative expenses in its consolidated statements of operations and comprehensive loss. As of December 31, 2020, there was $1,844 in accounts payable on the consolidated balance sheets.
During the Successor period June 21, 2019 through December 31, 2019, the Company made payments of $4,847, of which $2,140 is classified in prepaid expenses and other current assets in the consolidated balance sheet as of December 31, 2019. During the Successor period June 21, 2019 through December 31, 2019, the Company incurred research and development operating expenses of $3,139 and legal fees of $118 recorded as general and administrative expenses in the consolidated statements of operations and comprehensive loss.
During the Predecessor period January 1, 2019 through June 20, 2019, the Company incurred research and development operating expenses of $1,643.
Consulting Arrangements with Shareholders of Equity Method Investor
In 2019, the Company entered into arrangements with two shareholders of Prior Century, wherein the shareholders provide consulting services to the Company. As compensation for the consulting services, the shareholders are entitled to an annual retainer fee of $125, payable quarterly, along with payment of reasonable expenses associated with providing the consulting services. The Company paid $94, $106 and $44 related to these consulting arrangements that were included in research and development expenses in the consolidated statements of operations and comprehensive loss for the Successor period ended December 31, 2020, the Successor period June 21, 2019 through December 31, 2019, and the Predecessor period January 1, 2019 through June 20, 2019, respectively.
Note 17—Subsequent Events
The Company has evaluated subsequent events for the year ended December 31, 2020, the date of these consolidated financial statements, through May 5, 2021, which represents the date these consolidated financial statements were issued.
On February 25, 2021, the Company converted from a Delaware limited liability company to a Delaware corporation, and changed its name to CenturyTx, Inc. Upon completion of this conversion, Prior Century merged with and into CenturyTx, Inc., with CenturyTx, Inc. as the surviving entity and changed its name to “Century Therapeutics, Inc.” In connection with this merger, the holders of equity interests, including Series A Preferred Stock, common stock, restricted common stock and stock options in Prior Century received equivalent equity interests in Century Therapeutics, Inc. Bayer’s common units in the Company were converted into Series B Preferred Stock.
Upon the execution of the preceding conversion on February 25, 2021, the Company entered into a stock purchase agreement with existing and new investors whereby the Company issued and sold 24,721,999 shares of Series C Preferred Stock with a par value of $0.0001, to investors at a price of $6.4720 per shares for gross proceeds of $160,000.
Pursuant to its Amended Articles of Incorporation filed on February 25, 2021, the Company is now authorized to issue 125,236,190 shares of $0.0001 par value Common Stock and 85,865,789 shares of $0.0001 par value Preferred Stock. Of the Preferred Stock, 35,000,000 shares are designated as Series A Preferred Stock, 26,143,790 are designated as Series B Preferred Stock and 24,721,999 are designated as Series C Preferred Stock.
The holders of Series A and Series C Preferred Stock are entitled to receive non-cumulative dividends prior to and in preference to any declaration of payment of dividends on Common Stock or any other class of Preferred Stock, at an annual rate of 8% of the original issuance price, when and if declared by the Board of Directors. The original issuance price per share for the Series A, B and C Preferred Stock is $1.00, $5.55 and $6.4720, respectively. No dividends have been declared or paid as of December 31, 2020.
In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of Preferred Stock have liquidation preferences, before any distribution or payment is made to holders of Common Stock, in an amount per share equal to the original issue price, plus any dividends declared but unpaid. If the assets and funds to be distributed among the holders of Preferred Stock are insufficient to permit the payment to such holders, then the entire assets and funds of the Company legally available for distribution will be distributed ratably among the holders of Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive.
Upon completion of the payment of the full liquidation preference of Preferred Stock, the remaining assets of the Company, if any, shall be distributed ratably to the holders of Common Stock and Preferred Stock, with the Preferred Stock being treated as if the Preferred Stock had been converted to shares of Common Stock at the then applicable conversion rate.
The holders of each share of Preferred Stock are entitled to voting rights equal to the number of shares of Common Stock into which the shares could be converted. The holders of Series A Preferred Stock are entitled to elect two directors, the holders of Series B Preferred Stock are entitled to elect one director and the holders of Series C Preferred Stock are entitled to elect one director. The holders of Common Stock are entitled to elect one director.
Each share of Preferred Stock is convertible into shares of Common Stock, at the option of the holder, at any time after the date of issuance. Such conversion is mandatory upon the closing of a public offering at a price of at least $6.472 per share (subject to adjustment for stock splits) in a firm commitment underwritten public offering, resulting in at least $50 million of net proceeds.
The Preferred Stock is not mandatorily redeemable. Upon certain change in control events that are outside of the Company’s control, including liquidation, sale or transfer of control of the Company, the Preferred Stock is contingently redeemable.
Century Therapeutics, Inc. and Subsidiary
Table of Contents
As of and for the three months ended March 31, 2021 and March 31, 2020
|
|
Unaudited consolidated financial statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-29
|
|
|
|
|
|
|
|
|
|
F-30
|
|
|
|
|
|
|
|
|
|
F-31
|
|
|
|
|
|
|
|
|
|
F-32
|
|
|
|
|
|
|
|
|
|
F-33
|
|
|
Century Therapeutics, Inc. and Subsidiary
Consolidated balance sheets
(In thousands, except share and per share amounts)
|
|
|
|
March 31, 2021
(unaudited)
|
|
|
December 31,
2020
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
79,483
|
|
|
|
|
$
|
27,211
|
|
|
|
Short-term investments
|
|
|
|
|
103,459
|
|
|
|
|
|
48,542
|
|
|
|
Escrow deposits, current
|
|
|
|
|
377
|
|
|
|
|
|
783
|
|
|
|
Prepaid expenses and other current assets
|
|
|
|
|
1,980
|
|
|
|
|
|
2,261
|
|
|
|
Total current assets
|
|
|
|
|
185,299
|
|
|
|
|
|
78,797
|
|
|
|
Property and equipment, net
|
|
|
|
|
20,657
|
|
|
|
|
|
15,385
|
|
|
|
Deferred offering costs
|
|
|
|
|
2,119
|
|
|
|
|
|
—
|
|
|
|
Operating lease right-of-use asset, net
|
|
|
|
|
12,460
|
|
|
|
|
|
9,392
|
|
|
|
Restricted cash
|
|
|
|
|
517
|
|
|
|
|
|
517
|
|
|
|
Escrow deposits, non-current
|
|
|
|
|
723
|
|
|
|
|
|
723
|
|
|
|
Long-term investments
|
|
|
|
|
63,138
|
|
|
|
|
|
1,053
|
|
|
|
Security deposits
|
|
|
|
|
1,142
|
|
|
|
|
|
909
|
|
|
|
Total assets
|
|
|
|
$
|
286,055
|
|
|
|
|
$
|
106,776
|
|
|
|
Liabilities, convertible preferred stock, and stockholders’ deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
8,816
|
|
|
|
|
$
|
8,082
|
|
|
|
Accrued expenses and other liabilities
|
|
|
|
|
3,815
|
|
|
|
|
|
4,030
|
|
|
|
Deposit liability
|
|
|
|
|
281
|
|
|
|
|
|
—
|
|
|
|
Total current liabilities
|
|
|
|
|
12,912
|
|
|
|
|
|
12,112
|
|
|
|
Operating lease liability, long-term
|
|
|
|
|
14,745
|
|
|
|
|
|
11,679
|
|
|
|
Deposit liability, non-current
|
|
|
|
|
855
|
|
|
|
|
|
—
|
|
|
|
Long-term debt, net
|
|
|
|
|
9,711
|
|
|
|
|
|
9,636
|
|
|
|
Total liabilities
|
|
|
|
|
38,223
|
|
|
|
|
|
33,427
|
|
|
|
Commitments and contingencies (Note 11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cumulative convertible preferred stock, Series A, $0.0001 par value, 35,000,000 shares authorized, issued and outstanding at March 31, 2021 and December 31, 2020
|
|
|
|
|
34,922
|
|
|
|
|
|
34,922
|
|
|
|
Non-cumulative convertible preferred stock, Series B, $0.0001 par value, 26,143,790 shares authorized, issued and outstanding at March 31, 2021 and December 31, 2020
|
|
|
|
|
144,839
|
|
|
|
|
|
144,839
|
|
|
|
Non-cumulative convertible preferred stock, Series C, $0.0001 par value, 24,721,999 and 0 shares authorized, issued and outstanding at March 31, 2021 and December 31, 2020, respectively
|
|
|
|
|
159,628
|
|
|
|
|
|
—
|
|
|
|
Stockholders’ deficit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value, 125,236,190 shares authorized; 19,732,637 and 18,825,136 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively
|
|
|
|
|
3
|
|
|
|
|
|
2
|
|
|
|
Additional paid-in capital
|
|
|
|
|
219,156
|
|
|
|
|
|
217,831
|
|
|
|
Subscription receivable
|
|
|
|
|
—
|
|
|
|
|
|
(31,900)
|
|
|
|
Accumulated deficit
|
|
|
|
|
(310,690)
|
|
|
|
|
|
(292,342)
|
|
|
|
Accumulated other comprehensive loss
|
|
|
|
|
(26)
|
|
|
|
|
|
(3)
|
|
|
|
Total stockholders’ deficit
|
|
|
|
|
(91,557)
|
|
|
|
|
|
(106,412)
|
|
|
|
Total liabilities, convertible preferred stock and stockholders’ deficit
|
|
|
|
$
|
286,055
|
|
|
|
|
$
|
106,776
|
|
|
See accompanying notes to the consolidated financial statements.
Century Therapeutics, Inc. and Subsidiary
Consolidated statements of operations and comprehensive loss
(In thousands, except share and per share amounts)
|
|
|
|
Three Months Ended
March 31, 2021
(unaudited)
|
|
|
Three Months Ended
March 31, 2020
(unaudited)
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
$
|
15,374
|
|
|
|
|
$
|
7,943
|
|
|
|
General and administrative
|
|
|
|
|
2,688
|
|
|
|
|
|
2,050
|
|
|
|
Total operating expenses
|
|
|
|
|
18,062
|
|
|
|
|
|
9,993
|
|
|
|
Loss from operations
|
|
|
|
|
(18,062)
|
|
|
|
|
|
(9,993)
|
|
|
|
Interest expense
|
|
|
|
|
(314)
|
|
|
|
|
|
—
|
|
|
|
Other income, net
|
|
|
|
|
28
|
|
|
|
|
|
320
|
|
|
|
Net loss
|
|
|
|
$
|
(18,348)
|
|
|
|
|
$
|
(9,673)
|
|
|
|
Net loss per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
|
$
|
(0.95)
|
|
|
|
|
$
|
(0.51)
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
|
|
19,278,887
|
|
|
|
|
|
18,825,136
|
|
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(18,348)
|
|
|
|
|
$
|
(9,673)
|
|
|
|
Unrealized (loss) gain on short-term investments
|
|
|
|
|
(27)
|
|
|
|
|
|
27
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
4
|
|
|
|
|
|
—
|
|
|
|
Comprehensive loss
|
|
|
|
$
|
(18,371)
|
|
|
|
|
$
|
(9,646)
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
Century Therapeutics, Inc. and Subsidiary
Consolidated statements of changes in convertible preferred stock and stockholders’ deficit (unaudited)
(In thousands, except share amounts)
|
|
|
|
Series A
Convertible
Preferred Stock
|
|
|
Series B
Convertible
Preferred Stock
|
|
|
Series C
Convertible
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional
Paid-In
Capital
|
|
|
Subscription
Receivable
|
|
|
Accumulated
Deficit
|
|
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
|
|
Total
Stockholders’
Deficit
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Balance, December 31, 2020
|
|
|
|
|
35,000,000
|
|
|
|
|
$
|
34,922
|
|
|
|
|
|
26,143,790
|
|
|
|
|
$
|
144,839
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
18,825,136
|
|
|
|
|
$
|
2
|
|
|
|
|
$
|
217,831
|
|
|
|
|
$
|
(31,900)
|
|
|
|
|
$
|
(292,342)
|
|
|
|
|
$
|
(3)
|
|
|
|
|
$
|
(106,412)
|
|
|
|
Receipt of subscription receivable
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
31,900
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
31,900
|
|
|
|
Issuance of Series C preferred stock, net
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
24,721,999
|
|
|
|
|
|
159,628
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Net assets contributed as result of merger
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,061
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,061
|
|
|
|
Issuance of common stock upon the exercise of stock options
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
102,647
|
|
|
|
|
|
1
|
|
|
|
|
|
46
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
47
|
|
|
|
Vesting of restricted stock
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
379,426
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Vesting of early exercise stock options
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
425,428
|
|
|
|
|
|
—
|
|
|
|
|
|
123
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
123
|
|
|
|
Unrealized loss on short-term investments
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(27)
|
|
|
|
|
|
(27)
|
|
|
|
Foreign currency translation
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4
|
|
|
|
|
|
4
|
|
|
|
Stock based compensation
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
95
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
95
|
|
|
|
Net loss
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(18,348)
|
|
|
|
|
|
—
|
|
|
|
|
|
(18,348)
|
|
|
|
Balance, March 31, 2021
|
|
|
|
|
35,000,000
|
|
|
|
|
$
|
34,922
|
|
|
|
|
|
26,143,790
|
|
|
|
|
$
|
144,839
|
|
|
|
|
|
24,721,999
|
|
|
|
|
$
|
159,628
|
|
|
|
|
|
19,732,637
|
|
|
|
|
$
|
3
|
|
|
|
|
$
|
219,156
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(310,690)
|
|
|
|
|
$
|
(26)
|
|
|
|
|
$
|
(91,557)
|
|
|
|
|
|
|
|
|
Series A
Convertible
Preferred Stock
|
|
|
Series B
Convertible
Preferred Stock
|
|
|
Series C
Convertible
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional
Paid-In
Capital
|
|
|
Subscription
Receivable
|
|
|
Accumulated
Deficit
|
|
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
|
|
Total
Stockholders’
Deficit
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Balance, December 31, 2019
|
|
|
|
|
35,000,000
|
|
|
|
|
$
|
34,922
|
|
|
|
|
|
26,143,790
|
|
|
|
|
$
|
144,839
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
18,825,136
|
|
|
|
|
$
|
2
|
|
|
|
|
$
|
216,909
|
|
|
|
|
$
|
(70,000)
|
|
|
|
|
$
|
(238,767)
|
|
|
|
|
$
|
(3)
|
|
|
|
|
$
|
(91,859)
|
|
|
|
Unrealized gain on short-term investments
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
27
|
|
|
|
|
|
27
|
|
|
|
Stock based compensation
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
221
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
221
|
|
|
|
Net loss
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(9,673)
|
|
|
|
|
|
—
|
|
|
|
|
|
(9,673)
|
|
|
|
Balance, March 31, 2020
|
|
|
|
|
35,000,000
|
|
|
|
|
$
|
34,922
|
|
|
|
|
|
26,143,790
|
|
|
|
|
$
|
144,839
|
|
|
|
|
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
18,825,136
|
|
|
|
|
$
|
2
|
|
|
|
|
$
|
217,130
|
|
|
|
|
$
|
(70,000)
|
|
|
|
|
$
|
(248,440)
|
|
|
|
|
$
|
24
|
|
|
|
|
$
|
(101,284)
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
Century Therapeutics, Inc. and Subsidiary
Consolidated statements of cash flows (unaudited)
(In thousands)
|
|
|
|
Three Months Ended
March 31, 2021
(unaudited)
|
|
|
Three Months Ended
March 31, 2020
(unaudited)
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(18,348)
|
|
|
|
|
$
|
(9,673)
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
718
|
|
|
|
|
|
200
|
|
|
|
Amortization of deferred financing cost
|
|
|
|
|
75
|
|
|
|
|
|
—
|
|
|
|
Non-cash operating lease expense
|
|
|
|
|
230
|
|
|
|
|
|
59
|
|
|
|
Stock based compensation
|
|
|
|
|
95
|
|
|
|
|
|
221
|
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other assets
|
|
|
|
|
173
|
|
|
|
|
|
1,583
|
|
|
|
Operating lease liability
|
|
|
|
|
127
|
|
|
|
|
|
21
|
|
|
|
Accounts payable
|
|
|
|
|
(4,938)
|
|
|
|
|
|
1,627
|
|
|
|
Accrued expenses and other liabilities
|
|
|
|
|
(311)
|
|
|
|
|
|
(922)
|
|
|
|
Net cash used in operating activities
|
|
|
|
|
(22,179)
|
|
|
|
|
|
(6,884)
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property and equipment
|
|
|
|
|
(1,884)
|
|
|
|
|
|
(2,699)
|
|
|
|
Payments for purchase of fixed maturity securities, available for sale
|
|
|
|
|
(124,850)
|
|
|
|
|
|
(1,479)
|
|
|
|
Sale of fixed maturity securities, available for sale
|
|
|
|
|
7,700
|
|
|
|
|
|
—
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
(119,034)
|
|
|
|
|
|
(4,178)
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments of deferred offering costs
|
|
|
|
|
(554)
|
|
|
|
|
|
—
|
|
|
|
Proceeds from issuance of common stock
|
|
|
|
|
47
|
|
|
|
|
|
—
|
|
|
|
Proceeds from early exercises of common stock options, net of expense
|
|
|
|
|
138
|
|
|
|
|
|
—
|
|
|
|
Proceeds from subscription receivable
|
|
|
|
|
31,900
|
|
|
|
|
|
—
|
|
|
|
Proceeds from issuance of Series C preferred stock, net of issuance costs
|
|
|
|
|
159,628
|
|
|
|
|
|
—
|
|
|
|
Cash contributed as a result of merger
|
|
|
|
|
2,326
|
|
|
|
|
|
—
|
|
|
|
Net cash provided by financing activities
|
|
|
|
|
193,485
|
|
|
|
|
|
—
|
|
|
|
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
|
|
|
|
52,272
|
|
|
|
|
|
(11,062)
|
|
|
|
Cash, cash equivalents and restricted cash, beginning of period
|
|
|
|
|
27,728
|
|
|
|
|
|
44,064
|
|
|
|
Cash, cash equivalents and restricted cash, end of period
|
|
|
|
$
|
80,000
|
|
|
|
|
$
|
33,002
|
|
|
|
Supplemental disclosure of cash and non-cash operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
|
$
|
239
|
|
|
|
|
$
|
—
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment, accrued and unpaid
|
|
|
|
$
|
4,107
|
|
|
|
|
$
|
569
|
|
|
|
Deferred offering cost, accrued and unpaid
|
|
|
|
$
|
1,565
|
|
|
|
|
$
|
—
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
Century Therapeutics, Inc. and Subsidiary
Notes to the consolidated financial statements (unaudited)
(In thousands, except share and per share amounts)
Note 1—Organization and description of the business
Century Therapeutics, Inc. (“Prior Century”), was incorporated in the state of Delaware on March 5, 2018. Since inception, Prior Century has devoted substantially all of its time and efforts to performing research and development activities and raising capital.
On June 5, 2019, Century Therapeutics, LLC (the “Company”) was formed by Prior Century and entered into an LLC Agreement (“Agreement”). On June 21, 2019, Prior Century, through the execution of a commitment agreement and other transaction documents (altogether the “Commitment Agreement”) with Bayer Health, LLC (“Bayer”), financed the creation of the Company and amended the Agreement to account for the provisions in the Commitment Agreement that outlined the rights, obligations, and capital contributions of both Bayer and Prior Century in accordance with the newly executed and amended Agreement and related Commitment Agreement (the “Transaction”). The Transaction resulted in Prior Century contributing substantially all of its assets, liabilities, and operations in exchange for a retained 72% equity interest in the Company. Subsequent to June 21, 2019, Prior Century had no significant operations and accounted for its interest in the Company under the equity method of accounting.
In June 2020, the Company formed Century Therapeutics Canada ULC (“Century Canada”), a wholly owned subsidiary, to acquire the assets of Empirica Therapeutics, Inc. (“Empirica”).
On February 25, 2021, the Company converted from a Delaware limited liability company to a Delaware corporation, and changed its name to “CenturyTx, Inc.” Upon completion of this conversion, Prior Century merged with and into CenturyTx, Inc., with CenturyTx, Inc. as the surviving entity and CenturyTx, Inc. changed its name to “Century Therapeutics, Inc.” In connection with this merger, the holders of equity interests in Prior Century received equivalent equity interests in Century Therapeutics, Inc.
Principles of Consolidation
The consolidated financial statements include the consolidated financial position and consolidated results of operations of the Company and Century Canada. All intercompany balances and transactions have been eliminated in consolidation.
Going concern and liquidity
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has limited operating history and its prospects are subject to risks, expenses, and uncertainties frequently encountered by companies in the pharmaceutical industry. These risks include, but are not limited to, the uncertainty of availability of additional financing and the uncertainty of achieving future profitability.
Since inception, the Company has incurred net losses and negative cash flows from operations. During the three months ended March 31, 2021, the Company incurred a net loss of $18,348 and used $22,179 of cash for operations. During the three months ended March 31, 2020, the Company incurred a net loss of $9,673 and used $6,884 of cash for operations. Management expects to incur additional losses in the future to fund its operations and conduct product research and development and recognizes the need to raise additional capital to fully implement its business plan. As further described in Note 3, Prior Century obtained a cash capital commitment from Bayer totaling $215,000, from which net proceeds of $74,839 were received in June 2019, $38,100 were received in November 2020 and $31,900 were received in January 2021. Bayer has no continuing obligation to invest any additional amounts under its commitment, which terminated on February 25, 2021. As further described in Note 9, the Company entered into a Loan Agreement pursuant to which it received net proceeds
of $9,734 in September 2020. Beginning January 1, 2021 and upon the achievement of certain development milestones and continuing through September 30, 2021 the Company may borrow an additional $10.0 million under the Loan Agreement. As described in Note 10, in February 2021 the Company issued shares of Series C Preferred Stock (“Series C preferred”) resulting in gross proceeds of $160,000. The Company believes it has adequate cash and financial resources to operate for at-least the next 12 months from the date of issuance of these consolidated financial statements.
Note 2—Summary of significant accounting policies and basis of presentation
Basis of presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which contemplate the continued existence of the Company. Since commencing principal activities, the Company has been engaged primarily in research and development activities and raising capital.
Merger and capital restructuring
Upon the conversion of the LLC to a corporation and the merger of the newly converted corporation with Prior Century, the existing capital structure of the LLC was restructured with no consideration transferred. In accordance with ASC 505-10-S99-4, such a restructuring requires retroactive effect within the balance sheets presented as the restructuring was affected after the balance sheet date but prior to the effective date of this Registration Statement. As such, the Company retroactively adjusted its consolidated balance sheets to cancel the existing LLC units and give effect to their conversion into capital stock of the Company as if those effects happened as of January 1, 2020. See note 10 for further information on the Company’s capital restructuring.
Segment information
Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions on how to allocate resources and assess performance. The Company views its operations and manages the business as one operating segment.
Use of estimates
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Estimates and assumptions are primarily made in relation to the valuations supporting stock compensation and the estimation of the incremental borrowing rate for operating leases. If actual results differ from the Company’s estimates, or to the extent these estimates are adjusted in future periods, the Company’s results of operations could either benefit from, or be adversely affected by, any such change in estimate.
Concentration of credit risk and other risks and uncertainties
Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist of cash, cash equivalents, U.S. Treasury bills and bonds, as well as corporate bonds. Cash and cash equivalents, as well as short and long-term investments include a checking account and asset management accounts held by a limited number of financial institutions. At times, such deposits may be in excess of insured limits. As of March 31, 2021 and 2020, the Company has not experienced any losses on its deposits of cash and cash equivalents.
The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, uncertainty of market acceptance of its products, competition
from substitute products and larger companies, protection of proprietary technology, strategic relationships, and dependence on key individuals.
Products developed by the Company require clearances from the U.S. Food and Drug Administration or other international regulatory agencies prior to commercial sales. There can be no assurance the Company’s future products will receive the necessary clearances. If the Company was denied clearance, clearance was delayed, or if the Company was unable to maintain clearance, it could have a material adverse impact on the Company.
In January 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a “Public Health Emergency of International Concern,” which continues to spread throughout the world and has adversely impacted global commercial activity and contributed to significant declines and volatility in financial markets. The COVID-19 outbreak and government responses are creating disruption in global supply chains and adversely impacting many industries. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The Company continues to monitor the impact of the COVID-19 outbreak closely. The extent to which the COVID-19 outbreak will impact its operations or financial results is uncertain.
Deferred financing costs
Deferred financing costs represent costs incurred in connection with the issuance of debt instruments and equity financings. Deferred financing costs related to the issuance of debt are amortized over the term of the financing instrument using the effective interest method and are presented in the consolidated balance sheets as an offset against the related debt. Offering costs from equity financings are netted against the gross proceeds received from the equity financings.
Deferred offering costs
Deferred offering costs, which primarily consist of direct incremental legal and accounting fees relating to the initial public offering (IPO) of the Company’s common stock are capitalized. The deferred offering costs will be offset against IPO proceeds upon the consummation of the offering. In the event the offering is terminated, deferred offering costs will be expensed. The Company had $2,119 deferred offering costs recorded as of March 31, 2021. There were no deferred offering costs recorded as of December 31, 2020.
Fair value of financial instruments
The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows:
Level 1
Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date;
Level 2
Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active;
Level 3
Inputs are unobservable in which there is little or no market data available, which require the reporting entity to develop its own assumptions that are unobservable.
Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.
Cash and cash equivalents
Management considers all highly liquid investments with an insignificant interest rate risk and original maturities of three months or less to be cash equivalents.
Restricted cash
As of March 31, 2021 and December 31, 2020, the Company had $517 in cash on deposit to secure certain lease commitments. Restricted cash is recorded separately in the Company’s consolidated balance sheets.
The following provides a reconciliation of the Company’s cash, cash equivalents, and restricted cash as reported in the consolidated balance sheets to the amounts reported in the consolidated statements of cash flows:
|
|
|
|
March 31, 2021
|
|
|
December 31, 2020
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
79,483
|
|
|
|
|
$
|
27,211
|
|
|
|
Restricted cash
|
|
|
|
|
517
|
|
|
|
|
|
517
|
|
|
|
Cash, cash equivalents, and restricted cash
|
|
|
|
$
|
80,000
|
|
|
|
|
$
|
27,728
|
|
|
|
|
Fixed maturity securities
The Company invests in fixed maturity securities including U.S. Treasury bills and bonds as well as corporate bonds. The investments are classified as available-for-sale and reported at fair value. Unrealized gains or losses are determined by comparing the fair market value of the securities with their cost or amortized cost. Realized gains and losses on investments are recorded on the trade date and are included in the statement of operations. The cost of securities sold is based on the specified identification method. Investment income is recognized as earned and discounts or premiums arising from the purchase of debt securities are recognized in investment income using the interest method over the remaining term of the security. Securities with an original maturity date greater than three months that mature within one year of the balance sheet date are classified as short-term, while investments with a maturity date greater than one year are classified as long-term.
Property and equipment, net
Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is generally five years. Leasehold improvements are amortized over the shorter of the asset’s useful life or the remaining term of the lease.
Expenditures for major additions and improvements are capitalized, while minor replacements, maintenance, and repairs are charged to expense as incurred. When property is retired or otherwise disposed of, the costs and accumulated depreciation are removed from the respective accounts, with any resulting gain or loss recognized concurrently.
Research and development expenses
Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, stock compensation, materials, supplies, rent, depreciation on and maintenance of research equipment, and the cost of services provided by outside contractors. All costs associated with research and development are expensed as incurred.
Stock-based compensation
The Company accounts for stock-based compensation arrangements in accordance with provisions of Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation. ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option-pricing model (“Black
Scholes”) to determine the fair value of options granted. The Company’s stock-based awards are subject to service-based vesting conditions and performance-based vesting conditions. Compensation expense related to awards to employees and directors with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. For performance-based awards, the Company reassesses at each reporting date whether achievement of the performance condition is probable and accrues compensation expense if and when achievement of the performance condition is probable.
Black-Scholes requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to the lack of a public market for the Company’s common stock and lack of company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and life science industry focus. The historical volatility is calculated based on a period of time commensurate with expected term assumption. The Company uses the simplified method to calculate the expected term for options granted to employees and board members whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the options due to its lack of sufficient historical data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. Forfeitures are recognized as they occur.
Due to the absence of an active market for the Company’s common stock, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, to estimate the fair value of its common stock. In determining the exercise prices for options granted, the Company has considered the estimated fair value of the common stock as of the measurement date. The estimated fair value of the common stock has been determined at each grant date based upon a variety of factors, including the illiquid nature of the common stock, arm’s-length sales of the common stock, the effect of the rights and preferences of the preferred shareholders, and the prospects of a liquidity event. Among other factors are the Company’s financial position and historical financial performance, the status of technological developments within the Company’s research, the composition and ability of the current research and management team, an evaluation or benchmark of the Company’s competition, and the current business climate in the marketplace. Significant changes to the key assumptions underlying the factors used could result in different fair values of common stock at each valuation date.
Warrants
The Company has issued warrants that have been recognized as equity, and the fair value is recorded into additional paid-in capital in the accompanying consolidated balance sheets. Warrants are accounted for in accordance with applicable accounting guidance provided in ASC Topic 815, Derivatives and Hedging—Contracts in Entity’s Own Equity, as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement. The Company’s warrants issued in connection with its long-term debt are equity classified on the accompanying consolidated balance sheets. Equity classified warrants are accounted for at fair value on the issuance date, using Black Scholes, with no changes in fair value recognized after the issuance date.
Foreign currency translation
The reporting currency of the Company is the U.S. dollar. The functional currency of Century Canada is the Canadian dollar. Assets and liabilities of Century Canada are translated into U.S. dollars based on exchange rates at the end of each reporting period. Expenses are translated at average exchange rates during the reporting period. Gains and losses arising from the translation of assets and liabilities are included as a component of accumulated other comprehensive loss or income on the company’s consolidated balance sheets. Gains and losses resulting from foreign currency transactions are reflected within the Company’s consolidated statements of
operations and comprehensive loss. The Company has not utilized any foreign currency hedging strategies to mitigate the effect of its foreign currency exposure.
Intercompany payables and receivables are considered to be long-term in nature and any change in balance due to foreign currency fluctuation is included as a component of the Company’s consolidated comprehensive loss and accumulated other comprehensive loss within the Company’s consolidated balance sheets.
Basic and diluted net loss per common shares
Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted-average number of common shares outstanding during the period. The Company computes diluted net loss per common share by dividing the net loss applicable to common shareholders by the sum of the weighted-average number of common shares outstanding during the period plus the potential dilutive effects of its warrants, restricted stock and stock options to purchase common shares, but such items are excluded if their effect is anti-dilutive. Because the impact of these items are anti-dilutive during periods of net loss, there were no differences between the Company’s basic and diluted net loss per common share for the three months ended March 31, 2021 and 2020.
Early exercised options
The Company allows certain of its employees and its consultants to exercise options granted under the 2018 Plan (Note 15) prior to vesting. The Shares related to early exercised stock options are subject to the Company’s repurchase right upon termination of employment or services at the lesser of the original purchase price or fair market value at the time of repurchase. In order to vest, the holders are required to provide continued service to the Company. The early exercise by an employee or consultant of a stock option is not considered to be a substantive exercise for accounting purposes, and therefore, the payment received by the employer for the exercise price is recognized as a liability. For accounting purposes, unvested early exercised shares are not considered issued and outstanding and therefore not reflected as issued and outstanding in the accompanying consolidated balance sheets or the consolidated statements of changes in convertible preferred stock and stockholders’ equity (deficit) until the awards vest. The deposits received are initially recorded in deposit liability. The liabilities are reclassified to common stock and additional paid-in-capital as the repurchase right lapses. At March 31, 2021, $1,136 was recorded in deposit liability related to shares held by employees and nonemployees that were subject to repurchase. At December 31, 2020, there was no deposit liability as the initial deposit liability was recognized on February 25, 2021 when the merger discussed in Note 2 occurred.
All shares that were early exercised by the executives of the Company are considered legally issued, however, for accounting purposes, only vested shares are considered issued. Below is a reconciliation of shares issued and outstanding:
|
|
|
|
March 31, 2021
|
|
|
December 31, 2020
|
|
|
Total shares legally outstanding
|
|
|
|
|
24,381,382
|
|
|
|
|
|
22,307,756
|
|
|
|
Less: unvested early exercised shares
|
|
|
|
|
(2,377,447)
|
|
|
|
|
|
(831,896)
|
|
|
|
Less: unvested restricted stock
|
|
|
|
|
(2,271,298)
|
|
|
|
|
|
(2,650,724)
|
|
|
|
Total shares issued and outstanding
|
|
|
|
|
19,732,637
|
|
|
|
|
|
18,825,136
|
|
|
|
|
Restricted stock
In 2018, the Company issued 4,288,080 restricted stock awards at a purchase price of $0.01 per share. In 2019, the Company issued 2,139,473 restricted stock awards at a weighted average purchase price of $0.28 per share. In October 2019, the Company repurchased 750,000 shares at $0.41 per share. As of March 31, 2021, the number of restricted stock awards vested were 3,406,255. For accounting purposes, unvested restricted stock awards are not considered issued and outstanding and therefore are not reflected as issued and outstanding in the accompanying consolidated balance sheets or the consolidated statements of changes in convertible preferred stock and stockholders’ equity (deficit) until the awards vest. The Company recorded stock-based
compensation expense for these awards of $39, for the three months ended March 31, 2021 and 2020, in the statements of operations and comprehensive loss.
Recent accounting pronouncements
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. The update also requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. The new guidance is effective for annual periods beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update can be adopted on either a fully retrospective or a modified retrospective basis. The Company adopted ASU 2020-06, effective January 1, 2021, which did not have a material effect on the Company’s consolidated financial statements.
Recent Accounting 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”), which eliminates, adds, and modifies certain disclosure requirements for fair value measurements. ASU 2018-13 is effective for the Company for fiscal years beginning after December 15, 2020, and earlier adoption is permitted. The Company adopted this standard on January 1, 2021 and adoption had no impact on its consolidated financial statements.
Note 3—Initial capitalization
On June 21, 2019, Prior Century and Bayer entered into a Commitment Agreement to initially capitalize the Company. The Commitment Agreement called for capital contributions from Prior Century and Bayer as follows:
Century Capital Contributions
In exchange for issuing 67,226,891 common units to Prior Century, the Company acquired substantially all of Prior Century’s assets, assumed all of its liabilities and assumed the operations of Prior Century.
The Company evaluated the acquisition under the guidance within ASU 2017-01, “Clarifying the Definition of a Business” and concluded that the group of assets acquired did not meet the definition of a business, and, as such, the acquisition was accounted for under the asset acquisition model. The definition of a business was not met because substantially all the fair value of the assets acquired were concentrated in an in-process research and development (“IPR&D”) asset. In an asset acquisition, the total transaction cost is allocated between the acquired identified tangible and intangible assets based on relative fair value.
Total transaction costs for the assets acquired were $252,107, which was the fair value of the equity interests issued to Prior Century, with no additional capitalizable transaction costs. Equity issuance costs related to Prior Century were $407, which were recorded as a reduction to members’ equity. The relative fair value allocation was as follows:
|
|
|
|
As of June 21, 2019
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
25,163
|
|
|
|
IPR&D
|
|
|
|
|
225,946
|
|
|
|
Property and equipment
|
|
|
|
|
1,034
|
|
|
|
Other current assets
|
|
|
|
|
578
|
|
|
|
Other non-current assets
|
|
|
|
|
669
|
|
|
|
Current liabilities
|
|
|
|
|
(1,283)
|
|
|
|
Total
|
|
|
|
$
|
252,107
|
|
|
|
|
Under the asset acquisition model, an entity that acquires IPR&D assets follows the guidance in ASC 730, which requires that both tangible and intangible identifiable research and development assets with no alternative future use be initially allocated a portion of the consideration transferred and then charged to expense at the acquisition date. The IPR&D asset acquired was Prior Century's comprehensive allogenic cell therapy platform. As the IPR&D asset has no alternative future use to the Company, the Company charged $225,946 to expense within its consolidated statements of operations.
Bayer Capital Contributions
In accordance with the Commitment Agreement, Bayer agreed to provide an aggregate cash capital contribution of $215,000. The Bayer cash commitment is split into capital contributions of $145,000 (“Tranche 1”) and $70,000 (“Tranche 2”). The funding of Tranche 2 is dependent on certain contingent events and, as a result, is not recorded as a subscription receivable as of March 31, 2021. Tranche 2 was eliminated in connection with the Series C preferred financing. See Note 10.
Bayer Rights
In connection with the Commitment Agreement, Bayer was granted approval and veto rights over certain decisions related to the operations of the Company through its manager representation on the Company’s Board of Managers. Prior Century holds similar rights.
Tranche 1 was funded in exchange for 26,143,790 common units, with $75,000 paid at closing and the remaining $70,000 due upon the Company meeting certain development milestones or in 3 years.
During 2019, the Company received $74,839 from Tranche 1, net of equity issuance costs of $161. The Company accounts for the $70,000 as a subscription receivable, which is recorded as contra-equity within its consolidated statements of changes in convertible preferred stock and stockholders’ deficit.
On June 18, 2020, the Company, Prior Century and Bayer executed an amendment to the Commitment Agreement to modify the terms for the Company to receive the remaining Tranche 1 subscription receivable of $70,000. In November 2020, the Company received proceeds of $38,100 of the Tranche 1 subscription receivable. The remaining $31,900 was received in January 2021. The Commitment Agreement terminated in connection with the Series C Preferred financing, and Bayer has no obligation to invest any additional amounts.
Bayer Option Agreement
As a condition of the Tranche 1 closing, Bayer and Prior Century were required to enter into an Option Agreement, pursuant to which Bayer was provided the right of first refusal to acquire certain products researched and developed by the Company.
Note 4—Asset purchase by Century Therapeutics Canada ULC
On June 9, 2020, Century Canada and the Company entered into an agreement with Empirica, a company focused on the development of adoptive immunotherapies against aggressive and treatment-resistant forms of cancers, including glioblastoma and brain metastasis. Under the terms of the Empirica Agreement, the Company acquired an IPR&D asset. Cash of $4,519 was paid at closing and transaction expenses totaled $203. The Company also deposited $1,506 in escrow (the “Escrow Deposit”). Release of the Escrow Deposit is subject to the terms of a promissory note, which provides for the funds to be released in equal annual installments over a three-year period related to continuing services by certain Empirica shareholders who are employed by the Company. As of March 31, 2021 and December 31, 2020, accrued compensation expense on the promissory note was $407 and $282, which is presented within accrued expenses and other liabilities on the consolidated balance sheets.
Total consideration of the asset acquisition was as follows:
|
|
|
|
June 9, 2020
|
|
|
Cash paid to Sellers at close
|
|
|
|
$
|
4,516
|
|
|
|
Seller expenses paid by the Company
|
|
|
|
|
3
|
|
|
|
Buyer transaction expenses
|
|
|
|
|
203
|
|
|
|
Total consideration
|
|
|
|
$
|
4,722
|
|
|
|
IPR&D
|
|
|
|
$
|
4,722
|
|
|
|
|
The Company evaluated the acquisition under the guidance within ASU 2017-01, “Clarifying the Definition of a Business” and concluded that the group of assets acquired did not meet the definition of a business, and, as such, the acquisition was accounted for under the asset acquisition model. The definition of a business was not met because substantially all the fair value of the asset acquired was concentrated in an IPR&D asset.
As the IPR&D asset has no alternative future use, the Company charged $4,722 to expense within its consolidated statements of operations for the year ended December 31, 2020. There was no write off of in-process research and development asset for the three months ended March 31, 2021 and 2020.
Note 5—Financial instruments and fair value measurements
The following table sets forth the Company’s assets that were measured at fair value as of March 31, 2021, by level within the fair value hierarchy:
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Cash equivalents
|
|
|
|
$
|
75,686
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
$
|
75,686
|
|
|
|
U.S. Treasury
|
|
|
|
|
11,999
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
11,999
|
|
|
|
Corporate bonds
|
|
|
|
|
—
|
|
|
|
|
|
154,598
|
|
|
|
|
|
—
|
|
|
|
|
|
154,598
|
|
|
|
Total
|
|
|
|
$
|
87,685
|
|
|
|
|
$
|
154,598
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
242,283
|
|
|
|
|
The following table sets forth the Company’s assets that were measured at fair value as of December 31, 2020, by level within the fair value hierarchy:
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Cash equivalents
|
|
|
|
$
|
24,284
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
24,284
|
|
|
|
U.S. Treasury
|
|
|
|
|
9,525
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
9,525
|
|
|
|
Corporate bonds
|
|
|
|
|
—
|
|
|
|
|
|
40,070
|
|
|
|
|
|
—
|
|
|
|
|
|
40,070
|
|
|
|
Total
|
|
|
|
$
|
33,809
|
|
|
|
|
$
|
40,070
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
73,879
|
|
|
|
|
There were no transfers between levels during the period ended March 31, 2021. The Company uses the services of its investment manager, which uses widely accepted models for assumptions in valuing securities with inputs from major third-party data providers.
The Company classifies all of its investments in fixed maturity debt securities as available-for-sale and, accordingly, are carried at estimated fair value.
The amortized cost, gross unrealized gains and losses, and fair value of investments in fixed maturity securities are as follows as of March 31, 2021:
|
|
|
|
Amortized Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair Value
|
|
|
U.S. Treasury
|
|
|
|
$
|
11,996
|
|
|
|
|
$
|
3
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
11,999
|
|
|
|
Corporate bonds
|
|
|
|
|
154,628
|
|
|
|
|
|
10
|
|
|
|
|
|
(40)
|
|
|
|
|
|
154,598
|
|
|
|
|
|
|
|
|
Amortized Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair Value
|
|
|
Total
|
|
|
|
$
|
166,624
|
|
|
|
|
$
|
13
|
|
|
|
|
$
|
(40)
|
|
|
|
|
$
|
166,597
|
|
|
|
|
The amortized cost, gross unrealized gains and losses, and fair value of investments in fixed maturity securities are as follows as of December 31, 2020:
|
|
|
|
Amortized Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair Value
|
|
|
U.S. Treasury
|
|
|
|
$
|
9,518
|
|
|
|
|
$
|
7
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
9,525
|
|
|
|
Corporate bonds
|
|
|
|
|
40,069
|
|
|
|
|
|
8
|
|
|
|
|
|
(7)
|
|
|
|
|
|
40,070
|
|
|
|
Total
|
|
|
|
$
|
49,587
|
|
|
|
|
$
|
15
|
|
|
|
|
$
|
(7)
|
|
|
|
|
$
|
49,595
|
|
|
|
|
The following table provides the maturities of our fixed maturity available-for-sale securities:
|
|
|
|
March 31, 2021
|
|
|
December 31, 2020
|
|
|
Less than one year
|
|
|
|
$
|
103,459
|
|
|
|
|
$
|
48,542
|
|
|
|
One to five years
|
|
|
|
|
63,138
|
|
|
|
|
|
1,053
|
|
|
|
|
|
|
|
$
|
166,597
|
|
|
|
|
$
|
49,595
|
|
|
The Company has evaluated the unrealized losses on the fixed maturity securities and determined that they are not attributable to credit risk factors. For fixed maturity securities, losses in fair value are viewed as temporary if the fixed maturity security can be held to maturity and it is reasonable to assume that the issuer will be able to service the debt, both as to principal and interest.
Note 6—Prepaid expenses and other current assets
The following is a summary of prepaid expenses and other current assets:
|
|
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
Research and development
|
|
|
|
$
|
130
|
|
|
|
|
$
|
97
|
|
|
|
Software licenses and other
|
|
|
|
|
1,145
|
|
|
|
|
|
760
|
|
|
|
Reimbursement receivable
|
|
|
|
|
137
|
|
|
|
|
|
908
|
|
|
|
Warranties
|
|
|
|
|
299
|
|
|
|
|
|
240
|
|
|
|
Other
|
|
|
|
|
269
|
|
|
|
|
|
256
|
|
|
|
Total prepaid expenses and other current assets
|
|
|
|
$
|
1,980
|
|
|
|
|
$
|
2,261
|
|
|
|
|
Note 7—Property and equipment, net
The following is a summary of property and equipment, net:
|
|
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
Lab equipment
|
|
|
|
$
|
11,427
|
|
|
|
|
$
|
8,941
|
|
|
|
Leasehold improvements
|
|
|
|
|
7,746
|
|
|
|
|
|
1,964
|
|
|
|
Construction in progress
|
|
|
|
|
3,401
|
|
|
|
|
|
5,771
|
|
|
|
Computer software and equipment
|
|
|
|
|
228
|
|
|
|
|
|
214
|
|
|
|
Furniture and fixtures
|
|
|
|
|
153
|
|
|
|
|
|
76
|
|
|
|
Total
|
|
|
|
|
22,955
|
|
|
|
|
|
16,966
|
|
|
|
Less: Accumulated depreciation
|
|
|
|
|
(2,298)
|
|
|
|
|
|
(1,581)
|
|
|
|
Property and equipment, net
|
|
|
|
$
|
20,657
|
|
|
|
|
$
|
15,385
|
|
|
|
|
Depreciation expense was $718 and $200 for the three months ended March 31, 2021 and 2020, respectively.
Note 8—Accrued expenses and other liabilities
The following is a summary of accrued expenses:
|
|
|
|
March 31
2021
|
|
|
December 31,
2020
|
|
|
Payroll and bonuses
|
|
|
|
$
|
868
|
|
|
|
|
$
|
3,132
|
|
|
|
Interest
|
|
|
|
|
82
|
|
|
|
|
|
82
|
|
|
|
Professional and legal fees
|
|
|
|
|
2,213
|
|
|
|
|
|
524
|
|
|
|
Operating lease liability, current
|
|
|
|
|
596
|
|
|
|
|
|
240
|
|
|
|
Other
|
|
|
|
|
56
|
|
|
|
|
|
52
|
|
|
|
Total accrued expenses and other liabilities
|
|
|
|
$
|
3,815
|
|
|
|
|
$
|
4,030
|
|
|
|
|
Note 9—Long-term debt
The following is a summary of the Company’s indebtedness:
|
|
|
|
March 31, 2021
|
|
|
December 31, 2020
|
|
|
Principal
|
|
|
|
$
|
10,000
|
|
|
|
|
$
|
10,000
|
|
|
|
Less: Debt discount attributable to warrants, net of accretion
|
|
|
|
|
(39)
|
|
|
|
|
|
(43)
|
|
|
|
Less: Unamortized deferred financing cost, net of accretion
|
|
|
|
|
(250)
|
|
|
|
|
|
(321)
|
|
|
|
Long-term debt, net
|
|
|
|
$
|
9,711
|
|
|
|
|
$
|
9,636
|
|
|
|
|
On September 14, 2020, the Company entered into a $10.0 million Term Loan Agreement (the “Loan Agreement”) with Hercules Capital, Inc. (“Hercules”). Pursuant to the terms of the Loan Agreement, the Company borrowed $10.0 million (the “Tranche 1 Advance”) from the Lenders at closing. Beginning January 1, 2021 and upon the achievement of certain development milestones and continuing through September 30, 2021 the Company may borrow an additional $10.0 million (the “Tranche 2 Advance”). The remaining $10.0 million tranche (“Tranche 3 Advance”) is subject to Hercules’ investment committee’s sole discretion.
The Loan Agreement has a four-year term, has a minimum cash covenant and an interest-only period of up to 24 months. If the Tranche 2 Advance is not drawn or the Company has achieved certain development milestones by September 30, 2021, then there is no minimum cash requirement. The Company was in compliance with all provisions of the Loan Agreement as of March 31, 2021. Amounts borrowed under the Loan Agreement accrue
interest at a floating rate per annum (based on a year of 360 days) equal to (i) the sum of (a) the greater of 6.30% plus (b) the prime rate as reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue or (ii) 9.55%. The interest rate as of March 31, 2021 was 9.55%.
The Company incurred $410 in deferred financing costs. The Company is also required to pay the Lenders an end of term fee of 3.95% of loan proceeds upon repayment or prepayment of any loans made under the Loan Agreement. The end of term fee is being recognized as interest expense and accreted over the term of the Loan Agreement using the effective interest method. The Company is also required to pay Hercules a prepayment charge equal to 2.00% of the loan amounts prepaid during the interest-only period and 1.00% thereafter on any loans made under the Loan Agreement.
The Company granted Hercules a lien on substantially all of the Company’s assets, excluding intellectual property.
The Company issued to Hercules warrants to purchase up to an aggregate of 40,540 shares of common stock. The warrants are exercisable for a period of ten years from the date of the issuance of each warrant at a per-unit exercise price equal to $5.55, subject to certain adjustments as specified in the warrants. The fair value of the warrants at issuance was $46. The Company accounted for the warrants as equity, and the fair value is recorded in additional paid-in capital. The warrant value is also recorded as a debt discount and classified as a contra-liability on the consolidated balance sheet and amortized to interest expense. If the Company borrows on the remaining two tranche advances outlined above, the Company will be required to issue warrants to Hercules equal to 2.25% of the aggregate amount funded.
Interest expense of the Loan Agreement is as follows:
|
|
|
|
For the Three
Months Ended
March 31, 2021
|
|
|
For the Three
Months Ended
March 31, 2020
|
|
|
Interest expense for loan
|
|
|
|
$
|
239
|
|
|
|
|
$
|
—
|
|
|
|
Amortization of debt issuance costs, including end of term fee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
accretion
|
|
|
|
|
75
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
$
|
314
|
|
|
|
|
$
|
—
|
|
|
Included in accrued expenses in the accompanying consolidated balance sheets as of March 31, 2021 and December 31, 2020 were both $82 of accrued interest.
Future principal payments due (including the end of term fee) under the Loan Agreement are as follows (in thousands):
|
|
|
|
Principal Payments
|
|
|
2021
|
|
|
|
$
|
—
|
|
|
|
2022
|
|
|
|
|
1,039
|
|
|
|
2023
|
|
|
|
|
6,603
|
|
|
|
2024
|
|
|
|
|
2,753
|
|
|
|
2025
|
|
|
|
|
—
|
|
|
|
Total future payments
|
|
|
|
$
|
10,395
|
|
|
|
|
Note 10—Stockholders’ Equity
On February 25, 2021, the Company converted from a Delaware limited liability company to a Delaware corporation, and changed its name to CenturyTx, Inc. Upon completion of this conversion, Prior Century merged with and into CenturyTx, Inc., with CenturyTx, Inc. as the surviving entity and changed its name to “Century
Therapeutics, Inc.” In connection with this merger, the holders of equity interests, including Series A Preferred Stock, common stock, restricted common stock and stock options in Prior Century received equivalent equity interests in Century Therapeutics, Inc. Bayer’s common units in the Company were converted into Series B Preferred Stock.
Upon the execution of the preceding conversion on February 25, 2021, the Company entered into a stock purchase agreement with existing and new investors whereby the Company issued and sold 24,721,999 shares of Series C Preferred Stock with a par value of $0.0001, to investors at a price of $6.4720 per shares for gross proceeds of $160,000.
Pursuant to its Amended Articles of Incorporation filed on February 25, 2021, the Company is now authorized to issue 125,236,190 shares of $0.0001 par value common stock and 85,865,789 shares of $0.0001 par value Preferred Stock. Of the Preferred Stock, 35,000,000 shares are designated as Series A Preferred Stock, 26,143,790 are designated as Series B Preferred Stock and 24,721,999 are designated as Series C Preferred Stock.
The holders of Series A and Series C Preferred Stock are entitled to receive non-cumulative dividends prior to and in preference to any declaration of payment of dividends on Common Stock or any other class of Preferred Stock, at an annual rate of 8% of the original issuance price, when and if declared by the Board of Directors. The original issuance price per share for the Series A, B and C Preferred Stock is $1.00, $5.55 and $6.4720, respectively. No dividends have been declared or paid as of December 31, 2020.
In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of Preferred Stock have liquidation preferences, before any distribution or payment is made to holders of Common Stock, in an amount per share equal to the original issue price, plus any dividends declared but unpaid. If the assets and funds to be distributed among the holders of Preferred Stock are insufficient to permit the payment to such holders, then the entire assets and funds of the Company legally available for distribution will be distributed ratably among the holders of Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive.
Upon completion of the payment of the full liquidation preference of Preferred Stock, the remaining assets of the Company, if any, shall be distributed ratably to the holders of Common Stock and Preferred Stock, with the Preferred Stock being treated as if the Preferred Stock had been converted to shares of Common Stock at the then applicable conversion rate.
The holders of each share of Preferred Stock are entitled to voting rights equal to the number of shares of Common Stock into which the shares could be converted. The holders of Series A Preferred Stock are entitled to elect two directors, the holders of Series B Preferred Stock are entitled to elect one director and the holders of Series C Preferred Stock are entitled to elect one director. The holders of Common Stock are entitled to elect one director.
Each share of Preferred Stock is convertible into shares of Common Stock, at the option of the holder, at any time after the date of issuance. Such conversion is mandatory upon the closing of a public offering at a price of at least $6.472 per share (subject to adjustment for stock splits) in a firm commitment underwritten public offering, resulting in at least $50 million of net proceeds.
The Preferred Stock is not mandatorily redeemable. Upon certain change in control events that are outside of the Company’s control, including liquidation, sale or transfer of control of the Company, the Preferred Stock is contingently redeemable.
Note 11—Commitments and contingencies
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when future expenditures are probable and such expenditures can be reasonably estimated.
Distributed Bio Master Service Agreement
On July 24, 2019, the Company entered into a Master Service Agreement with Distributed Bio, Inc (“DBio”), whereby DBio will screen for protein binders that bind to specific therapeutic targets. The Company pays for such services according to a payment schedule, and if the Company brings the protein binders into the clinic for further development, DBio will receive milestone payments of up to $16,100 in total for each product as the products move through the clinical development and regulatory approval processes.
The Company had accrued expenses of $420 and $244 within accrued expenses and other liabilities as of March 31, 2021 and December 31, 2020, respectively, in its consolidated balance sheets related to the Master Service Agreement.
iCELL Inc. Sublicense Agreement
In March 2020, the Company entered into a Sublicense Agreement with iCELL Inc (“iCELL”) whereby iCELL granted the Company a license of certain patents and technology. The Company will pay iCELL royalties in the low single digits on net sales of the licensed product. In addition to the earned royalties, the Company will pay one-time sales milestones for the first time sales of the licensed product exceeding thresholds in a single calendar year, to a maximum of $70,000. iCELL will receive payments of up to $4,250 in development and regulatory approval milestone payments.
Note 12—Leases
The Company has commitments under operating leases for certain facilities used in its operations. The Company maintains security deposits on certain leases in the amounts of $1,142 and $909 within security deposits in its consolidated balance sheets at March 31, 2021 and December 31, 2020, respectively. The Company’s leases have initial lease terms ranging from 5 to 16 years. Certain lease agreements contain provisions for future rent increases.
The following table reflects the components of lease expense:
|
|
|
|
For the
Three Months Ended
March 31, 2021
|
|
|
For the
Three Months Ended
March 31, 2020
|
|
|
Operating lease expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed lease cost
|
|
|
|
$
|
548
|
|
|
|
|
$
|
126
|
|
|
|
Variable lease cost
|
|
|
|
|
272
|
|
|
|
|
|
—
|
|
|
|
Short term lease expense
|
|
|
|
|
668
|
|
|
|
|
|
496
|
|
|
|
Total operating lease expense
|
|
|
|
$
|
1,488
|
|
|
|
|
$
|
622
|
|
|
|
|
The following table reflects supplemental balance sheet information related to leases:
|
|
|
|
Location in Balance Sheet
|
|
|
As of
March 31,
2021
|
|
|
As of
December 31,
2020
|
|
|
Operating lease right-of-use asset, net
|
|
|
Operating lease right-of-use asset, net
|
|
|
|
$
|
12,460
|
|
|
|
|
$
|
9,392
|
|
|
|
Operating lease liability, current
|
|
|
Accrued expenses and other liabilities
|
|
|
|
|
596
|
|
|
|
|
|
240
|
|
|
|
Operating lease liability, long-term
|
|
|
Operating lease liability, long-term
|
|
|
|
|
14,745
|
|
|
|
|
|
11,679
|
|
|
|
Total operating lease liability
|
|
|
|
|
|
|
$
|
15,341
|
|
|
|
|
$
|
11,919
|
|
|
|
|
The following table reflects supplement lease term and discount rate information related to leases:
|
|
|
|
As of March 31, 2021
|
|
|
As of December 31, 2020
|
|
|
Weighted-average remaining lease terms—operating leases
|
|
|
8.74 years
|
|
|
10.2 years
|
|
|
Weighted-average discount rate—operating leases
|
|
|
9%
|
|
|
9%
|
|
The following table reflects supplemental cash flow information related to leases as of the periods indicated:
|
|
|
|
For the Three
Months Ended
March 31, 2021
|
|
|
For the Three
Months Ended
March 31, 2020
|
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases
|
|
|
|
$
|
127
|
|
|
|
|
$
|
21
|
|
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
|
$
|
3,295
|
|
|
|
|
$
|
2,998
|
|
|
The following table reflects future minimum lease payments under noncancelable leases as of March 31, 2021:
|
|
|
|
Operating Leases
|
|
|
2021
|
|
|
|
$
|
1,869
|
|
|
|
2022
|
|
|
|
|
2,813
|
|
|
|
2023
|
|
|
|
|
2,678
|
|
|
|
2024
|
|
|
|
|
2,708
|
|
|
|
2025
|
|
|
|
|
2,743
|
|
|
|
Thereafter
|
|
|
|
|
18,300
|
|
|
|
Total lease payments
|
|
|
|
|
31,111
|
|
|
|
Less: imputed Interest
|
|
|
|
|
(12,065)
|
|
|
|
Less: tenant incentive receivable
|
|
|
|
|
(3,705)
|
|
|
|
Total
|
|
|
|
$
|
15,341
|
|
|
|
|
The Company entered into one lease that had not commenced at March 31, 2021. As a result, future lease payments of approximately $17.3 million are not recorded on the Company’s consolidated balance sheets. The lease commences in January 2022 with a non-cancelable term of 10 years.
Note 13—Basic and diluted net loss per common share
Basic and diluted net loss per common share is calculated as follows:
|
|
|
|
Three Months
Ended March 31,
2021
|
|
|
Three Months
Ended March 31,
2020
|
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(18,348)
|
|
|
|
|
$
|
(9,673)
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common share for basic and diluted net loss per
share
|
|
|
|
|
19,278,887
|
|
|
|
|
|
18,825,136
|
|
|
|
Basic and diluted net loss per common share
|
|
|
|
$
|
(0.95)
|
|
|
|
|
$
|
(0.51)
|
|
|
|
|
The Company’s potentially dilutive securities, which include the Preferred Stock, restricted stock, warrants, early exercised stock options and options to purchase shares of the Company’s common stock, have been excluded from the computation of dilutive net loss per share as the effect would be antidilutive. Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share is the same. The Company excluded the following potential shares of common stock presented based on amounts outstanding at each stated period end, from the computation of diluted net loss per share for the three months ended March 31, 2021 and 2020 because including them would have had an anti-dilutive effect.
|
|
|
|
Three Months
Ended March 31,
2021
|
|
|
Three Months
Ended March 31,
2020
|
|
|
Stock options to purchase common stock
|
|
|
|
|
8,603,052
|
|
|
|
|
|
6,100,045
|
|
|
|
Early exercised stock options subject to future vesting
|
|
|
|
|
2,377,447
|
|
|
|
|
|
560,224
|
|
|
|
Restricted stock award subject to future vesting
|
|
|
|
|
2,271,298
|
|
|
|
|
|
3,865,577
|
|
|
|
Warrants on long term debt
|
|
|
|
|
40,540
|
|
|
|
|
|
—
|
|
|
|
Convertible preferred stock
|
|
|
|
|
85,865,789
|
|
|
|
|
|
61,143,790
|
|
|
|
Total
|
|
|
|
|
99,158,126
|
|
|
|
|
|
71,669,636
|
|
|
|
|
Note 14—Defined contribution plan
The Company has a 401(k) Employee Savings Plan (“401(k) Plan”) that is available to all employees of the Company. The Company has elected a Safe-Harbor provision for the 401(k) Plan in which participants are always fully vested in their employer contributions. Prior Century matches 100% of the first 3% of participating employee contributions and 50% of the next 2% of participating employee contributions. Contributions are made in cash. Contributions were approximately $212 and $63 for the three months ended March 31, 2021 and 2020, respectively. Such contribution expense has been recognized in the consolidated statement of operations for each period.
Note 15—Stock-based compensation
As part of the merger discussed in Note 2 above, the Company adopted from Prior Century, the 2018 Stock Option and Grant Plan (the “Plan”). The Plan provides for the Company to sell or issue common stock or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the Board of Directors, and consultants of the Company under terms and provisions established by the Board of Directors. Under the terms of the Plan, options may be granted at an exercise price not less than fair market value. the Company generally grants stock-based awards with service conditions only. Stock awards granted typically vest over a four-year period but may be granted with different vesting terms. As of March 31, 2021 the Company had 23,498,781 shares authorized for issuance under the Plan.
The Company recognizes the costs of the stock-based payments as the employees vest in the awards. For the three months ended March 31, 2021, the Company recognized $95 of stock-based compensation expense within the consolidated statement of operations. For the three months ended March 31, 2020, the Company recognized $221 of stock-based compensation expense within the consolidated statement of operations.
Stock Options
The following table summarizes stock option activity for the period ended March 31, 2021:
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
Remaining
Contractual Term
(years)
|
|
|
Outstanding January 1, 2021
|
|
|
|
|
9,768,326
|
|
|
|
|
$
|
0.42
|
|
|
|
|
|
9.11
|
|
|
|
Granted
|
|
|
|
|
1,059,066
|
|
|
|
|
|
2.89
|
|
|
|
|
|
—
|
|
|
|
Exercised—vested
|
|
|
|
|
(435,007)
|
|
|
|
|
|
0.42
|
|
|
|
|
|
—
|
|
|
|
Exercised—unvested
|
|
|
|
|
(1,733,311)
|
|
|
|
|
|
0.56
|
|
|
|
|
|
—
|
|
|
|
Forfeited
|
|
|
|
|
(56,022)
|
|
|
|
|
|
0.41
|
|
|
|
|
|
—
|
|
|
|
Cancelled
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Outstanding, March 31, 2021
|
|
|
|
|
8,603,052
|
|
|
|
|
$
|
0.73
|
|
|
|
|
|
8.94
|
|
|
|
Exercisable at March 31, 2021
|
|
|
|
|
5,087,456
|
|
|
|
|
$
|
0.89
|
|
|
|
|
|
8.77
|
|
|
|
|
The weighted average grant date fair value of awards for options granted during the period ended March 31, 2021 was $1.80. As of March 31, 2021, there was $3,553 of total unrecognized compensation expense related to unvested stock options with time-based vesting terms, which is expected to be recognized over a weighted average period of 2.74 years.
During 2020, the Company issued 537,500 performance-based awards, respectively, that vest upon contingent events. The Company determined the performance condition for these awards is not probable of being achieved. As a result, the Company has not recorded any compensation cost related to the awards. As of March 31, 2021, there was $213 of total unrecognized compensation expense related to the performance-based awards.
The Company estimates the fair value of its option awards to employees and directors using Black-Scholes, which requires inputs and subjective assumptions, including (i) the expected stock price volatility, (ii) the calculation of the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to the lack of substantial company-specific historical and implied volatility data of its common stock, the Company has based its estimate of expected volatility on the historical volatility of a group of similar public companies. When selecting these companies on which it has based its expected stock price volatility, the Company selected companies with comparable characteristics to it, including enterprise value, risk profiles, position within the industry and with historical share price information sufficient to meet the expected term of the stock-based awards. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.
The Company has never paid dividends and does not expect to in the foreseeable future. The expected term of the options granted to employees is derived from the “simplified” method as described in Staff Accounting Bulletin 107 relating to stock-based compensation. The risk-free interest rates for periods within the expected term of the option are based on the U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The Company will account for actual forfeitures as they occur.
The weighted-average assumptions used to calculate the fair value of stock options granted are as follows:
|
|
|
|
March 31, 2021
|
|
|
Expected dividend rate
|
|
|
|
|
—
|
|
|
|
Expected option term (years)
|
|
|
|
|
6.04
|
|
|
|
Expected volatility
|
|
|
|
|
69.81%
|
|
|
|
Risk-free interest rate
|
|
|
|
|
1.07%
|
|
|
Restricted Stock
The following table summarizes restricted stock activity as of March 31, 2021 and December 31, 2020:
|
|
|
|
Shares
|
|
|
Weighted Average
Grant Date Fair Value
|
|
|
Total Unvested December 31, 2020
|
|
|
|
|
2,650,724
|
|
|
|
|
|
0.14
|
|
|
|
Vested
|
|
|
|
|
(379,426)
|
|
|
|
|
|
0.10
|
|
|
|
Total Unvested March 31, 2021
|
|
|
|
|
2,271,298
|
|
|
|
|
$
|
0.15
|
|
|
Pursuant to certain stock purchase agreements containing vesting and other provisions, the Company has the right to repurchase unvested shares.
As of March 31, 2021, there was $333 of total unrecognized compensation expense related to the unvested restricted stock with time-based vesting terms, which is expected to be recognized over a weighted average period of 1.71 years. All restricted stock vests over a four-year period.
Early-Exercise of Unvested Equity Awards
As part of the merger, the Company assumed a deposit liability from Prior Century. Certain equity award holders early exercised unvested equity awards. The cash received upon early exercise of options of $1,136 was recorded as a deposit liability on the Company’s balance sheet as of March 31, 2021.
Note 16—Related party transactions
License Agreements and Collaborative Agreements with Shareholder of Equity Method Investor
As part of the Commitment Agreement, the Company acquired licenses and other contracts from Prior Century that were originally entered into by Prior Century and FUJIFILM Cellular Dynamics, Inc. (“FCDI”). FCDI is a shareholder of Century. The acquired licenses and other contracts with FCDI are as follows:
FCDI Licenses
The Company acquired from Prior Century a non-exclusive license agreement with FCDI. The license provides the Company with certain patents and know-how related to the reprogramming of human somatic cells to induce pluripotent stem cell(s) (“iPSCs”) (“License Agreement”). Under this agreement, the Company is required to make certain developmental and regulatory milestone payments as well as royalty payments upon commercialization. Royalties are in the low single digits on the sale of all licensed products.
The Company also acquired from Prior Century an exclusive license agreement with FCDI. The license provides the Company with patents and know-how related to human iPSC exclusively manufactured by FCDI.
The potential development and regulatory milestone payments to be paid by the Company to FCDI are $6,000.
FCDI Collaboration Agreement
In October 2019, the Company entered into the Master Collaboration Agreement with FCDI, whereby FCDI will provide certain services to the Company to develop and manufacture iPSCs and immune cells derived therefrom. FCDI will provide services in accordance with the approved research plan and related research budget. The initial research plan covers the period from October 2019 through March 31, 2022, with the related research budget totaling $30,400.
During the three months ended March 31, 2021, the Company made payments of $3,223 and incurred research and development expenses of $2,781 and legal fees of $21 recorded within general and administrative expenses in its consolidated statements of operations and comprehensive loss. As of March 31, 2021, there was $1,423 in accounts payable related to this agreement on the consolidated balance sheets.
During the three months ended March 31, 2020, the Company made payments of $35 and incurred research and development expenses of $2,877 and legal fees of $3 recorded within general and administrative expenses in its consolidated statements of operations and comprehensive loss.
Consulting Arrangements with Shareholders of Equity Method Investor
In 2019, the Company entered into arrangements with two shareholders of the Company, wherein the shareholders provide consulting services to the Company. As compensation for the consulting services, the shareholders are entitled to an annual retainer fee of $125, payable quarterly, along with payment of reasonable expenses associated with providing the consulting services. The Company paid $38 and $13 related to these consulting arrangements that were included in research and development expenses in the consolidated statements of operations and comprehensive loss for the three months ended March 31, 2021 and March 31, 2020, respectively.
Note 17—Subsequent Events
The Company has evaluated subsequent events as of March 31, 2021—the date of these consolidated financial statements—through May 5, 2021, which represents the date these consolidated financial statements were issued.
Stock Plan
The Board of Directors of the Company, pursuant to a meeting held in April 2021, granted 5,105,425 options to new and existing employees at an exercise price of $2.89 per share.
shares
Common stock
Preliminary prospectus
|
|
J.P. Morgan
|
|
|
BofA Securities
|
|
|
SVB Leerink
|
|
|
Piper Sandler
|
|
, 2021
Through and including , 2021 (the 25th day after the commencement of this offering), all dealers that buy, sell or trade shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
Part II
Information not required in prospectus
Item 13. Other expenses of issuance and distribution.
The following table sets forth the costs and expenses, other than the underwriting discounts and commissions, payable by Century Therapeutics, Inc., or the Registrant, in connection with the sale of our common stock being registered. All amounts are estimates except for the SEC, registration fee, FINRA, filing fee and listing fee.
|
Item
|
|
|
Amount
|
|
|
SEC registration fee
|
|
|
|
$
|
10,910.00
|
|
|
|
FINRA filing fee
|
|
|
|
$
|
15,500.00
|
|
|
|
Nasdaq Global Select Market listing fee
|
|
|
|
|
*
|
|
|
|
Printing expenses
|
|
|
|
|
*
|
|
|
|
Legal fees and expenses
|
|
|
|
|
*
|
|
|
|
Accounting fees and expenses
|
|
|
|
|
*
|
|
|
|
Blue Sky, qualification fees and expenses
|
|
|
|
|
*
|
|
|
|
Transfer agent fees and expenses
|
|
|
|
|
*
|
|
|
|
Miscellaneous expenses
|
|
|
|
|
*
|
|
|
|
Total
|
|
|
|
$
|
*
|
|
|
* To be filed by amendment.
Item 14. Indemnification of directors and officers.
As permitted by Section 102 of the DGCL, our second amended and restated certificate of incorporation and amended and restated bylaws to be in effect immediately prior to the closing of this offering will limit or eliminate the personal liability of our directors for a breach of their fiduciary duty of care as a director. The duty of care generally requires that, when acting on behalf of the corporation, directors exercise an informed business judgment based on all material information reasonably available to them. Consequently, a director will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for:
•
any breach of the director’s duty of loyalty to us or our stockholders;
•
any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
•
any act related to unlawful stock repurchases, redemptions, or other distributions or payment of dividends; or
•
any transaction from which the director derived an improper personal benefit.
These limitations of liability do not affect the availability of equitable remedies such as injunctive relief or rescission. Our second amended and restated certificate of incorporation will authorize us to indemnify our officers, directors and other agents to the fullest extent permitted under Delaware law.
As permitted by Section 145 of the DGCL, our amended and restated bylaws will provide that:
•
we may indemnify our directors, officers, and employees to the fullest extent permitted by the DGCL, subject to limited exceptions;
•
we may advance expenses to our directors, officers, and employees in connection with a legal proceeding to the fullest extent permitted by the DGCL, subject to limited exceptions; and
•
the rights provided in our amended and restated bylaws are not exclusive.
Our second amended and restated certificate of incorporation and our amended and restated bylaws will provide for the indemnification provisions described above and elsewhere herein. We have entered into, and intend to
continue to enter into, separate indemnification agreements with our directors and officers that may be broader than the specific indemnification provisions contained in the DGCL. These indemnification agreements generally require us, among other things, to indemnify our officers and directors against certain liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct. These indemnification agreements also generally require us to advance any expenses incurred by the directors or officers as a result of any proceeding against them as to which they could be indemnified. These indemnification provisions and the indemnification agreements may be sufficiently broad to permit indemnification of our officers and directors for liabilities, including reimbursement of expenses incurred, arising under the Securities Act.
We have purchased and currently intend to maintain insurance on behalf of each and every person who is or was a director or officer of the company against any loss arising from any claim asserted against him or her and incurred by him or her in any such capacity, subject to certain exclusions.
The form of underwriting agreement for this initial public offering provides for indemnification by the underwriters of us and our officers and directors who sign this Registration Statement for specified liabilities, including matters arising under the Securities Act.
Item 15. Recent sales of unregistered securities.
Set forth below is information regarding all unregistered securities sold by us since our inception in 2018. Also included is the consideration received by us for such securities and information relating to the section of the Securities Act, or rule of the SEC, under which exemption from registration was claimed.
1. Units in Century Therapeutics, LLC (prior to the 2021 Reorganization)
a. Century Therapeutics, Inc. and Bayer HealthCare LLC
On June 21, 2019, we issued 26,143,790 units to Bayer and 67,226,891 units to Prior Century in connection with the Commitment Agreement. Pursuant to the Commitment Agreement, Bayer agreed to make an aggregate cash contribution to us in the amount of $145 million as consideration for the 26,143,790 units issued to Bayer. Pursuant to the Commitment Agreement and a Contribution Agreement between Prior Century and us, dated June 21, 2019, or the Contribution Agreement, Prior Century contributed substantially all of its assets including contracts, intellectual property and research and development assets, as consideration for the 67,226,891 units issued to Prior Century.
b. Hercules Capital, Inc.
On September 14, 2020, we issued a warrant, or the Hercules Warrant, to purchase units at an exercise price of $5.55 per unit to Hercules Technology Management Co II, Inc., in connection with a Loan and Security Agreement by and between Hercules Capital, Inc., or together with Hercules Technology Management Co II, Inc., Hercules, and us, or the Loan and Security Agreement, whereby Hercules acted as administrative agent and collateral agent for a loan in an aggregate principal amount of up to $30 million. In connection with the 2021 Reorganization, the Hercules Warrant converted to a warrant to purchase shares of our common stock. The Hercules Warrant provides for warrant coverage of 2.25% of the aggregate principal amount of the term loan advances made to us under the Loan and Security Agreement. There are three $10 million tranches available under the Loan and Security Agreement. As of April 30, 2021, the aggregate principal amount outstanding under the Loan and Security Agreement is $10 million, providing for warrant coverage of 40,450 shares. If we draw on any additional tranches under the Loan and Security Agreement, the number of shares of our common stock underlying the Hercules Warrant will increase proportionally, up to a maximum aggregate amount of 121,620 shares. The issuance of shares upon exercise by Hercules will constitute a transaction exempt from the registration requirements of Section 5 of the Securities Act, in reliance upon Section 4(a)(2) thereof.
a.
Century Therapeutics, Inc.
Following the determination of the board of managers of Century Therapeutics, LLC that the available shares of Prior Century common stock authorized for issuance under the 2018 Plan was insufficient to incentivize and encourage the current and prospective employees, consultants, independent contractors and other persons providing services to us, on January 1, 2021, we issued 3,021,890 units to Prior Century pursuant to Section 8.14 of our Amended and Restated Limited Liability Company Agreement, as amended. Following the issuance of such units to Prior Century, the number of shares of common stock of Prior Century reserved for issuance under the 2018 Plan was increased by 3,021,890.
2. Corporate Reorganization
a.
In connection with the 2021 Reorganization, all units held by Bayer were converted into an aggregate of 26,143,790 shares of our Series B preferred stock, and the units held by Prior Century were converted into 35,000,000 shares of our Class 1 Series A preferred stock and 35,248,781 shares of our Class 1 common stock. Immediately upon the completion of the 2021 Reorganization, Prior Century merged with and into us, and all shares of Class 1 Series A preferred stock and Class 1 common stock were cancelled for no consideration, and the holders of equity interests in Prior Century exchanged all of such equity interests in Prior Century for an aggregate of 35,000,000 shares of our Series A preferred stock and 24,381,382 shares of our common stock.
3. Series C Preferred Stock
a.
On February 25, 2021, we completed an offering of Series C preferred stock to various institutional investors. We issued a total of 24,721,999 shares of Series C preferred stock, at a price per share of approximately $6.472, for total gross proceeds of approximately $160 million.
4. Equity Awards
a.
Since our inception, we have granted stock options to employees, officers, directors and consultants, covering an aggregate of 13,635,229 shares of our common stock, having a weighted average exercise price of $0.80 per share, in connection with services provided to us by such parties.
b.
Since our inception, we have issued an aggregate of 4,594,784 shares of our common stock to employees, officers, directors, and consultants upon their exercise of stock options, for aggregate cash consideration of approximately $3.5 million.
Unless otherwise stated, the issuances of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. Individuals who purchased securities as described above represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates issued in such transactions.
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions or any public offering.
Item 16. Exhibits and financial statement schedules.
(a) Exhibits.
The exhibits listed below are filed as part of this Registration Statement.
|
Exhibit
Number
|
|
|
Exhibit description
|
|
|
|
|
1.1†
|
|
|
|
Form of Underwriting Agreement
|
|
|
|
|
3.1
|
|
|
|
|
|
|
|
|
3.2†
|
|
|
|
Form of Second Amended and Restated Certificate of Incorporation, which will become effective immediately prior to the closing of this offering
|
|
|
|
|
3.3
|
|
|
|
|
|
|
|
|
3.4†
|
|
|
|
Form of Amended and Restated Bylaws, which will become effective immediately prior to the closing
of this offering
|
|
|
|
|
4.1†
|
|
|
|
Specimen Common Stock Certificate of Registrant
|
|
|
|
|
4.2
|
|
|
|
|
|
|
|
|
4.3
|
|
|
|
|
|
|
|
|
5.1†
|
|
|
|
Opinion of Troutman Pepper Hamilton Sanders LLP
|
|
|
|
|
10.1•
|
|
|
|
|
|
|
|
|
10.2•
|
|
|
|
|
|
|
|
|
10.3•
|
|
|
|
|
|
|
|
|
10.4•
|
|
|
|
|
|
|
|
|
10.5•
|
|
|
|
|
|
|
|
|
10.6•
|
|
|
|
|
|
|
|
|
10.7•
|
|
|
|
|
|
|
|
|
10.8•†
|
|
|
|
2021 Equity Incentive Plan
|
|
|
|
|
10.9•†
|
|
|
|
2021 Employee Stock Purchase Plan
|
|
|
|
|
10.10•
|
|
|
|
|
|
|
|
|
10.11•
|
|
|
|
|
|
|
|
|
10.12•
|
|
|
|
|
|
|
|
|
10.13•
|
|
|
|
|
|
|
|
|
10.14•
|
|
|
|
Form of Restricted Stock Unit Grant Notice and Award Agreement, under the 2021 Plan
|
|
|
|
|
10.15*
|
|
|
|
|
|
|
|
|
10.16*
|
|
|
|
|
|
|
|
|
10.17
|
|
|
|
|
|
|
|
|
10.18*
|
|
|
|
|
|
|
|
|
10.19
|
|
|
|
|
|
|
|
|
10.20
|
|
|
|
|
|
|
|
|
10.21*
|
|
|
|
|
|
|
Exhibit
Number
|
|
|
Exhibit description
|
|
|
|
|
10.22*
|
|
|
|
|
|
|
|
|
10.23*
|
|
|
|
|
|
|
|
|
10.24*
|
|
|
|
|
|
|
|
|
10.25*
|
|
|
|
|
|
|
|
|
10.26*
|
|
|
|
|
|
|
|
|
10.27*
|
|
|
|
|
|
|
|
|
10.28*
|
|
|
|
|
|
|
|
|
10.29
|
|
|
|
|
|
|
|
|
10.30•
|
|
|
|
|
|
|
|
|
10.31•
|
|
|
|
|
|
|
|
|
10.32•
|
|
|
|
|
|
|
|
|
10.33•
|
|
|
|
Executive Employment Agreement, by and between the Registrant and Luis Borges, Ph.D., dated May 26, 2021
|
|
|
|
|
10.34•
|
|
|
|
Executive Employment Agreement, by and between the Registrant and Adrienne Farid, Ph.D., dated May 26, 2021
|
|
|
|
|
10.35•
|
|
|
|
Executive Employment Agreement, by and between the Registrant and Gregory Russotti, Ph.D., dated
May 26, 2021
|
|
|
|
|
10.36•
|
|
|
|
|
|
|
|
|
10.37•
|
|
|
|
|
|
|
|
|
10.38•
|
|
|
|
Offer Letter, by and between the Registrant and Kimberly Blackwell, M.D., dated May 19, 2021
|
|
|
|
|
10.39•
|
|
|
|
Offer Letter, by and between the Registrant and Alessandro Riva, M.D., dated May 19, 2021
|
|
|
|
|
21.1
|
|
|
|
|
|
|
|
|
23.1
|
|
|
|
|
|
|
|
|
23.2†
|
|
|
|
Consent of Troutman Pepper Hamilton Sanders LLP (included in Exhibit 5.1)
|
|
|
|
|
24.1
|
|
|
|
Power of Attorney (included on the signature page to this Registration Statement)
|
|
†
To be filed by amendment.
•
Indicates management contract or compensatory plan.
*
Certain identified information in the exhibit has been omitted because it is the type of information that (i) the Company customarily and actually treats as private and confidential, and (ii) is not material.
(b) Financial statement schedules.
Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or notes thereto.
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has
been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
1.
For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.
2.
For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Signatures
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Philadelphia, Commonwealth of Pennsylvania on May 28, 2021.
CENTURY THERAPEUTICS, INC.
By:
/s/ Osvaldo Flores, Ph.D.
Osvaldo Flores, Ph.D.
President and Chief Executive Officer
Power of attorney
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Osvaldo Flores, Ph.D. and Michael Diem, M.D., and each of them, as his or her true and lawful attorneys-in-fact and agents, each with the full power of substitution, for him or her and in his or her name, place or stead, in any and all capacities, to sign any and all amendments to this Registration Statement (including post-effective amendments), and to sign any registration statement for the same offering covered by this Registration Statement that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act, and all post-effective amendments thereto, and to file the same, with exhibits thereto and other documents in connection therewith, with the SEC granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ Osvaldo Flores, Ph.D.
Osvaldo Flores, Ph.D.
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President, Chief Executive Officer and Director
(Principal Executive Officer)
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May 28, 2021
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/s/ Michael Diem, M.D.
Michael Diem, M.D.
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Chief Business Officer
(Principal Financial Officer)
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May 28, 2021
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/s/ Toshikazu Ban
Toshikazu Ban
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Director
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May 28, 2021
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/s/ Kimberly Blackwell, M.D.
Kimberly Blackwell, M.D.
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Director
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May 28, 2021
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/s/ Cynthia Butitta
Cynthia Butitta
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Director
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May 28, 2021
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/s/ Eli Casdin
Eli Casdin
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Director
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May 28, 2021
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/s/ Juergen Eckhardt, M.D.
Juergen Eckhardt, M.D.
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Director
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May 28, 2021
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/s/ Joseph Jimenez
Joseph Jimenez
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Director, Chairman of the Board
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May 28, 2021
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Signature
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Title
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Date
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/s/ Alessandro Riva, M.D.
Alessandro Riva, M.D.
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Director
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May 28, 2021
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/s/ Carlo Rizzuto, Ph.D.
Carlo Rizzuto, Ph.D.
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Director
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May 28, 2021
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Exhibit 3.1
Execution Version
AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION OF
CENTURY THERAPEUTICS,
INC.
(Pursuant
to Sections 242 and 245 of the General Corporation Law of the State of Delaware)
Century
Therapeutics, Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of
the State of Delaware (the “General Corporation Law”),
DOES HEREBY CERTIFY:
1.
That the name of this corporation is Century Therapeutics, Inc., and that this corporation was originally incorporated
pursuant to the General Corporation Law on February 25, 2021 under the name CenturyTx, Inc.
2.
That the Board of Directors duly adopted resolutions proposing to amend and restate the Certificate of Incorporation
of this corporation, declaring said amendment and restatement to be advisable and in the best interests of this corporation and
its stockholders, and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor,
which resolution setting forth the proposed amendment and restatement is as follows:
RESOLVED,
that the Certificate of Incorporation of this corporation be amended and restated in its entirety as follows:
FIRST: The name of this corporation
is Century Therapeutics, Inc. (the “Corporation”).
SECOND:
The address of the registered office of the Corporation in the State of Delaware is 1313 N Market St # 5100, in the City of Wilmington,
County of New Castle, 19801. The name of its registered agent at such address is PHS Corporate Services, Inc.
THIRD:
The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law.
FOURTH:
The total number of shares of all classes of stock which the Corporation shall have authority to issue is (i) 125,236,190 shares
of Common Stock, $0.0001 par value per share (“Common Stock”) and (ii) 85,865,789 shares of Preferred Stock,
$0.0001 par value per share (“Preferred Stock”).
The
following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions
thereof in respect of each class of capital stock of the Corporation.
1. General.
The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers
and preferences of the holders of the Preferred Stock set forth herein.
2. Voting. The holders of the Common Stock are entitled to one vote for each share of Common Stock held at all meetings
of stockholders (and written actions in lieu of meetings); provided, however, that, except as otherwise required
by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Amended and Restated Certificate
of Incorporation (this “Certificate of Incorporation”) that relates solely to the terms of one or more outstanding
series of Preferred Stock if the holders of such affected series of Preferred Stock are entitled, either separately or together
with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation or pursuant to
the General Corporation Law. There shall be no cumulative voting. The number of authorized shares of Common Stock may be increased
or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or
more series of Preferred Stock that may be required by the terms of this Certificate of Incorporation) the affirmative vote of
the holders of shares of capital stock of the Corporation representing a majority of the votes represented by all outstanding shares
of capital stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation
Law.
35,000,000
shares of the authorized Preferred Stock of the Corporation are hereby designated “Series A Preferred Stock,”
26,143,790 of the authorized shares of Preferred Stock are hereby designated “Series B Preferred Stock,” and
24,721,999 of the authorized shares of Preferred Stock are hereby designated “Series C Preferred Stock”. The
rights, preferences, powers, privileges and restrictions, qualifications and limitations granted and imposed on the Preferred Stock
are as set forth below in Part B of this Article Fourth. Unless otherwise indicated, references to “Sections” or “Subsections”
in this Part B of this Article Fourth refer to sections and subsections of Part B of this Article Fourth.
1.1.
The holders of then outstanding shares of Series A Preferred Stock and Series C Preferred Stock shall be entitled to receive
a non-cumulative dividend, out of any assets legally available therefor, at an annual rate of eight percent (8%) of the applicable
Original Issue Price (as defined below) per share (subject to appropriate adjustment in the event of any stock dividend, stock
split, combination or other similar recapitalization with respect to the Preferred Stock) (the “Preferred Dividend”);
provided, however such Preferred Dividend shall be payable only when, as, and if declared by the Board of Directors
of the Corporation (the “Board”) and the Board shall be under no obligation to declare or pay any such dividends.
The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the
Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock) in any calendar year unless (in
addition to the obtaining of any consents required elsewhere in this Certificate of Incorporation) the holders of Series A Preferred
Stock and Series C Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding
share of Series A Preferred Stock and Series C Preferred Stock in an amount
at
least equal to the greater of (i) the amount of the aggregate Preferred Dividends then accrued on such share of Series A Preferred
Stock and Series C Preferred Stock and not previously paid and (ii) (A) in the case of a dividend on Common Stock or any class
or series that is convertible into Common Stock, that dividend per share of Series A Preferred Stock and Series C Preferred Stock
as would equal the product of (1) the dividend payable on each share of such class or series determined, if applicable, as if
all shares of such class or series had been converted into Common Stock and (2) the number of shares of Common Stock issuable
upon conversion of a share of Series A Preferred Stock or Series C Preferred Stock, in each case calculated on the record date
for determination of holders entitled to receive such dividend or (B) in the case of a dividend on any class or series that is
not convertible into Common Stock, at a rate per share of Series A Preferred Stock or Series C Preferred Stock determined by (1)
dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price
of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination
or other similar recapitalization with respect to such class or series) and (2) multiplying such fraction by an amount equal to
the applicable Original Issue Price (as defined below); provided that if the Corporation declares, pays or sets aside,
on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable
to the holders of Series A Preferred Stock and Series C Preferred Stock pursuant to this Section 1 shall be calculated
based upon the dividend on the class or series of capital stock that would result in the highest Series A Preferred Stock and
Series C Preferred Stock dividend.
1.2.
For purposes of this Certificate of Incorporation, the “Original Issue Price” shall be (i) $6.4720 per
share of Series C Preferred Stock, (ii) $5.55 per share of Series B Preferred Stock, and (iii) $1.00 per share of Series A Preferred
Stock (in each case, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar
recapitalization with respect to the applicable Preferred Stock).
2.
Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.
2.1.
Preferential Payments to Holders of Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation or Deemed Liquidation Event (as defined below), the holders of shares of Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, on
a pari passu basis, prior and in preference to any distribution of any of the assets of the Corporation to the holders of
Common Stock by reason of their ownership thereof, an amount per share equal to the applicable Original Issue Price, plus any dividends
declared but unpaid thereon. If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event,
the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares
of Preferred Stock the full amount to which they shall be entitled under this Section 2.1, the holders of shares of Preferred
Stock shall share ratably on a pari passu basis in any distribution of the assets available for distribution in proportion
to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full.
2.2.
Distribution of Remaining Assets. In the event of any voluntary or involuntary liquidation, dissolution or winding
up of the Corporation or Deemed Liquidation Event, after the payment of all preferential amounts required to be paid to the holders
of shares of Preferred Stock pursuant to Section 2.1 of this Certificate of Incorporation have been paid in full, the remaining
assets of the Corporation available for distribution to its stockholders shall be distributed among the holders of the shares of
Preferred Stock and Common Stock, pro rata based on the number of shares held by each such holder, treating for this purpose
all such securities as if they had been converted to Common Stock pursuant to the terms of this Certificate of Incorporation immediately
prior to such liquidation, dissolution or winding up of the Corporation, The aggregate amount which a holder of a share of Preferred
Stock is entitled to receive under Sections 2.1 and 2.2 is hereinafter referred to as the “Liquidation Amount.”
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2.3.
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Deemed Liquidation Events.
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2.3.1.
Definition. Each of the following events shall be considered a “Deemed Liquidation Event” unless
(i) the holders of a majority of the outstanding shares of Preferred Stock, voting together as a single class on an as-converted
basis (the “Preferred Threshold”), and (ii) the holders of a majority of the outstanding shares of Series C
Preferred Stock, voting as a separate class, elect otherwise by written notice sent to the Corporation at least thirty (30) days
prior to the effective date of any such event:
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(a)
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a merger, consolidation or reorganization in which
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(i)
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the Corporation is a constituent party or
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(ii)
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a subsidiary of the Corporation is a constituent party and the Corporation
issues shares of its capital stock pursuant to such merger or consolidation,
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except
any such merger, consolidation or reorganization involving the Corporation or a subsidiary in which the shares of capital stock
of the Corporation outstanding immediately prior to such merger, consolidation or reorganization continue to represent, or are
converted into or exchanged for shares of capital stock that represent, immediately following such merger, consolidation or reorganization,
at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation or (2) if the surviving
or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger, consolidation
or reorganization, the parent corporation of such surviving or resulting corporation; provided, however, a merger
with a special purpose acquisition company, a reverse merger with a publicly traded shell company or other similar transaction,
immediately following which the Corporation’s securities become publicly traded on a national securities exchange, shall
be deemed to not constitute a Deemed Liquidation Event.
(b) (1)
the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions,
by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its
subsidiaries taken as a whole, or (2) the sale or disposition (whether by merger, consolidation or
otherwise) of one or more
subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole
are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition
is to a wholly owned subsidiary of the Corporation; or
(c) any other transaction or series of transactions pursuant to, or as a result of, which a single person (or group of affiliated
persons) acquires (from the Corporation or directly from the stockholders of the Corporation) or holds capital stock of the Corporation
representing a majority of the Corporation’s outstanding voting power; provided, however, a change in majority
voting control resulting from the consummation of the transactions contemplated by that certain Series C Preferred Stock Purchase
Agreement, dated on or about the date hereof, by and between the Corporation and the parties thereto (as may be amended or amended
and restated from time to time) (the “Purchase Agreement”), shall be deemed to not constitute a Deemed Liquidation
Event.
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2.3.2.
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Effecting a Deemed Liquidation Event.
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(a) The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Section 2.3.1(a)(i)
unless the agreement or plan of merger or consolidation for such transaction (the “Merger Agreement”) provides
that the consideration payable to the stockholders of the Corporation in such Deemed Liquidation Event shall be allocated among
the holders of capital stock of the Corporation in accordance with Sections 2.1 and 2.2.
(b) In
the event of a Deemed Liquidation Event referred to in Section 2.3.1(a)(ii) or 2.3.1(b), if the Corporation
does not effect a dissolution of the Corporation under the General Corporation Law within ninety (90) days after such Deemed
Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Preferred Stock no later than the
ninetieth (90th) day after the Deemed Liquidation Event advising such holders of their right (and the requirements
to be met to secure such right) pursuant to the terms of the following clause to require the redemption of such shares of
Preferred Stock and (ii) if the Preferred Threshold so requests in a written instrument delivered to the Corporation not
later than one hundred twenty (120) days after such Deemed Liquidation Event (the “Redemption Date”), the
Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained
liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board), together with
any other assets of the Corporation available for distribution to its stockholders, all to the extent permitted by Delaware
law governing distributions to stockholders (the “Available Proceeds”), on the one hundred fiftieth
(150th) day after such Deemed Liquidation Event, to redeem all outstanding shares of Preferred Stock at a price
per share equal to the applicable Liquidation Amount for each series. Notwithstanding the foregoing, in the event of a
redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares
of Preferred Stock, the Corporation shall ratably redeem each holder’s shares of Preferred Stock on a pari passu basis
to the fullest extent of such Available Proceeds, based on the respective amounts which would otherwise be payable in respect
of the shares to be redeemed if the Available Proceeds were sufficient to redeem all such shares, and shall redeem the
remaining shares as soon as it may lawfully do so under Delaware law governing distributions to stockholders. The provisions
of
Sections 2.3.2(c) through 2.3.2(e) shall apply to the redemption of the Preferred Stock pursuant to this Section
2.3.2(b). Prior to the distribution or redemption provided for in this Section 2.3.2(b), the Corporation shall not
expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in
connection with such Deemed Liquidation Event.
(c) The Corporation shall send written notice of the redemption pursuant to Section 2.3.2(b) (the “Redemption
Notice”) to each holder of record of Preferred Stock not less than ninety (90) days after the Deemed Liquidation Event.
Each Redemption Notice shall state:
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(i)
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the number of shares of Preferred Stock held by such holder that the Corporation
shall redeem on the Redemption Date;
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(ii)
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the Redemption Date and price per share of the Preferred Stock to be redeemed
(the “Redemption Price”);
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(iii)
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the date upon which such holder’s right to convert such shares terminates
(as determined in accordance with Section 4.1); and
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(iv)
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that such holder is to surrender to the Corporation, in the manner and at
the place designated, his, her or its certificate or certificates representing the shares of Preferred Stock to be redeemed.
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(d) On or before the Redemption Date, each holder of shares of Preferred Stock to be redeemed on the Redemption Date, unless
such holder has exercised his, her or its right to convert such shares as provided in Section 4, shall surrender the certificate
or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or
destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against
any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to
the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price for such
shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof.
In the event less than all of the shares of Preferred Stock represented by a certificate are redeemed, a new certificate representing
the unredeemed shares of Preferred Stock shall promptly be issued to such holder.
(e) If
the Redemption Notice shall have been duly given, and if on the Redemption Date the Redemption Price payable upon redemption
of the shares of Preferred Stock to be redeemed on such Redemption Date is paid or tendered for payment or deposited with an
independent payment agent so as to be available therefor in a timely manner,
then notwithstanding that the certificates
evidencing any of the shares of Preferred Stock so called for redemption shall not have been surrendered, dividends with
respect to such shares of Preferred Stock shall cease to accrue after such Redemption Date and all rights with respect to
such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the
Redemption Price without interest upon surrender of their certificate or certificates therefor.
2.3.3.
Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the holders of capital stock of the Corporation
upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the
value of the property, rights or securities paid or distributed to such holders by the Corporation or the acquiring person, firm
or other entity. The value of such property, rights or securities shall be determined in good faith by the Board.
2.3.4.
Allocation of Escrow and Contingent Consideration. In the event of a Deemed Liquidation Event pursuant to Section
2.3.1(a)(i), if any portion of the consideration payable to the stockholders of the Corporation is payable only upon satisfaction
of contingencies (the “Additional Consideration”), the Merger Agreement, indemnification agreement, escrow agreement,
or other definitive purchase or acquisition agreement in respect of the Deemed Liquidation Event shall provide that (a) the portion
of such consideration that is not Additional Consideration (such portion, the “Initial Consideration”) shall
be allocated among the holders of capital stock of the Corporation in accordance with Sections 2.1 and 2.2 as if
the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event and (b) any Additional
Consideration which becomes payable to the stockholders of the Corporation upon satisfaction of such contingencies shall be allocated
among the holders of capital stock of the Corporation in accordance with Sections 2.1 and 2.2 after taking into account
the previous payment of the Initial Consideration as part of the same transaction. For the purposes of this Section 2.3.4,
consideration placed into escrow or retained as a holdback to be available for satisfaction of indemnification or similar obligations
in connection with such Deemed Liquidation Event shall be deemed to be Additional Consideration.
3.1.
General. On any matter presented to the stockholders of
the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders
in lieu of meeting), each holder of outstanding shares of Preferred Stock shall be entitled to cast the number of votes equal to
the number of whole shares of Common Stock into which the shares of Preferred Stock held by such holder are convertible as of the
record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions
of this Certificate of Incorporation, holders of Preferred Stock shall vote together with the holders of Common Stock as a single
class on an as-converted to Common Stock basis.
3.2. Election
of Directors. The holders of record of the shares of Series A Preferred Stock, exclusively and as a separate class, shall
be entitled to elect two (2) directors of the Corporation (the “Series A Directors”), the holders of
record of the shares of Series B Preferred Stock, exclusively and as a separate class, shall be entitled to elect one (1)
director of the Corporation (the “Series B Director”), the holders of record of the shares of Series C
Preferred
Stock, exclusively and as a separate class, shall be entitled to elect one (1) director of the Corporation (the
“Series C Director” and, together with the Series A Directors and the Series B Director, the
“Preferred Directors”), and the holders of record of the shares of Common Stock, exclusively and as a
separate class, shall be entitled to elect one (1) director of the Corporation (the “Common Director”).
For administrative convenience, the initial Series C Director may also be appointed by the Board in connection with the
approval of the initial issuance of Series C Preferred Stock without a separate action by the holders of Series C Preferred
Stock. Any director elected as provided in the preceding sentence may be removed without cause (consistent with the General
Corporation Law) by, and only by, the affirmative vote of the holders of the shares of the class or series of capital stock
entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that
purpose or pursuant to a written consent of stockholders. If the holders of shares of Preferred Stock or Common Stock, as the
case may be, fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect
directors, voting exclusively and as a separate class, pursuant to the first sentence of this Section 3.2, then any
directorship not so filled shall remain vacant until such time as the holders of the Preferred Stock or Common Stock, as the
case may be, elect a person to fill such directorship by vote or written consent in lieu of a meeting; and no such
directorship may be filled by stockholders of the Corporation other than by the stockholders of the Corporation that are
entitled to elect a person to fill such directorship, voting exclusively and as a separate class. The holders of record of
the shares of Common Stock and of any other class or series of voting stock (including the Preferred Stock), exclusively and
voting together as a single class on an as-converted basis, shall be entitled to elect the balance of the total number of
directors of the Corporation. At any meeting held for the purpose of electing a director, the presence in person or by proxy
of the holders of a majority of the outstanding shares of the class or series entitled to elect such director shall
constitute a quorum for the purpose of electing such director. Except as otherwise provided in this Section 3.2, a
vacancy in any directorship filled by the holders of any class or series shall be filled only by vote or written consent in
lieu of a meeting of the holders of such class or series or by any remaining director or directors elected by the holders of
such class or series pursuant to this Section 3.2.
3.3.
Super Preferred Threshold Protective Provisions. At any time when any shares of Preferred Stock are outstanding,
the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following
without (in addition to any other vote required by law or this Certificate of Incorporation) the written consent or affirmative
vote of the holders of at least sixty-six percent (66%) of the outstanding shares of Preferred Stock, voting together as a single
class on an as-converted basis (the “Super Preferred Threshold”), given in writing or by vote at a meeting,
consenting or voting (as the case may be) as a separate class on an as-converted basis, and any such act or transaction entered
into without such consent or vote shall be null and void ab initio, and of no force or effect:
3.3.1.
(i) reclassify, alter or amend any existing security of the Corporation that is pari passu with the Preferred Stock
in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends,
voting rights or rights of redemption, if such reclassification, alteration or amendment would render such other security senior
to the Preferred Stock in respect of any such right, preference or privilege, or (ii) reclassify, alter or amend any existing
security of the Corporation that is junior to the Preferred Stock in respect of the distribution of assets on the liquidation,
dissolution or winding up of the
Corporation, the payment of dividends, voting rights or rights of redemption, if such reclassification,
alteration or amendment would render such other security senior to or pari passu with the Preferred Stock in respect of
any such right, preference or privilege;
3.3.2.
purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution
on, any shares of capital stock of the Corporation other than (i) redemptions of or dividends or distributions on the Preferred
Stock as expressly authorized herein, (ii) repurchases of Common Stock from former employees, officers, directors, consultants
or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment
or service at the lower of the original purchase price or the then-current fair market value thereof, or (iii) the Company’s
exercise of contractual rights of first refusal, as approved by the Board, including the approval of at least two (2) Preferred
Directors;
3.3.3. authorize, commence or approve
an initial public offering that is not a Qualified IPO; or
3.3.4. amend, alter, repeal or waive
any provision of this Certificate of Incorporation or Bylaws of the Corporation requiring the written consent or affirmative
vote of the Super Preferred Threshold to approve an act or transaction.
3.4.
Preferred Threshold Protective Provisions. At any time when any shares of Preferred Stock are outstanding, the Corporation
shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in
addition to any other vote required by law or this Certificate of Incorporation), the written consent or affirmative vote of the
Preferred Threshold, given in writing or by vote at a meeting, and any such act or transaction entered into without such consent
or vote shall be null and void ab initio, and of no force or effect:
3.4.1.
liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any merger, consolidation or any other
corporate reorganization or other Deemed Liquidation Event, or consent to any of the foregoing;
3.4.2.
amend, alter, repeal or waive any provision of this Certificate of Incorporation or Bylaws of the Corporation (other than
any provision requiring the written consent or affirmative vote of the Super Preferred Threshold or the holders of Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock, as applicable, to approve an act or transaction);
3.4.3.
increase or decrease the number of authorized shares of Common Stock or Preferred Stock (other than as set forth in Sections
3.5.3, 3.6.4 or 3.7.3);
3.4.4.
create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of
capital stock (or any securities convertible into or exercisable for any additional class or series of capital stock) unless the
same ranks junior to the Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding
up of the Corporation, the payment of dividends and rights of redemption;
3.4.5.
create, or hold capital stock in, any subsidiary that is not wholly owned (either directly or through one or more other
subsidiaries) by the Corporation, or sell, transfer or otherwise dispose of any capital stock of any direct or indirect subsidiary
of the Corporation, or permit any direct or indirect subsidiary to sell, lease, transfer, exclusively license or otherwise dispose
(in a single transaction or series of related transactions) of all or substantially all of the assets of such subsidiary or permit
any direct or indirect subsidiary to sell, transfer or otherwise issue any of its securities other than to the Corporation or
to a wholly-owned subsidiary of the Corporation; constituting the Board; Directors;
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3.4.6.
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increase or decrease the authorized number of directors
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3.4.7.
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increase or decrease the authorized number of Preferred
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3.4.8.
sell, assign, license, pledge or
encumber material technology or intellectual property, other than licenses granted in the ordinary course of business; or
3.4.9.
acquire any asset or business or enter into any corporate strategic relationship involving the payment, contribution or
assignment by the Corporation or to the Corporation of money, securities or assets greater than $500,000.
3.5.
Series C Preferred Stock Protective Provisions. At any time when any shares of Series C Preferred Stock are outstanding,
the Corporation shall not, either directly or indirectly, by amendment, merger, consolidation or otherwise, do any of the following
(in addition to any other vote required by law or this Certificate of Incorporation) without the written consent or affirmative
vote of the holders of at least a majority of the shares of Series C Preferred Stock then outstanding, given in writing or by vote
at a meeting, consenting or voting (as the case may be) exclusively and as a separate class, and any such act or transaction entered
into without such consent or vote shall be null and void ab initio, and of no force or effect:
3.5.1.
liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any merger, consolidation or any other
corporate reorganization or other Deemed Liquidation Event, or consent to any of the foregoing; unless the holders of Series C
Preferred Stock have received an aggregate amount under Sections 2.1 and 2.2 equal to $6.4720 per share (subject
to appropriate adjustment in the event of a stock split, stock dividend, combination, reclassification, or similar event affecting
the Series C Preferred Stock);
3.5.2.
amend, alter, repeal or waive any provision of this Certificate of Incorporation or Bylaws of the Corporation in a manner
that adversely affects the rights, preferences or privileges of the Series C Preferred Stock; provided, however,
that the creation, authorization and issuance of any additional class or series of capital stock (or any securities convertible
into or exercisable for any additional class or series of capital stock) with a liquidation preference or other rights that are
senior or pari passu to the Series C Preferred Stock
or any other series or class of capital stock will not, in and of
itself, be deemed to have an adverse effect on the Series C Preferred Stock;
3.5.3.
amend, alter, repeal or waive any provision of this Certificate of Incorporation or Bylaws of the Corporation requiring
the written consent or affirmative vote of the holders of Series C Preferred Stock to approve an act or transaction;
3.5.4.
increase or decrease the
number of authorized shares of Series C Preferred Stock; or
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3.5.5.
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increase or decrease the authorized number of Series C Preferred Directors.
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3.6.
Series B Preferred Stock Protective Provisions. At any time when any shares of Series B Preferred Stock are outstanding,
the Corporation shall not, either directly or indirectly, by amendment, merger, consolidation or otherwise, do any of the following
(in addition to any other vote required by law or this Certificate of Incorporation) without the written consent or affirmative
vote of the holders of at least a majority of the shares of Series B Preferred Stock then outstanding, given in writing or by vote
at a meeting, consenting or voting (as the case may be) exclusively and as a separate class, and any such act or transaction entered
into without such consent or vote shall be null and void ab initio, and of no force or effect:
3.6.1.
liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any merger, consolidation or any other
corporate reorganization or other Deemed Liquidation Event, or consent to any of the foregoing; unless the holders of Series B
Preferred Stock have received an aggregate amount under Sections 2.1 and 2.2 equal to $5.55 per share (subject to
appropriate adjustment in the event of a stock split, stock dividend, combination, reclassification, or similar event affecting
the Series B Preferred Stock);
3.6.2.
amend, alter, repeal or waive any provision of this Certificate of Incorporation or Bylaws of the Corporation in a manner
that adversely affects the rights, preferences or privileges of the Series B Preferred Stock; provided, however,
that the creation, authorization and issuance of any additional class or series of capital stock (or any securities convertible
into or exercisable for any additional class or series of capital stock) with a liquidation preference or other rights that are
senior or pari passu to the Series B Preferred Stock or any other series or class of capital stock will not, in and of itself,
be deemed to have an adverse effect on the Series B Preferred Stock;
3.6.3.
amend, alter, repeal or waive any provision of this Certificate of Incorporation or Bylaws of the Corporation requiring
the written consent or affirmative vote of the holders of Series B Preferred Stock to approve an act or transaction;
3.6.4.
increase or decrease the number of
authorized shares of Series B Preferred Stock; or
3.6.5. increase or decrease the authorized number of Series B Preferred Directors.
3.7. Series A
Preferred Stock Protective Provisions. At any time when any shares of Series A Preferred Stock are outstanding, the
Corporation shall not, either directly or indirectly, by amendment, merger, consolidation or otherwise, do any of the
following (in addition to any other vote required by law or this Certificate of Incorporation) without the written consent or
affirmative vote of the holders of at least seventy-five percent (75%) of the shares of Series A Preferred Stock then
outstanding, given in writing or by vote at a meeting, consenting or voting (as the case may be) exclusively and as a
separate class, and any such act or transaction entered into without such consent or vote shall be null and void ab
initio, and of no force or effect.
3.7.1.
amend, alter, repeal or waive any provision of this Certificate of Incorporation or Bylaws of the Corporation in a manner
that adversely affects the rights, preferences or privileges of the Series A Preferred Stock; provided, however,
that the creation, authorization and issuance of any additional class or series of capital stock (or any securities convertible
into or exercisable for any additional class or series of capital stock) with a liquidation preference or other rights that are
senior or pari passu to the Series A Preferred Stock or any other series or class of capital stock will not, in and of itself,
be deemed to have an adverse effect on the Series A Preferred Stock;
3.7.2.
amend, alter, repeal or waive any provision of this Certificate of Incorporation or Bylaws of the Corporation requiring
the written consent or affirmative vote of the holders of Series A Preferred Stock to approve an act or transaction;
3.7.3.
increase or decrease the
number of authorized shares of Series A Preferred Stock; or
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3.7.4.
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increase or decrease the authorized number of Series A Preferred Directors.
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The holders of the
Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):
4.1.1.
Conversion Ratio. Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any
time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully
paid and non- assessable shares of Common Stock as is determined by dividing the applicable Original Issue Price by the applicable
Conversion Price (as defined below) in effect at the time of conversion. The “Conversion Price” shall, with
respect to any series of Preferred Stock, initially be equal to the applicable Original Issue Price for such series of Preferred
Stock. Such initial Conversion Price, and the rate at which shares of Preferred Stock may be converted into shares of Common Stock,
shall be subject to adjustment as provided below.
4.1.2.
Termination of Conversion Rights. In the event of a liquidation, dissolution or winding up of the Corporation or
a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the
date fixed for the payment of any such amounts distributable on such event to the holders of Preferred Stock.
4.2.
Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock. In
lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction
multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board. Whether or not fractional
shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Preferred Stock
the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.
4.3.
Mechanics of Conversion.
4.3.1.
Notice of Conversion. In order for a holder of Preferred Stock to voluntarily convert shares of Preferred Stock into
shares of Common Stock, such holder shall (a) provide written notice to the Corporation’s transfer agent at the office of
the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own
transfer agent) that such holder elects to convert all or any number of such holder’s shares of Preferred Stock and, if applicable,
any event on which such conversion is contingent and (b) if such holder’s shares are certificated, surrender the certificate
or certificates for such shares of Preferred Stock (or, if such registered holder alleges that such certificate has been lost,
stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation
against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate),
at the office of the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves
as its own transfer agent). Such notice shall state such holder’s name or the names of the nominees in which such holder
wishes the shares of Common Stock to be issued. If required by the Corporation, any certificates surrendered for conversion shall
be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed
by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by
the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of such notice and, if applicable,
certificates (or lost certificate affidavit and agreement) shall be the time of conversion (the “Conversion Time”),
and the shares of Common Stock issuable upon conversion of the specified shares shall be deemed to be outstanding of record as
of such date. The Corporation shall, as soon as practicable after the Conversion Time (i) issue and deliver to such holder of Preferred
Stock, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable upon
such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Preferred Stock
represented by the surrendered certificate that were not converted into Common Stock, (ii) pay in cash such amount as provided
in Section 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and (iii) pay
all declared but unpaid dividends on the shares of Preferred Stock converted.
4.3.2.
Reservation of Shares. The Corporation shall at all times when the Preferred Stock shall be outstanding, reserve
and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Preferred
Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock, the Corporation shall take such
corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder
approval of any necessary amendment to this Certificate of Incorporation. Before taking any action which would cause an adjustment
reducing the applicable Conversion Price for a series of Preferred Stock below the then par value of the shares of Common Stock
issuable upon conversion of such series of Preferred Stock, the Corporation will take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares
of Common Stock at such adjusted Conversion Price.
4.3.3.
Effect of Conversion. All shares of Preferred Stock which shall have been surrendered for conversion as herein provided
shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at
the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor, to receive
payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in Section 4.2 and to receive
payment of any dividends declared but unpaid thereon. Any shares of Preferred Stock so converted shall be retired and cancelled
and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the
need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.
4.3.4.
No Further Adjustment. Upon any such conversion, no adjustment to the Conversion Price shall be made for any declared
but unpaid dividends on the Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.
4.3.5.
Taxes. The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any
issuance or delivery of shares of Common Stock upon conversion of shares of Preferred Stock pursuant to this Section 4.
The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Common Stock in a name other than that in which the shares of Preferred Stock so converted were
registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid
to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been
paid.
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4.4.
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Adjustments to Conversion Price for Diluting Issues.
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4.4.1.
Special Definitions. For purposes of this Article Fourth, the following definitions shall apply:
(a) “Option”
shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.
(b)
“Series C Original Issue Date” shall mean the date on which the first share of Series C Preferred Stock
was issued.
(c)
“Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly
or indirectly convertible into or exchangeable for Common Stock, but excluding Options.
(d)
“Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Section
4.4.3 below, deemed to be issued) by the Corporation after the Series C Original Issue Date, other than (1) the following shares
of Common Stock and (2) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses
(1) and (2), collectively, “Exempted Securities”):
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(i)
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shares of Common Stock, Options or Convertible Securities issued as a dividend
or distribution on Preferred Stock that are outstanding as of immediately following the Closing (as defined in the Purchase Agreement);
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(ii)
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shares of Common Stock, Options or Convertible Securities issued by reason
of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Section 4.5, 4.6,
4.7 or 4.8 and approved by the Board, including at least two (2) Preferred Directors;
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(iii)
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shares of Common Stock or Options issued to employees or directors of, or
consultants or advisors to, the Corporation or any of its subsidiaries pursuant to (A) the Century Therapeutics, Inc. 2018 Stock
Option and Grant Plan (as may be amended from time to time, the “Stock Plan”), which was assumed by the Corporation
in connection the merger of Century Therapeutics, Inc. with and into the Corporation, or (B) any other plan, agreement or arrangement
that is approved by the Board, including at least two (2) Preferred Directors;
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(iv)
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shares of Common Stock issued in connection with a Qualified IPO;
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(v)
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shares of Common Stock issued upon conversion of the Preferred Stock;
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(vi)
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shares of Common Stock or Convertible Securities actually issued upon the
exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities outstanding
as of the date of the Closing or issued thereafter, in each case provided such issuance is pursuant to the terms of such Option
or Convertible Security;
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(vii)
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shares of Common Stock, Options or Convertible Securities issued to banks,
equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing,
commercial credit arrangements, real property leasing transaction or similar transaction approved by the Board, including at least
two (2) Preferred Directors;
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(viii)
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shares of Common Stock, Options or Convertible Securities issued pursuant
to the acquisition of another corporation by the Corporation by merger, purchase of substantially all of the assets, reorganization
or other business combination; provided that such issuances are approved by the Board, including at least two (2) Preferred
Directors; or
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(ix)
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shares of Common Stock, Options or Convertible Securities issued in connection
with licenses, strategic partnerships or similar transactions approved by the Board, including at least two (2) Preferred Directors;
or
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(x)
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shares of Common Stock, Options or Convertible Securities that are deemed
at the time of issuance to be “Exempt Securities” by the written consent or affirmative vote of the Preferred Threshold.
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4.4.2.
No Adjustment of Conversion Price. No adjustment in the applicable Conversion Price for a series of Preferred Stock
shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives
written notice from the holders of a majority of the outstanding shares of such series of Preferred Stock agreeing that no such
adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock.
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4.4.3.
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Deemed Issue of Additional Shares of Common Stock.
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(a) If the Corporation at any time or from time to time after the Series C Original Issue Date shall issue any Options or Convertible
Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for
the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the
maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions
to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment
of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the
time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.
(b) If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to the applicable Conversion
Price for a series of Preferred Stock pursuant to the terms of Section 4.4.4, are revised as a result of an amendment to
such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments
to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1)
any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any
such Option or Convertible Security or (2) any increase or decrease in the consideration payable to the Corporation upon such exercise,
conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the applicable Conversion Price
computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto)
shall be readjusted to such Conversion Price for a series of Preferred Stock as would have obtained had such revised terms been
in effect upon the original date of issuance of such Option or Convertible Security, Notwithstanding the foregoing, no readjustment
pursuant to this clause (b) shall have the effect of increasing the applicable Conversion Price for such series of Preferred Stock
to an amount which exceeds the lower of (i) the Conversion Price in effect immediately prior to the original adjustment made as
a result of the issuance of such Option or Convertible Security, or (ii) the applicable Conversion Price for such series of Preferred
Stock that would have resulted from any issuances of Additional Shares of Common Stock (other than deemed issuances of Additional
Shares of Common Stock as a result of the issuance of such Option or Convertible Security) between the original adjustment date
and such readjustment date.
(c) If
the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted
Securities), the
issuance of which did not result in an adjustment to the applicable Conversion Price for such series of
Preferred Stock pursuant to the terms of Section 4.4.4 (either because the consideration per share (determined
pursuant to Section 4.4.5) of the Additional Shares of Common Stock subject thereto was equal to or greater than the
Conversion Price then in effect, or because such Option or Convertible Security was issued before the Series C Original Issue
Date), are revised after the Series C Original Issue Date as a result of an amendment to such terms or any other adjustment
pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant
to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase in the
number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible
Security or (2) any decrease in the consideration payable to the Corporation upon such exercise, conversion or exchange, then
such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject thereto
(determined in the manner provided in Section 4.4.3(a)) shall be deemed to have been issued effective upon such
increase or decrease becoming effective.
(d) Upon
the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof)
which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the applicable Conversion
Price of any series of Preferred Stock pursuant to the terms of Section 4.4.4, the applicable Conversion Price shall be
readjusted to such Conversion Price as would have obtained had such Option or Convertible Security (or portion thereof) never
been issued.
(e)
If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible
Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculable at the
time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment
to the applicable Conversion Price of any series of Preferred Stock provided for in this Section 4.4.3 shall be effected
at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions
for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (b) and (c) of this Section
4.4.3). If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible
Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, cannot be calculated
at all at the time such Option or Convertible Security is issued or amended, any adjustment to the applicable Conversion Price
of any series of Preferred Stock that would result under the terms of this Section 4.4.3 at the time of such issuance or
amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even
if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the Conversion Price that such issuance
or amendment took place at the time such calculation can first be made.
4.4.4.
Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the Corporation shall
at any time or from time to time after the Series C Original Issue Date issue Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Section 4.4.3), without consideration or for a consideration per
share less than the applicable Conversion Price for a series
of Preferred
Stock in effect immediately prior to such issue, then such Conversion Price shall be reduced, concurrently with such issue, to
a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:
CP2 = CP1* (A + B)÷(A
+ C).
For purposes of the foregoing formula,
the following definitions shall apply:
(a)
“CP2” shall mean the applicable Conversion Price in effect immediately after such issuance or deemed issuance
of Additional Shares of Common Stock
(b)
“CP1” shall mean the applicable Conversion Price in effect immediately prior to such issuance or deemed issuance
of Additional Shares of Common Stock;
(c)
“A” shall mean the number of shares of Common Stock outstanding immediately prior to such issuance or deemed
issuance of Additional Shares of Common Stock (treating for this purpose as outstanding all shares of Common Stock issuable upon
exercise of Options outstanding immediately prior to such issuance or deemed issuance or upon conversion or exchange of Convertible
Securities (including the Preferred Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior
to such issue);
(d)
“B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of
Common Stock had been issued or deemed issued at a price per share equal to CP1 (determined by dividing the aggregate consideration
received by the Corporation in respect of such issue by CP1); and
(e) “C”
shall mean the number of such Additional Shares of Common Stock issued in such transaction.
4.4.5.
Determination of Consideration. For purposes of this Section 4.4, the consideration received by the Corporation
for the issuance or deemed issuance of any Additional Shares of Common Stock shall be computed as follows:
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(a)
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Cash and Property: Such consideration shall:
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(i)
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insofar as it consists of cash, be computed at the aggregate amount of cash
received by the Corporation, excluding amounts paid or payable for accrued interest;
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(ii)
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insofar as it consists of property other than cash, be computed at the fair
market value thereof at the time of such issue, as determined in good faith by the Board; and
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(iii)
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in the event Additional Shares of Common Stock are issued together with other
shares or
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securities
or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed
as provided in clauses (i) and (ii) above, as determined in good faith by the Board.
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(b)
Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares
of Common Stock deemed to have been issued pursuant to Section 4.4.3, relating to Options and Convertible Securities, shall
be determined by dividing:
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(i)
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the total amount, if any, received or receivable by the Corporation as consideration
for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set
forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities,
or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion
or exchange of such Convertible Securities, by
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(ii)
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the maximum number of shares of Common Stock (as set forth in the instruments
relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.
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4.4.6.
Multiple Closing Dates. In the event the Corporation shall issue on more than one date Additional Shares of Common
Stock that are a part of one transaction or a series of related transactions and that would result in an adjustment to the applicable
Conversion Price for a series of Preferred Stock pursuant to the terms of Section 4.4.4, and such issuance dates occur
within a period of no more than ninety (90) days from the first such issuance
to the final such issuance, then, upon the final
such issuance, such Conversion Price shall be readjusted to give effect to all such issuances as if they occurred on the date
of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances
within such period).
4.5.
Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the
Series C Original Issue Date effect a subdivision of the outstanding Common Stock, the applicable Conversion Price for each series
of Preferred Stock in effect immediately before that subdivision shall be proportionately decreased so that the number of shares
of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate
number of shares of Common Stock outstanding. If the Corporation shall at any time or from time to time after the Series C Original
Issue Date combine the outstanding shares of Common Stock, the applicable Conversion Price for each series of Preferred Stock in
effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable
on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares
of Common Stock outstanding. Any adjustment under this subsection shall become effective at the close of business on the date the
subdivision or combination becomes effective.
4.6.
Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time or from time to time
after the Series C Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and
in each such event the applicable Conversion Price for each series of Preferred Stock in effect immediately before such event shall
be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business
on such record date, by multiplying such Conversion Price for such series then in effect by a fraction:
(a)
the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date, and
(b)
the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to
the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment
of such dividend or distribution.
Notwithstanding
the foregoing, (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is
not fully made on the date fixed therefor, the applicable Conversion Price for each series of Preferred Stock shall be
recomputed accordingly as of the close of business on such record date and thereafter the Conversion Price shall be adjusted
pursuant to this subsection as of the time of actual payment of such dividends or distributions; and (b) that
no such adjustment shall be made if the holders of such series of Preferred Stock simultaneously receive a dividend or other
distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received
if all outstanding shares of such series of Preferred Stock had been converted into Common Stock on the date of such
event,
4.7.
Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time
after the Series C Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares
of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of Section 1 do
not apply to such dividend or distribution, then and in each such event the holders of each series of Preferred Stock shall receive,
simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other
property in an amount equal to the amount of such securities or other property as they would have received if all outstanding shares
of such series of Preferred Stock had been converted into Common Stock on the date of such event.
4.8.
Adjustment for Merger or Reorganization, etc. Subject to the provisions of Section 2.3, if there shall occur
any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock
(but not the Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered
by Sections 4.4, 4.6 or 4.7), then, following any such reorganization, recapitalization, reclassification,
consolidation or merger, each share of a series of Preferred Stock shall thereafter be convertible in lieu of the Common Stock
into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder
of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of such series of Preferred Stock
immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled
to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board) shall
be made in the application of the provisions in this Section 4 with respect to the rights and interests thereafter of the
holders of such series of Preferred Stock, to the end that the provisions set forth in this Section 4 (including provisions
with respect to changes in and other adjustments of the applicable Conversion Price) shall thereafter be applicable, as nearly
as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of such Preferred
Stock, For the avoidance of doubt, nothing in this Section 4.8 shall be construed as preventing the holders of Preferred
Stock from seeking any appraisal rights to which they are otherwise entitled under the General Corporation Law in connection with
a merger triggering an adjustment hereunder, nor shall this Section 4.8 be deemed conclusive evidence of the fair value
of the shares of Preferred Stock in any such appraisal proceeding.
4.9.
Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the applicable Conversion
Price of a series of Preferred Stock pursuant to this Section 4, the Corporation at its expense shall, as promptly as reasonably
practicable but in any event not later than ten (10) days thereafter, compute such adjustment or readjustment in accordance with
the terms hereof and furnish to each holder of such series of Preferred Stock a certificate setting forth such adjustment or readjustment
(including the kind and amount of securities, cash or other property into which such Preferred Stock is convertible) and showing
in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, as promptly as reasonably practicable
after the written request at any time of any holder of a series of Preferred Stock (but in any event not later than ten (10) days
thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the applicable Conversion Price for
such series of Preferred Stock then in effect, and (ii) the number of shares of Common Stock and the
amount, if any, of other
securities, cash or property which then would be received upon the conversion of such series of Preferred Stock.
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4.10.
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Notice of Record Date. In the event:
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(a)
the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time
issuable upon conversion of the Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other
distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities,
or to receive any other security; or
(b)
of any capital reorganization of the Corporation, any reclassification of the Common Stock of the Corporation, or any Deemed
Liquidation Event; or
(c)
of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation, then, and in each such case,
the Corporation will send or cause to be sent to the holders of the Preferred Stock a notice specifying, as the case may be, (i)
the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right,
or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation
or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock
(or such other capital stock or securities at the time issuable upon the conversion of the Preferred Stock) shall be entitled to
exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount
per share and character of such exchange applicable to the Preferred Stock and the Common Stock. Such notice shall be sent at least
ten (10) days prior to the record date or effective date for the event specified in such notice.
5.1. Trigger
Events. Upon either (a) the closing of the sale of shares of Common Stock to the public at a price per share at least
equal to $6.4720 (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other
similar recapitalization with respect to the Common Stock), in a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended, resulting in at least $50,000,000 of proceeds,
net of the underwriting discount and commissions, to the Corporation (a “Qualified IPO”) or (b) the date
and time, or the occurrence of an event, specified by vote or written consent of each of (i) the Preferred Threshold and (ii)
the holders of a majority of the outstanding shares of Series C Preferred Stock, voting as a separate class (the time of such
closing or the date and time specified or the time of the event specified in such vote or written consent is referred to
herein as the “Mandatory Conversion Time”), then (A) all
outstanding shares of Preferred Stock shall automatically be converted into shares of Common Stock, at the then effective
conversion rate as calculated pursuant to Section 4.1.1 and (B) such shares may not be reissued by the Corporation.
5.2.
Procedural Requirements. All holders of record of shares of Preferred Stock shall be sent written notice of the
Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Preferred Stock pursuant to this
Section 5. Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of such
notice, each holder of shares of Preferred Stock in certificated form shall surrender his, her or its certificate or certificates
for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit
and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against
the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated
in such notice. If so required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied
by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder
or by his, her or its attorney duly authorized in writing. All rights with respect to the Preferred Stock converted pursuant to
Section 5.1, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate
at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender any certificates at
or prior to such time), except only the rights of the holders thereof, upon surrender of any certificate or certificates of such
holders (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this
Section 5.2. As soon as practicable after the Mandatory Conversion Time and, if applicable, the surrender of any certificate
or certificates (or lost certificate affidavit and agreement) for Preferred Stock, the Corporation shall (a) issue and deliver
to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable
on such conversion in accordance with the provisions hereof and (b) pay cash as provided in Section 4.2 in lieu of any fraction
of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the
shares of Preferred Stock converted. Such converted Preferred Stock shall be retired and cancelled and may not be reissued as shares
of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may
be necessary to reduce the authorized number of shares of Preferred Stock accordingly.
6.
Redemption. The Preferred Stock is not mandatorily redeemable. Any shares of Preferred Stock or Common Stock
that are not reserved for issuance under (A) the Stock Plan, or (B) any other plan, agreement or arrangement that is approved by
the Board, including at least two (2) Preferred Directors, that are redeemed or otherwise acquired by the Corporation or any of
its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. Neither
the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Preferred Stock or
Common Stock following redemption.
7. Waiver.
Subject to Section 3.5, 3.6, and 3.7, any of the rights, powers, preferences and other terms of the Preferred
Stock set forth herein may be waived on behalf of all holders of Preferred Stock by the affirmative written consent or vote of
the Preferred Threshold except for (i) the provisions herein that require the affirmative written consent or vote of the Super
Preferred Threshold, which provisions may be waived on behalf of all holders of Preferred Stock by the affirmative written consent
or vote of the Super Preferred Threshold, and (ii) in addition to the affirmative written consent or vote of the Preferred Threshold,
the waiver of Section 2.3.1 or
Section 5.1 shall require the affirmative written consent or vote of the holders of a majority of the outstanding shares of Series
C Preferred Stock, voting as a separate class.
8.
Notices. Any notice required or permitted by the provisions of this Article Fourth to be given to a holder of
shares of Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation
or given by electronic communication in compliance with the provisions of the General Corporation Law, and shall be deemed sent
upon the first business day after such mailing or electronic transmission.
FIFTH:
Subject to any additional vote required by this Certificate of Incorporation or Bylaws, in furtherance and not in limitation of
the powers conferred by statute, the Board is expressly authorized to make, repeal, alter, amend and rescind any or all of the
Bylaws of the Corporation.
SIXTH:
The initial number of directors of the Corporation shall be seven. Subject to any additional vote required by this Certificate
of Incorporation, the number of directors of the Corporation shall be increased or decreased in the manner set forth in the Bylaws
of the Corporation.
SEVENTH:
Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.
EIGHTH:
Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws of the Corporation may provide.
The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to
time by the Board or in the Bylaws of the Corporation.
NINTH:
To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a director. If the General Corporation Law or any other law
of the State of Delaware is amended after approval by the stockholders of this Article Ninth to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated
or limited to the fullest extent permitted by the General Corporation Law as so amended.
Any
repeal or modification of the foregoing provisions of this Article Ninth by the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation existing at the time of or increase the liability of any director
of the Corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.
TENTH:
The following indemnification provisions shall apply to the persons enumerated below.
1. Right
to Indemnification of Directors and Officers. The Corporation shall indemnify and hold harmless, to the fullest extent
permitted by applicable law as it presently exists or may hereafter be amended, any person (an “Indemnified
Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether
civil, criminal, administrative or investigative (a “Proceeding”), by reason of the
fact that such person, or a person for whom such person is the legal representative, is or was a director or officer of the
Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership, joint venture, limited liability company,
trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and
loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Indemnified Person in such
Proceeding, Notwithstanding the preceding sentence, except as otherwise provided in Section 3 of this Article Tenth,
the Corporation shall be required to indemnify an Indemnified Person in connection with a Proceeding (or part thereof)
commenced by such Indemnified Person only if the commencement of such Proceeding (or part thereof) by the Indemnified Person
was authorized in advance by the Board.
2.
Prepayment of Expenses of Directors and Officers. The Corporation shall pay the expenses (including attorneys’
fees) incurred by an Indemnified Person in defending any Proceeding in advance of its final disposition, provided, however,
that, to the extent required by law, such payment of expenses in advance of the final disposition of the Proceeding shall be made
only upon receipt of an undertaking by the Indemnified Person to repay all amounts advanced if it should be ultimately determined
that the Indemnified Person is not entitled to be indemnified under this Article Tenth or otherwise.
3.
Claims by Directors and Officers. If a claim for indemnification or advancement of expenses under this Article
Tenth is not paid in full within thirty (30) days after a written claim therefor by the Indemnified Person has been received by
the Corporation, the Indemnified Person may file suit to recover the unpaid amount of such claim and, if successful in whole or
in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the
burden of proving that the Indemnified Person is not entitled to the requested indemnification or advancement of expenses under
applicable law.
4.
Indemnification of Employees and Agents. The Corporation may indemnify and advance expenses to any person who
was or is made or is threatened to be made or is otherwise involved in any Proceeding by reason of the fact that such person, or
a person for whom such person is the legal representative, is or was an employee or agent of the Corporation or, while an employee
or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, limited liability company, trust, enterprise or nonprofit entity, including service
with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees)
reasonably incurred by such person in connection with such Proceeding. The ultimate determination of entitlement to indemnification
of persons who are non-director or officer employees or agents shall be made in such manner as is determined by the Board in its
sole discretion. Notwithstanding the foregoing sentence, the Corporation shall not be required to indemnify a person in connection
with a Proceeding initiated by such person if the Proceeding was not authorized in advance by the Board.
5.
Advancement of Expenses of Employees and Agents. The Corporation may pay the expenses (including attorneys’
fees) incurred by an employee or agent in defending any
Proceeding in advance of its final disposition on such terms and conditions
as may be determined by the Board.
6.
Non-Exclusivity of Rights. The rights conferred on any person by this Article Tenth shall not be exclusive of
any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation,
the Bylaws of the Corporation, agreement, vote of stockholders or disinterested directors or otherwise.
7. Other Indemnification. The Corporation’s obligation, if any, to indemnify any person who was or is serving
at its request as a director, officer or employee of another corporation, partnership, limited liability company, joint venture,
trust, organization or other enterprise shall be reduced by any amount such person may collect as indemnification from such other
corporation, partnership, limited liability company, joint venture, trust, organization or other enterprise.
8.
Insurance. The Board may, to the full extent permitted by applicable law as it presently exists, or may hereafter
be amended from time to time, authorize an appropriate officer or officers to purchase and maintain at the Corporation’s
expense insurance: (a) to indemnify the Corporation for any obligation which it incurs as a result of the indemnification of directors,
officers and employees under the provisions of this Article Tenth; and (b) to indemnify or insure directors, officers and employees
against liability in instances in which they may not otherwise be indemnified by the Corporation under the provisions of this Article
Tenth.
9.
Amendment or Repeal. Any repeal or modification of the foregoing provisions of this Article Tenth shall not adversely
affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal
or modification.
The rights provided
hereunder shall inure to the benefit of any Indemnified Person and such person’s heirs, executors and administrators.
ELEVENTH:
The Corporation renounces, to the fullest extent permitted by law, any interest or expectancy of the Corporation in, or in
being offered an opportunity to participate in, any Excluded Opportunity. An “Excluded Opportunity” is any matter,
transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession
of (i) any director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, or (ii) any holder
of Preferred Stock or any partner, member, director, stockholder, employee or agent of any such holder, other than someone who
is an employee of the Corporation or any of its subsidiaries (collectively, “Covered Persons”), unless such
matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of,
a Covered Person expressly and solely in such Covered Person’s capacity as a director of the Corporation. Any repeal or modification
of this Article Eleventh will only be prospective and will not affect the rights under this Article Eleventh in effect at the time
of the occurrence of any actions or omissions to act giving rise to liability. Notwithstanding anything to the contrary contained
elsewhere in this Certificate of Incorporation, the affirmative vote of the holders of at least a majority of the shares of Preferred
Stock then outstanding, will be required to amend or repeal, or to adopt any provisions inconsistent with this Article Eleventh.
* * *
3.
That the foregoing amendment and restatement was approved by the holders of the requisite number of shares of this corporation
in accordance with Section 228 of the General Corporation Law.
4.
That this Certificate of Incorporation, which restates and integrates and further amends the provisions of this Corporation’s
Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law.
[Signature Page
Follows]
IN WITNESS WHEREOF,
this Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on this
25th day of February, 2021.
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By:
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/s/ Osvaldo Flores, Ph.D.
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Name:
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Osvaldo Flores, Ph.D.
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Title:
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President and Chief Executive Officer
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[Signature
Page – Series C Certificate of Incorporation]
Exhibit 3.3
BYLAWS
OF
CENTURYTX, INC.
(the “Corporation”)
1.
Stockholders
(a)
Annual Meeting. The annual meeting of stockholders shall be held for the election of directors each year at
such place, date and time as shall be designated by the Board of Directors. Any other proper business may be transacted at the
annual meeting. If no date for the annual meeting is established or said meeting is not held on the date established as provided
above, a special meeting in lieu thereof may be held or there may be action by written consent of the stockholders on matters to
be voted on at the annual meeting, and such special meeting or written consent shall have for the purposes of these Bylaw or otherwise
all the force and effect of an annual meeting.
(b)
Special Meetings. Special meetings of stockholders may be called by the Chief Executive Officer, if one is
elected, or, if there is no Chief Executive Officer, a President, or by the Board of Directors, but such special meetings may not
be called by any other person or persons. The call for the meeting shall state the place, date, hour and purposes of the meeting.
Only the purposes specified in the notice of special meeting shall be considered or dealt with at such special meeting.
(c)
Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a notice
stating the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and
proxyholders may be deemed to be present and vote at such meeting, and, in the case of a special meeting, the purpose or purposes
of the meeting, shall be given by the Secretary (or other person authorized by these Bylaw or by law) not less than ten (10) nor
more than sixty (60) days before the meeting to each stockholder entitled to vote thereat and to each stockholder who, under the
Certificate of Incorporation or under these Bylaw is entitled to such notice. If mailed, notice is given when deposited in the
mail, postage prepaid, directed to such stockholder at such stockholder’s address as it appears in the records of the Corporation.
Without limiting the manner by which notice otherwise may be effectively given to stockholders, any notice to stockholders may
be given by electronic transmission in the manner provided in Section 232 of the Delaware General Corporation Law (the “DGCL”).
If a meeting is adjourned
to another time or place, notice need not be given of the adjourned meeting if the time and place, if any, and the means of remote
communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned
meeting are announced at the meeting at which the adjournment is taken, except that if the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting.
(d)
Quorum. The holders of a majority in interest of all stock issued, outstanding and entitled to vote at a meeting,
present in person or represented by proxy, shall constitute a quorum. Any meeting may be adjourned from time to time by a majority
of the votes properly cast upon the question, whether or not a quorum is present. The stockholders present at a duly constituted
meeting may continue to transact business until adjournment notwithstanding the withdrawal of enough stockholders to reduce the
voting shares below a quorum.
(e)
Voting and Proxies. Except as otherwise provided by the Certificate of Incorporation or by law, each stockholder
entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder
which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders or to express
consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder
by either written proxy or by a transmission permitted by Section 212(c) of the DGCL, but no proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer period or is irrevocable and coupled with an interest.
Proxies shall be filed with the Secretary of the meeting, or of any adjournment thereof. Except as otherwise limited therein, proxies
shall entitle the persons authorized thereby to vote at any adjournment of such meeting.
(f)
Action at Meeting. When a quorum is present, any matter before the meeting shall be decided by vote of the
holders of a majority of the shares of stock voting on such matter except where a larger vote is required by law, by the Certificate
of Incorporation or by these Bylaw. Any election of directors by stockholders shall be determined by a plurality of the votes cast,
except where a larger vote is required by law, by the Certificate of Incorporation or by these Bylaw. The Corporation shall not
directly or indirectly vote any share of its own stock; provided, however, that the Corporation may vote shares which it holds
in a fiduciary capacity to the extent permitted by law.
(g)
Presiding Officer. Meetings of stockholders shall be presided over by the Chairman of the Board, if one is
elected, or in his or her absence, the Vice Chairman of the Board, if one is elected, or if neither is elected or in their absence,
a President. The Board of Directors shall have the authority to appoint a temporary presiding officer to serve at any meeting of
the stockholders if the Chairman of the Board, the Vice Chairman of the Board or a President is unable to do so for any reason.
(h) Conduct
of Meetings. The Board of Directors may adopt by resolution such rules and regulations for the conduct of the meeting of
stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by
the Board of Directors, the presiding officer of any meeting of stockholders shall have the right and authority to prescribe
such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the
proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed
by the presiding officer of the meeting, may include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those
present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation,
their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv)
restrictions on entry to the
meeting after
the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants.
Unless and to the extent determined by the Board of Directors or the presiding officer of the meeting, meetings of stockholders
shall not be required to be held in accordance with the rules of parliamentary procedure.
(i)
Action without a Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required
or permitted by law to be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders
of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery
to its registered office, by hand or by certified mail, return receipt requested, or to the Corporation’s principal place
of business or to the officer of the Corporation having custody of the minute book. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in
writing.
(j)
Stockholder Lists. The officer who has charge of the stock ledger of the Corporation shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of
each stockholder. Nothing contained in this Section 1(j) shall require the Corporation to include electronic mail addresses or
other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, for a period of at least ten (10) days prior to the meeting in the manner provided by law. The list shall
also be open to the examination of any stockholder during the whole time of the meeting as provided by law.
2.
Directors
(a)
Powers. The business of the Corporation shall be managed by or under the direction of a Board of Directors
who may exercise all the powers of the Corporation except as otherwise provided by law, by the Certificate of Incorporation or
by these Bylaw. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law,
may exercise the powers of the full Board until the vacancy is filled.
(b)
Number and Qualification. Unless otherwise provided in the Certificate of Incorporation or in these Bylaw,
the number of directors which shall constitute the whole board shall be determined from time to time by resolution of the Board
of Directors. Directors need not be stockholders.
(c)
Vacancies; Reduction of Board. A majority of the directors then in office, although less than a quorum, or
a sole remaining Director, may fill vacancies in the Board of Directors occurring for any reason and newly created directorships
resulting from any increase in the authorized number of directors. In lieu of filling any vacancy, the Board of Directors may reduce
the number of directors.
(d)
Tenure. Except as otherwise provided by law, by the Certificate of Incorporation or by these Bylaw, directors
shall hold office until their successors are elected and qualified or until their earlier resignation or removal. Any director
may resign at any time upon notice given in writing or by electronic transmission to the Corporation. Such resignation shall be
effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
(e)
Removal. To the extent permitted by law, a director may be removed from office with or without cause by vote
of the holders of a majority of the shares of stock entitled to vote in the election of directors.
(f)
Meetings. Regular meetings of the Board of Directors may be held without notice at such time, date and place
as the Board of Directors may from time to time determine. Special meetings of the Board of Directors may be called, orally or
in writing, by the Chief Executive Officer, if one is elected, or, if there is no Chief Executive Officer, the President, or by
two or more Directors, designating the time, date and place thereof. Directors may participate in meetings of the Board of Directors
by means of conference telephone or other communications equipment by means of which all directors participating in the meeting
can hear each other, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting.
(g)
Notice of Meetings. Notice of the time, date and place of all special meetings of the Board of Directors shall
be given to each director by the Secretary, or Assistant Secretary, or in case of the death, absence, incapacity or refusal of
such persons, by the officer or one of the directors calling the meeting. Notice shall be given to each director in person, by
telephone, or by facsimile, electronic mail or other form of electronic communications, sent to such director’s business
or home address at least twenty-four (24) hours in advance of the meeting, or by written notice mailed to such director’s
business or home address at least forty-eight (48) hours in advance of the meeting.
(h)
Quorum. At any meeting of the Board of Directors, a majority of the total number of directors shall constitute
a quorum for the transaction of business. Less than a quorum may adjourn any meeting from time to time and the meeting may be held
as adjourned without further notice.
(i)
Action at Meeting. At any meeting of the Board of Directors at which a quorum is present, unless otherwise
provided in the following sentence, a majority of the directors present may take any action on behalf of the Board of Directors,
unless a larger number is required by law, by the Certificate of Incorporation or by these Bylaw. So long as there are two (2)
or fewer Directors, any action to be taken by the Board of Directors shall require the approval of all Directors.
(j) Action
by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a
meeting if all members of the Board of Directors consent thereto in writing or by electronic transmission, and the writing or
writings or electronic transmission or transmissions are filed with the records of the meetings of the Board of
Directors. Such filing
shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained
in electronic form.
(k)
Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors,
establish one or more committees, each committee to consist of one or more directors. The Board of Directors may designate one
or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
Any such committee,
to the extent permitted by law and to the extent provided in the resolution of the Board of Directors, shall have and may exercise
all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power
or authority in reference to the following: (i) approving or adopting, or recommending to the stockholders, any action or matter
expressly required by the DGCL to be submitted to stockholders for approval or (ii) adopting, amending or repealing any provision
of these Bylaw.
Except as the Board
of Directors may otherwise determine, any such committee may make rules for the conduct of its business, but in the absence of
such rules its business shall be conducted so far as possible in the same manner as is provided in these Bylaw for the Board of
Directors. All members of such committees shall hold their committee offices at the pleasure of the Board of Directors, and the
Board may abolish any committee at any time.
3.
Officers
(a)
Enumeration. The officers of the Corporation shall consist of one or more Presidents (who, if there is more
than one, shall be referred to as Co-Presidents), a Treasurer, a Secretary, and such other officers, including, without limitation,
a Chief Executive Officer and one or more Vice Presidents (including Executive Vice Presidents or Senior Vice Presidents), Assistant
Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the Board of Directors may determine. The Board of Directors
may elect from among its members a Chairman of the Board and a Vice Chairman of the Board.
(b)
Election. The Presidents, Treasurer and Secretary shall be elected annually by the Board of Directors at their
first meeting following the annual meeting of stockholders. Other officers may be chosen by the Board of Directors at such meeting
or at any other meeting.
(c)
Qualification. No officer need be a stockholder or Director. Any two or more offices may be held by the same
person. Any officer may be required by the Board of Directors to give bond for the faithful performance of such officer’s
duties in such amount and with such sureties as the Board of Directors may determine.
(d)
Tenure. Except as otherwise provided by the Certificate of Incorporation or by these Bylaw, each of the officers
of the Corporation shall hold office until the first meeting
of the Board of Directors following the next annual meeting of stockholders and
until such officer’s successor is elected and qualified or until such officer’s earlier resignation or removal.
Any officer may resign by delivering his or her written resignation to the Corporation, and such resignation shall be
effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other
event.
(e)
Removal. The Board of Directors may remove any officer with or without cause by a vote of a majority of the
directors then in office.
(f)
Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors.
(g)
Chairman of the Board and Vice Chairman. Unless otherwise provided by the Board of Directors, the Chairman
of the Board of Directors, if one is elected, shall preside, when present, at all meetings of the stockholders and the Board of
Directors. The Chairman of the Board shall have such other powers and shall perform such duties as the Board of Directors may from
time to time designate.
Unless otherwise provided
by the Board of Directors, in the absence of the Chairman of the Board, the Vice Chairman of the Board, if one is elected, shall
preside, when present, at all meetings of the stockholders and the Board of Directors. The Vice Chairman of the Board shall have
such other powers and shall perform such duties as the Board of Directors may from time to time designate.
(h)
Chief Executive Officer. The Chief Executive Officer, if one is elected, shall have such powers and shall
perform such duties as the Board of Directors may from time to time designate.
(i)
Presidents. The Presidents shall, subject to the direction of the Board of Directors, each have general supervision
and control of the Corporation’s business and any action that would typically be taken by a President may be taken by any
Co-President. If there is no Chairman of the Board or Vice Chairman of the Board, a President shall preside, when present, at all
meetings of stockholders and the Board of Directors. The Presidents shall have such other powers and shall perform such duties
as the Board of Directors may from time to time designate.
(j)
Vice Presidents and Assistant Vice Presidents. Any Vice President (including any Executive Vice President
or Senior Vice President) and any Assistant Vice President shall have such powers and shall perform such duties as the Board of
Directors may from time to time designate.
(k)
Treasurer and Assistant Treasurers. The Treasurer shall, subject to the direction of the Board of Directors,
have general charge of the financial affairs of the Corporation and shall cause to be kept accurate books of account. The Treasurer
shall have custody of all funds, securities, and valuable documents of the Corporation, except as the Board of Directors may otherwise
provide. The Treasurer shall have such other powers and shall perform such duties as the Board of Directors may from time to time
designate.
Any Assistant Treasurer
shall have such powers and perform such duties as the Board of Directors may from time to time designate.
(l)
Secretary and Assistant Secretaries. The Secretary shall record the proceedings of all meetings of the stockholders
and the Board of Directors (including committees of the Board) in books kept for that purpose. In the absence of the Secretary
from any such meeting an Assistant Secretary, or if such person is absent, a temporary secretary chosen at the meeting, shall record
the proceedings thereof. The Secretary shall have charge of the stock ledger (which may, however, be kept by any transfer or other
agent of the Corporation) and shall have such other duties and powers as may be designated from time to time by the Board of Directors.
Any Assistant Secretary
shall have such powers and perform such duties as the Board of Directors may from time to time designate.
(m)
Other Powers and Duties. Subject to these Bylaw, each officer of the Corporation shall have in addition to
the duties and powers specifically set forth in these Bylaw, such duties and powers as are customarily incident to such officer’s
office, and such duties and powers as may be designated from time to time by the Board of Directors.
4.
Capital Stock
(a)
Certificates of Stock. Each stockholder shall be entitled to a certificate of the capital stock of the Corporation
in such form as may from time to time be prescribed by the Board of Directors. Such certificate shall be signed by any two authorized
officers of the Corporation. Such signatures may be a facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the time of its issue. Every certificate for shares of stock which are subject to any restriction
on transfer and every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall
contain such legend with respect thereto as is required by law. The Corporation shall be permitted to issue fractional shares.
(b)
Transfers. Subject to any restrictions on transfer, shares of stock may be transferred on the books of the
Corporation by the surrender to the Corporation or its transfer agent of the certificate therefor properly endorsed or accompanied
by a written assignment or power of attorney properly executed, with transfer stamps (if necessary) affixed, and with such proof
of the authenticity of signature as the Corporation or its transfer agent may reasonably require.
(c)
Record Holders. Except as may otherwise be required by law, by the Certificate of Incorporation or by these
Bylaw, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for
all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any transfer, pledge
or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the
requirements of these Bylaw.
It shall be the duty
of each stockholder to notify the Corporation of such stockholder’s post office address.
(d)
Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, or to consent to corporate action in writing without a meeting, or entitled
to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect
of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not precede the date on which it is established, and which shall not be more than sixty (60)
nor less than ten (10) days before the date of such meeting, more than ten (10) days after the date on which the record date for
stockholder consent without a meeting is established, nor more than sixty (60) days prior to any other action. In such case only
stockholders of record on such record date shall be so entitled notwithstanding any transfer of stock on the books of the Corporation
after the record date.
If no record date
is fixed, (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held, (ii) the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall
be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in this state, to its principal place of business, or to an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded, and (iii) the record
date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
(e)
Lost Certificates. The Corporation may issue a new certificate of stock in the place of any certificate theretofore
issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify it against any claim
that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such
new certificate.
5.
Indemnification
(a)
Definitions. For purposes of this Section 5:
(i) “Corporate
Status” describes the status of a person who is serving or has served (A) as a Director of the Corporation, (B) as an
Officer of the Corporation, (C) as a Non-Officer Employee of the Corporation, or (D) as a director, partner, trustee,
officer, employee or agent of any other corporation, partnership, limited liability company, joint venture, trust, employee
benefit plan, foundation, association, organization or other legal entity for which such person is or was serving at the
request of the Corporation. For purposes of this Section 5(a)(i), a Director, Officer or Non-Officer Employee of the
Corporation who is serving or has served as a director, partner, trustee, officer, employee or agent of a Subsidiary shall be
deemed to be serving at the request of the Corporation. Notwithstanding the foregoing, “Corporate Status” shall
not include the status of a person who is serving or has served as a director, officer, employee or agent of a constituent
corporation absorbed in a merger or consolidation transaction with the Corporation
with respect to
such person’s activities prior to said transaction, unless specifically authorized by the Board of Directors or the stockholders
of the Corporation;
(ii)
“Director” means any person who serves or has served the Corporation as a director on the Board of Directors
of the Corporation;
(iii)
“Disinterested Director” means, with respect to each Proceeding in respect of which indemnification is
sought hereunder, a Director of the Corporation who is not and was not a party to such Proceeding;
(iv)
“Expenses” means all reasonable attorneys fees, retainers, court costs, transcript costs, fees of expert
witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers),
travel expenses, duplicating costs, printing and binding costs, costs of preparation of demonstrative evidence and other courtroom
presentation aids and devices, costs incurred in connection with document review, organization, imaging and computerization, telephone
charges, postage, delivery service fees, and all other disbursements, costs or expenses of the type customarily incurred in connection
with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settling or
otherwise participating in, a Proceeding;
(v)
“Liabilities” means judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts
paid in settlement;
(vi)
“Non-Officer Employee” means any person who serves or has served as an employee or agent of the Corporation,
but who is not or was not a Director or Officer;
(vii)
“Officer” means any person who serves or has served the Corporation as an officer of the Corporation
appointed by the Board of Directors of the Corporation;
(viii) “Proceeding”
means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, inquiry, investigation,
administrative hearing or other proceeding, whether civil, criminal, administrative, arbitrative or investigative; and
(ix) “Subsidiary”
shall mean any corporation, partnership, limited liability company joint venture, trust or other entity of which the Corporation
owns (either directly or through or together with another Subsidiary of the Corporation) either (i) a general partner, managing
member or other similar interest or (ii) (A) 50% or more of the voting power of the voting capital equity interests of such corporation,
partnership, limited liability company, joint venture or other entity, or (B) 50% or more of the outstanding voting capital stock
or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other entity.
(b)
Indemnification of Directors and Officers. Subject to the operation of Section 5(d) of these Bylaw, each
Director and Officer shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as
the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment
permits the Corporation
to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), and to
the extent authorized in subsections (i) through (iv) of this Section 5(b).
(i)
Actions, Suits and Proceedings Other than By or In the Right of the Corporation. Each Director and Officer
shall be indemnified and held harmless by the Corporation against any and all Expenses and Liabilities that are incurred or paid
by such Director or Officer or on such Director’s or Officer’s behalf in connection with any Proceeding or any claim,
issue or matter therein (other than an action by or in the right of the Corporation), which such Director or Officer is, or is
threatened to be made, a party to or participant in by reason of such Director’s or Officer’s Corporate Status, if
such Director or Officer acted in good faith and in a manner such Director or Officer reasonably believed to be in or not opposed
to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or
her conduct was unlawful.
(ii)
Actions, Suits and Proceedings By or In the Right of the Corporation. Each Director and Officer shall be indemnified
and held harmless by the Corporation against any and all Expenses that are incurred by such Director or Officer or on such Director’s
or Officer’s behalf in connection with any Proceeding or any claim, issue or matter therein by or in the right of the Corporation,
which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director’s
or Officer’s Corporate Status, if such Director or Officer acted in good faith and in a manner such Director or Officer reasonably
believed to be in or not opposed to the best interests of the Corporation; provided, however, that no indemnification shall be
made under this Section 5(b)(ii) in respect of any claim, issue or matter as to which such Director or Officer shall have been
finally adjudged by a court of competent jurisdiction to be liable to the Corporation, unless, and only to the extent that, the
Court of Chancery or another court in which such Proceeding was brought shall determine upon application that, despite adjudication
of liability, but in view of all the circumstances of the case, such Director or Officer is fairly and reasonably entitled to indemnification
for such Expenses that such court deems proper.
(iii)
Survival of Rights. The rights of indemnification provided by this Section 5(b) shall continue as to a Director
or Officer after he or she has ceased to be a Director or Officer and shall inure to the benefit of his or her heirs, executors,
administrators and personal representatives.
(iv)
Actions by Directors or Officers. Notwithstanding the foregoing, the Corporation shall indemnify any Director
or Officer seeking indemnification in connection with a Proceeding initiated by such Director or Officer only if such Proceeding
(including any parts of such Proceeding not initiated by such Director or Officer) was authorized in advance by the Board of Directors
of the Corporation, unless such Proceeding was brought to enforce such Officer’s or Director’s rights to indemnification
or, in the case of Directors, advancement of Expenses under these Bylaw in accordance with the provisions set forth herein.
(c)
Indemnification of Non-Officer Employees. Subject to the operation of Section 5(d) of these Bylaw, each Non-Officer
Employee may, in the discretion of the Board of Directors of the Corporation, be indemnified by the Corporation to the fullest
extent authorized by the DGCL, as the same exists or may hereafter be amended, against any or all Expenses and
Liabilities that are incurred by
such Non-Officer Employee or on such Non-Officer Employee’s behalf in connection with any threatened, pending or
completed Proceeding, or any claim, issue or matter therein, which such Non-Officer Employee is, or is threatened to be made,
a party to or participant in by reason of such Non-Officer Employee’s Corporate Status, if such Non-Officer Employee
acted in good faith and in a manner such Non-Officer Employee reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The rights of indemnification provided by this Section 5(c) shall exist as to a Non-Officer Employee
after he or she has ceased to be a Non-Officer Employee and shall inure to the benefit of his or her heirs, personal
representatives, executors and administrators. Notwithstanding the foregoing, the Corporation may indemnify any Non-Officer
Employee seeking indemnification in connection with a Proceeding initiated by such Non-Officer Employee only if such
Proceeding was authorized in advance by the Board of Directors of the Corporation.
(d)
Determination. Unless ordered by a court, no indemnification shall be provided pursuant to this Section 5
to a Director, to an Officer or to a Non-Officer Employee unless a determination shall have been made that such person acted in
good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and,
with respect to any criminal Proceeding, such person had no reasonable cause to believe his or her conduct was unlawful. Such determination
shall be made by (i) a majority vote of the Disinterested Directors, even though less than a quorum of the Board of Directors,
(ii) a committee comprised of Disinterested Directors, such committee having been designated by a majority vote of the Disinterested
Directors (even though less than a quorum), (iii) if there are no such Disinterested Directors, or if a majority of Disinterested
Directors so directs, by independent legal counsel in a written opinion, or (iv) by the stockholders of the Corporation.
(e)
Advancement of Expenses to Directors Prior to Final Disposition.
(i)
The Corporation shall advance all Expenses incurred by or on behalf of any Director in connection with any Proceeding
in which such Director is involved by reason of such Director’s Corporate Status within thirty (30) days after the receipt
by the Corporation of a written statement from such Director requesting such advance or advances from time to time, whether prior
to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred
by such Director and shall be preceded or accompanied by an undertaking by or on behalf of such Director to repay any Expenses
so advanced if it shall ultimately be determined that such Director is not entitled to be indemnified against such Expenses. Notwithstanding
the foregoing, the Corporation shall advance all Expenses incurred by or on behalf of any Director seeking advancement of expenses
hereunder in connection with a Proceeding initiated by such Director only if such Proceeding (including any parts of such Proceeding
not initiated by such Director) was (A) authorized by the Board of Directors of the Corporation, or (B) brought to enforce such
Director’s rights to indemnification or advancement of Expenses under these Bylaw.
(ii) If
a claim for advancement of Expenses hereunder by a Director is not paid in full by the Corporation within thirty (30) days
after receipt by the Corporation of documentation of Expenses and the required undertaking, such Director may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of the claim and if successful in
whole or in part,
such Director shall also be entitled to be paid the expenses of prosecuting such claim. The failure of the Corporation (including
its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning
the permissibility of such advancement of Expenses under this Section 5 shall not be a defense to an action brought by a Director
for recovery of the unpaid amount of an advancement claim and shall not create a presumption that such advancement is not permissible.
The burden of proving that a Director is not entitled to an advancement of expenses shall be on the Corporation.
(iii)
In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking,
the Corporation shall be entitled to recover such expenses upon a final adjudication that the Director has not met any applicable
standard for indemnification set forth in the DGCL.
(f)
Advancement of Expenses to Officers and Non-Officer Employees Prior to Final Disposition.
(i)
The Corporation may, at the discretion of the Board of Directors of the Corporation, advance any or all Expenses
incurred by or on behalf of any Officer or any Non-Officer Employee in connection with any Proceeding in which such person is involved
by reason of his or her Corporate Status as an Officer or Non-Officer Employee upon the receipt by the Corporation of a statement
or statements from such Officer or Non-Officer Employee requesting such advance or advances from time to time, whether prior to
or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by
such Officer or Non-Officer Employee and shall be preceded or accompanied by an undertaking by or on behalf of such person to repay
any Expenses so advanced if it shall ultimately be determined that such Officer or Non-Officer Employee is not entitled to be indemnified
against such Expenses.
(ii)
In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking,
the Corporation shall be entitled to recover such expenses upon a final adjudication that the Officer or Non-Officer Employee has
not met any applicable standard for indemnification set forth in the DGCL.
(g)
Contractual Nature of Rights.
(i)
The provisions of this Section 5 shall be deemed to be a contract between the
Corporation and each Director and Officer entitled to the benefits hereof at any time while this Section 5 is in effect, in
consideration of such person’s past or current and any future performance of services for the Corporation. Neither
amendment, repeal or modification of any provision of this Section 5 nor the adoption of any provision of the Certificate of
Incorporation inconsistent with this Section 5 shall eliminate or reduce any right conferred by this Section 5 in respect of
any act or omission occurring, or any cause of action or claim that accrues or arises or any state of facts existing, at the
time of or before such amendment, repeal, modification or adoption of an inconsistent provision (even in the case of a
proceeding based on such a state of facts that is commenced after such time), and all rights to indemnification and
advancement of Expenses granted herein or arising out of any act or omission shall vest at the time of the act or omission in
question, regardless of when or if any proceeding with respect to such act or omission
is commenced. The
rights to indemnification and to advancement of expenses provided by, or granted pursuant to, this Section 5 shall continue notwithstanding
that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs,
executors, administrators, legatees and distributees of such person.
(ii)
If a claim for indemnification hereunder by a Director or Officer is not paid in full by the Corporation within sixty
(60) days after receipt by the Corporation of a written claim for indemnification, such Director or Officer may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim, and if successful in whole or in part, such Director
or Officer shall also be entitled to be paid the expenses of prosecuting such claim. The failure of the Corporation (including
its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning
the permissibility of such indemnification under this Section 5 shall not be a defense to an action brought by a Director or Officer
for recovery of the unpaid amount of an indemnification claim and shall not create a presumption that such indemnification is not
permissible. The burden of proving that a Director or Officer is not entitled to indemnification shall be on the Corporation.
(iii)
In any suit brought by a Director or Officer to enforce a right to indemnification hereunder, it shall be a defense
that such Director or Officer has not met any applicable standard for indemnification set forth in the DGCL.
(h)
Non-Exclusivity of Rights. The rights to indemnification and advancement of Expenses set forth in this Section
5 shall not be exclusive of any other right which any Director, Officer, or Non-Officer Employee may have or hereafter acquire
under any statute, provision of the Certificate or these Bylaw, agreement, vote of stockholders or Disinterested Directors or otherwise.
(i)
Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any Director, Officer
or Non-Officer Employee against any liability of any character asserted against or incurred by the Corporation or any such Director,
Officer or Non-Officer Employee, or arising out of any such person’s Corporate Status, whether or not the Corporation would
have the power to indemnify such person against such liability under the DGCL or the provisions of this Section 5.
(j)
Other Indemnification. The Corporation’s obligation, if any, to indemnify or provide advancement of
Expenses to any person under this Section 5 as a result of such person serving, at the request of the Corporation, as a director,
partner, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise shall be reduced by any amount such person may collect as indemnification or advancement of Expenses from
such other corporation, partnership, joint venture, trust, employee benefit plan or enterprise (the “Primary Indemnitor”).
Any indemnification or advancement of Expenses under this Section 5 owed by the Corporation as a result of a person serving, at
the request of the Corporation, as a director, partner, trustee, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise shall only be in excess of, and shall be secondary to, the indemnification
or advancement of Expenses available from the applicable Primary Indemnitor(s) and any applicable insurance policies.
6.
Miscellaneous Provisions
(a)
Fiscal Year. Except as otherwise determined by the Board of Directors, the fiscal year of the Corporation
shall end on December 31 of each year.
(b)
Seal. The Board of Directors shall have power to adopt and alter the seal of the Corporation.
(c)
Execution of Instruments. Subject to any limitations which may be set forth in a resolution of the Board of
Directors, all deeds, leases, transfers, contracts, bonds, notes and other obligations to be entered into by the Corporation in
the ordinary course of its business without director action may be executed on behalf of the Corporation by, a President, or by
any other officer, employee or agent of the Corporation as the Board of Directors may authorize.
(d)
Voting of Securities. Unless the Board of Directors otherwise provides, a President, any Vice President or
the Treasurer may waive notice of and act on behalf of this Corporation, or appoint another person or persons to act as proxy or
attorney in fact for this Corporation with or without discretionary power and/or power of substitution, at any meeting of stockholders
or shareholders of any other corporation or organization, any of whose securities are held by this Corporation.
(e)
Resident Agent. The Board of Directors may appoint a resident agent upon whom legal process may be served
in any action or proceeding against the Corporation.
(f)
Corporate Records. The original or attested copies of the Certificate of Incorporation, Bylaw and records
of all meetings of the incorporators, stockholders and the Board of Directors and the stock and transfer records, which shall contain
the names of all stockholders, their record addresses and the amount of stock held by each, shall be kept at the principal office
of the Corporation, at the office of its counsel, or at an office of its transfer agent.
(g)
Certificate of Incorporation. All references in these Bylaw to the Certificate of Incorporation shall be deemed
to refer to the Certificate of Incorporation of the Corporation, as amended and in effect from time to time.
(h)
Amendments. These Bylaw may be altered, amended or repealed, and new Bylaw may be adopted, by the stockholders
or by the Board of Directors; provided, that (a) the Board of Directors may not alter, amend or repeal any provision of these Bylaw
which by law, by the Certificate of Incorporation or by these Bylaw requires action by the stockholders and (b) any alteration,
amendment or repeal of these Bylaw by the Board of Directors and any new By-law adopted by the Board of Directors may be altered,
amended or repealed by the stockholders.
(i)
Waiver of Notice. Whenever notice is required to be given under any provision of these Bylaw, a written waiver,
signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before
or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at
a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose
of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be
transacted at, nor the purpose of, any meeting needs to be specified in any written waiver
or any waiver by electronic transmission.
Adopted: February 25, 2021
Exhibit 4.2
Execution Version
CENTURY THERAPEUTICS,
INC.
INVESTORS’
RIGHTS AGREEMENT
February 25, 2021
Table
of Contents
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Page
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1.
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Definitions
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1
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2.
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Registration Rights
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4
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2.1
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Demand Registration
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4
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2.2
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Company Registration
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6
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2.3
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Underwriting Requirements
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6
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2.4
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Obligations of the Company
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8
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2.5
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Furnish Information
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9
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2.6
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Expenses of Registration
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9
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2.7
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Delay of Registration
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10
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2.8
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Indemnification
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10
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2.9
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Reports Under Exchange Act
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12
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2.10
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Limitations on Subsequent Registration Rights
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13
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2.11
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“Market Stand-off” Agreement
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13
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2.12
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Restrictions on Transfer
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14
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2.13
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Termination of Registration Rights
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15
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3.
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Rights to Future Stock Issuances
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15
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3.1
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Right of First Offer
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15
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3.2
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Termination
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17
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4.
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Additional Covenants
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17
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4.1
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Information Rights
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17
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4.2
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Successor Indemnification
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18
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4.3
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Inspection
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18
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4.4
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Observer Rights
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18
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4.5
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Termination of Information and Observer Rights
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19
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4.6
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Confidentiality
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19
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4.7
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Insurance
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19
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4.8
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Employee Agreements
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20
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4.9
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Employee Stock
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20
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4.10
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Reserved
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20
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4.11
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Matters Requiring Preferred Director Approval
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20
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4.12
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Board Matters
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21
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4.13
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Expenses of Counsel
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21
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4.14
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Indemnification Matters
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22
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4.15
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Right to Conduct Activities
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22
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4.16
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Business of the Company
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22
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4.17
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Real Property Holding Corporation
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23
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4.18
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No Use of Trademarks or Logos
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23
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4.19
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Termination of Covenants
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23
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5.
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Tag-Along Rights
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23
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6.
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Miscellaneous
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24
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6.1
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Successors
and Assigns
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24
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6.2
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Governing Law
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25
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6.3
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Counterparts
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25
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6.4
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Titles and Subtitles
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25
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6.5
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Notices
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25
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6.6
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Amendments and Waivers
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26
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6.7
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Severability
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26
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6.8
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Aggregation of Stock
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26
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6.9
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Entire Agreement
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27
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6.10
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Dispute Resolution
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27
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6.11
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Delays or Omissions
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27
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6.12
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Acknowledgment
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27
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6.13
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Submission to Jurisdiction
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27
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6.14
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Massachusetts Business
Trust
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28
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INVESTORS’
RIGHTS AGREEMENT
THIS INVESTORS’
RIGHTS AGREEMENT, is made as of the 25th day of February, 2021, by and among Century Therapeutics, Inc., a Delaware
corporation (the “Company”), and each of the investors listed on Schedule A hereto (each, an “Investor”
and collectively, the “Investors”).
RECITALS
WHEREAS,
certain of the Investors (the “Existing Investors”) hold shares of the Company’s Series A Preferred Stock,
Series B Preferred Stock and/or shares of Common Stock issued upon conversion thereof;
WHEREAS,
certain of the Investors are parties to that certain Series C Preferred Stock Purchase Agreement of even date herewith by and among
the Company and such Investors (the “Purchase Agreement”), under which certain of the Company’s and such
Investors’ obligations are conditioned upon the execution and delivery of this Agreement by such Investors, the Existing
Investors and the Company.
NOW, THEREFORE,
the parties hereby agree as follows:
1.
Definitions. For purposes of this Agreement:
1.1
“Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly,
controls, is controlled by, or is under common control with such Person, including, without limitation, any general partner, managing
member, officer, director or trustee of such Person, or any venture capital fund or other investment fund now or hereafter existing
that is controlled by one (1) or more general partners, managing members or investment advisers (including but not limited to registered
investment advisers) of, or shares the same management company or investment adviser with, such Person.
1.2
“Bayer” means Bayer Healthcare LLC.
1.3
“Board” means the Board of Directors of the Company.
1.4
“Casdin” means Casdin Capital, LLC.
1.5
“Certificate of Incorporation” means the Company’s Amended and Restated Certificate of Incorporation
(as it may be amended and/or restated from time to time).
1.6
“Common Stock” means shares of the Company’s common stock, par value $0.0001 per share.
1.7
“Damages” means any loss, damage, claim or liability (joint or several) to which a party hereto may become
subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, claim or liability
(or any action in respect thereof) arises out of or is based upon: (i) any untrue statement or alleged untrue
statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus
or final
prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation
or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any
state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities
law.
1.8
“Derivative Securities” means any securities or rights convertible into, or exercisable or exchangeable
for (in each case, directly or indirectly), Common Stock, including options and warrants.
1.9
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
1.10
“Excluded Registration” means (i) a registration relating to the sale or grant of securities to employees
of the Company or a subsidiary pursuant to a stock option, stock purchase, equity incentive or similar plan; (ii) a registration
relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information
as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (iv) a registration
in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being
registered.
1.11
“Form S-1” means such form under the Securities Act as in effect on the date hereof or any successor
registration form under the Securities Act subsequently adopted by the SEC.
1.12
“Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration
form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference
to other documents filed by the Company with the SEC.
1.13
“FCDI” means FUJIFILM Cellular Dynamics Inc.
1.14
“GAAP” means generally accepted accounting principles in the United States.
1.15
“Holder” means any holder of Registrable Securities who is a party to this
Agreement.
1.16
“Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
life partner or similar statutorily recognized domestic partner, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including, adoptive relationships, of a natural person referred to herein.
1.17
“Initiating Holders” means, collectively, Holders who properly initiate
a registration request under this Agreement.
1.18
“IPO” means the Company’s first underwritten public offering of its Common
Stock under the Securities Act.
1.19
“Key Employee” means any executive-level employee (including, without limitation, any Chief Executive
Officer, Chief Technology Officer, Chief Scientific Officer, Chief of Research and Development and any division director and vice
president level positions) as well as any employee or consultant who either alone or in concert with others, develops, invents,
programs or designs any Company Intellectual Property (as defined in the Purchase Agreement).
1.20
“Major Investor” means any Investor that, individually or together with such Investor’s Affiliates,
holds at least 750,000 shares of Common Stock issuable or issued upon conversion of the Preferred Stock (as adjusted for
any stock split, stock dividend, combination, or other recapitalization or reclassification effected after the date hereof).
1.21
“New Securities” means, collectively, equity securities of the Company, whether or not currently authorized,
as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may
become, convertible or exchangeable into or exercisable for such equity securities.
1.22
“Person” means any individual, corporation, partnership, trust, limited
liability company, association or other entity.
1.23
“Preferred Directors” means, collectively, the Series A Directors, the Series B Director and the Series
C Director.
1.24
“Preferred Stock” means, collectively, the Series A Preferred Stock, the Series B Preferred Stock and
the Series C Preferred Stock.
1.25
“Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of the Preferred
Stock; (ii) any Common Stock, or any Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of
any other securities of the Company, acquired by the Investors after the date hereof; (iii) any Common Stock held by the
Investors as of the date hereof; and (iv) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant,
right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement
of, the shares referenced in clauses (i), (ii) and (iii) above; excluding in all cases, however, any Registrable Securities sold
by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Section 6.1,
and excluding for purposes of Section 2 any shares for which registration rights have terminated pursuant to Section
2.13 of this Agreement.
1.26
“Registrable Securities then outstanding” means the number of shares determined by adding the number
of shares of outstanding Common Stock that are Registrable Securities and the number of shares of Common Stock issuable (directly
or indirectly) pursuant to then exercisable and/or convertible securities that are Registrable Securities.
1.27
“Restricted Securities” means the securities of the Company required to bear the legend set forth in
Section 2.12(b) hereof.
1.28
“SEC” means the Securities and Exchange Commission.
1.29
“SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities
Act.
1.30
“SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.
1.31
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
1.32
“Selling Expenses” means all underwriting discounts, selling commissions, and stock transfer taxes applicable
to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements
of the Selling Holder Counsel and Major Investor Counsel borne and paid by the Company as provided in Section 2.6.
1.33
“Series A Directors” means any director of the Company that the holders of record of the Series A Preferred
Stock are entitled to elect pursuant to the Certificate of Incorporation.
1.34
“Series A Preferred Stock” means shares of the Company’s Series A Preferred Stock, par value $0.0001
per share.
1.35
“Series B Director” means any director of the Company that the holders of record of the Series B Preferred
Stock are entitled to elect pursuant to the Certificate of Incorporation.
1.36
“Series B Preferred Stock” means shares of the Company’s Series B Preferred Stock, par value $0.0001
per share.
1.37
“Series C Director” means any director of the Company that the holders of record of the Series C Preferred
Stock are entitled to elect pursuant to the Certificate of Incorporation.
1.38
“Series C Preferred Stock” means shares of the Company’s Series C Preferred Stock, par value $0.0001
per share.
1.39
“Versant” means Versant Venture Capital VI, L.P and Versant Vantage II, L.P.
2.
Registration Rights. The Company covenants and agrees as follows:
2.1
Demand Registration.
(a)
Form S-1 Demand. If at any time after the earlier of (i) five (5) years after the date of this Agreement or (ii)
one hundred eighty (180) days after the effective date of the registration statement for the IPO, the Company receives a request
from Holders of a majority of the Common Stock issued or issuable upon conversion of the Preferred Stock then outstanding that
the Company file a Form S-1 registration statement with respect to at least forty percent (40%) of
the Registrable Securities then
outstanding, then the Company shall (x) within ten (10) days after the date such request is given, give notice thereof (the “Demand
Notice”) to all Holders other than the Initiating Holders; and (y) as soon as practicable, and in any event within sixty
(60) days after the date such request is given by the Initiating Holders, file a Form S-1 registration statement under the Securities
Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities
requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company
within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Sections 2.1(c)
and 2.3.
(b)
Form S-3 Demand. If at any time when it is eligible to use a Form S-3 registration statement, the Company receives
a request from Holders of at least thirty percent (30%) of the Registrable Securities then outstanding that the Company file a
Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate
offering price, net of Selling Expenses, of at least $5,000,000, then the Company shall (i) within ten (10) days after the date
such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable,
and in any event within forty-five (45) days after the date such request is given by the Initiating Holders, file a Form S-3 registration
statement under the Securities Act covering all Registrable Securities requested to be included in such registration by any other
Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice
is given, and in each case, subject to the limitations of Sections 2.1(c) and 2.3.
(c)
Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this
Section 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment
of the Board it would be materially detrimental to the Company and its stockholders for such registration statement to either become
effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because
such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction
involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose
for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange
Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect
to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than ninety (90) days after the request
of the Initiating Holders is given; provided, however, that the Company may not invoke this right more than once
in any twelve (12) month period; and provided, further that the Company shall not register any securities for its
own account or that of any other stockholder during such ninety day period other than an Excluded Registration.
(d)
The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section
2.1(a), (i) during the period that is sixty (60) days before the Company’s good faith estimate of the date of
filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Company-initiated registration,
provided, that the Company is actively employing in good faith commercially reasonable efforts to cause such registration
statement to become effective; (ii) after the Company has effected two (2) registrations pursuant to Section 2.1(a); or
(iii) if the Initiating Holders propose to dispose of shares
of Registrable Securities that may be immediately registered on Form
S-3 pursuant to a request made pursuant to Section 2.1(b). The Company shall not be obligated to effect, or to take any
action to effect, any registration pursuant to Section 2.1(b) (i) during the period that is thirty (30) days before the
Company’s good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after the effective
date of, a Company-initiated registration, provided, that the Company is actively employing in good faith commercially reasonable
efforts to cause such registration statement to become effective; or (ii) if the Company has effected two (2) registrations pursuant
to Section 2.1(b) within the twelve (12) month period immediately preceding the date of such request. A registration shall
not be counted as “effected” for purposes of this Section 2.1(d) until such time as the applicable registration
statement has been declared effective by the SEC, unless the Initiating Holders withdraw their request for such registration, elect
not to pay the registration expenses therefor, and forfeit their right to one (1) demand registration statement pursuant to Section
2.6, in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Section
2.1(d).
2.2
Company Registration. If the Company proposes to register (including, for this purpose, a registration effected by
the Company for stockholders other than the Holders) any of its securities under the Securities Act in connection with the public
offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly
give each Holder notice of such registration. Upon the request of each Holder given within twenty (20) days after such notice is
given by the Company, the Company shall, subject to the provisions of Section 2.3, cause to be registered all of the Registrable
Securities that each such Holder has requested to be included in such registration. The Company shall have the right to terminate
or withdraw any registration initiated by it under this Section 2.2 before the effective date of such registration, whether
or not any Holder has elected to include Registrable Securities in such registration. The expenses (other than Selling Expenses)
of such withdrawn registration shall be borne by the Company in accordance with Section 2.6.
2.3
Underwriting Requirements.
(a)
If, pursuant to Section 2.1, the Initiating Holders intend to distribute the Registrable Securities covered by their
request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 2.1,
and the Company shall include such information in the Demand Notice. The underwriter(s) will be selected by the Company and shall
be reasonably acceptable to a majority in interest of the Initiating Holders. In such event, the right of any Holder to include
such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in
such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in
Section 2.4(e)) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Section 2.3, if the managing underwriter(s) advise(s) the Initiating Holders
in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders
shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable
Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including
the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities
owned by each Holder or
in such other proportion as shall mutually be agreed to by all such selling Holders; provided, however, that the
number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other
securities are first entirely excluded from the underwriting. To facilitate the allocation of shares in accordance with the above
provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100)
shares. For purposes of the provision in this Section 2.3(a) concerning apportionment, for any selling Holder that is a
partnership, limited liability company, or corporation, the partners, members, retired partners, retired members, stockholders,
and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and
retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,”
and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable
Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.
(b)
In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Section
2.2, the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless
the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such
quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company.
If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering
exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine
is compatible with the success of the offering, then the Company shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine
will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities
requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering
shall be allocated among the selling Holders in proportion (as nearly as practicable to) the number of Registrable Securities owned
by each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders. To facilitate the
allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated
to any Holder to the nearest one hundred (100) shares. Notwithstanding the foregoing, in no event shall (i) the number of Registrable
Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company) are
first entirely excluded from the offering, or (ii) the number of Registrable Securities included in the offering be reduced below
thirty percent (30%) of the total number of securities included in such offering, unless such offering is the IPO, in which case
the selling Holders may be excluded further if the underwriters make the determination described above and no other stockholder’s
securities are included in such offering. For purposes of the provision in this Section 2.3(b) concerning apportionment,
for any selling Holder that is a partnership, limited liability company, or corporation, the partners, members, retired partners,
retired members, stockholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners,
retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed
to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall
be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,”
as defined in this sentence.
(c)
For purposes of Section 2.1, a registration shall not be counted as “effected” if, as a result of an
exercise of the underwriter’s cutback provisions in Section 2.3(a), fewer than the total number of Registrable Securities
that Holders have requested to be included in such registration statement are actually included.
2.4
Obligations of the Company. Whenever required under this Section 2 to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably possible:
(a)
prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially
reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority
of the Common Stock issued or issuable upon conversion of the Preferred Stock then outstanding registered thereunder, keep such
registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated
in the registration statement has been completed; provided, however, that (i) such one hundred twenty (120) day period
shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Stock
(or other securities) of the Company, from selling any securities included in such registration, and (ii) in the case of any registration
of Registrable Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with
applicable SEC rules, such one hundred twenty (120) day period shall be extended for up to ninety (90) days, if necessary, to keep
the registration statement effective until all such Registrable Securities are sold;
(b)
prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in
connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition
of all securities covered by such registration statement;
(c)
furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by
the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of
their Registrable Securities;
(d)
use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under
such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided
that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such
states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(e)
in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement,
in usual and customary form, with the underwriter(s) of such offering;
(f)
use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement
to be listed on a national securities exchange or
trading system and each securities exchange and trading system (if any) on which
similar securities issued by the Company are then listed;
(g)
provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide
a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;
(h)
promptly make available for inspection by the selling Holders, any managing underwriter(s) participating in any disposition
pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected
by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause
the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested
by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy
of the information in such registration statement and to conduct appropriate due diligence in connection therewith;
(i)
notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement
has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and
(j)
after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company
amend or supplement such registration statement or prospectus.
In addition, the Company
shall ensure that, at all times after any registration statement covering a public offering of securities of the Company under
the Securities Act shall have become effective, its insider trading policy shall provide that the Company’s directors may
implement a trading program under Rule 10b5-1 of the Exchange Act pursuant to the terms of such insider trading policy.
2.5
Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant
to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the
Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such
securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.
2.6
Expenses of Registration. All expenses (other than Selling Expenses) incurred in connection with registrations, filings,
or qualifications pursuant to Section 2, including all registration, filing, and qualification fees; printers’ and
accounting fees; fees and disbursements of counsel for the Company; the reasonable fees and disbursements, not to exceed $35,000,
of one (1) counsel for the selling Holders (“Selling Holder Counsel”); and at the request of the Major Investors,
the reasonable fees and disbursements of one (1) counsel for the Major Investors (“Major Investor Counsel”),
shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently withdrawn
at the request of the
Holders of a majority of the Common Stock issued or issuable upon conversion of the Preferred Stock to be
registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities
that were to be included in the withdrawn registration), unless the Holders of a majority of the Common Stock issued or issuable
upon conversion of the Preferred Stock agree to forfeit their right to one registration pursuant to Sections 2.1(a) or 2.1(b),
as the case may be; provided, further that if, at the time of such withdrawal, the Holders shall have learned of
a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of
their request and have withdrawn the request with reasonable promptness after learning of such information then the Holders shall
not be required to pay any of such expenses and shall not forfeit their right to one registration pursuant to Sections 2.1(a)
or 2.1(b). All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be
borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.
2.7
Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying
any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation
or implementation of this Section 2.
2.8
Indemnification. If any Registrable Securities are included in a registration statement under this Section 2:
(a)
To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members,
officers, directors, and stockholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter
(as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter,
controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating
or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however,
that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such
claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably
withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions
made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling
Person, or other aforementioned Person expressly for use in connection with such registration.
(b)
To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company,
and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the
Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in
the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such
underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon
actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling
Holder expressly for use in connection with such registration; and each such selling Holder will pay to the Company and each other
aforementioned Person any legal
or other expenses reasonably incurred thereby in connection with investigating or defending any
claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity
agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding
if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided,
further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Sections
2.8(b) and 2.8(d) exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder),
except in the case of fraud or willful misconduct by such Holder.
(c)
Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action
(including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will,
if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, give the indemnifying
party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the
extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given,
and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified
party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right
to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between
such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying
party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.8, to the extent that such failure materially prejudices the indemnifying party’s
ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 2.8.
(d)
To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i)
any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.8
but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding
the fact that this Section 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any party hereto for which indemnification is provided under this Section 2.8, then, and
in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they
may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the
indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such
loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault
of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue
or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information
supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access
to information,
and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case (x) no
Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered
and sold by such Holder pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation; and provided, further that in no event shall a Holder’s liability pursuant to
this Section 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Section 2.8(b), exceed
the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of
willful misconduct or fraud by such Holder.
(e)
Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions
in the underwriting agreement shall control.
(f)
Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering,
the obligations of the Company and Holders under this Section 2.8 shall survive the completion of any offering of Registrable
Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.
2.9
Reports Under Exchange Act. With a view to making available to the Holders the benefits of SEC Rule 144 and any other
rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration
or pursuant to a registration on Form S-3, the Company shall:
(a)
make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144,
at all times after the effective date of the registration statement filed by the Company for the IPO;
(b)
use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of
the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements);
and
(c)
furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate,
a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety
(90) days after the effective date of the registration statement filed by the Company for the IPO), the Securities Act, and the
Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant
whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies); and (ii) such other information
as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such
securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange
Act) or pursuant to Form S-3 (at any time after the Company so qualifies to use such form).
2.10
Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not,
without the prior written consent of the Holders of a majority of the Common Stock issued or issuable upon conversion of the Preferred
Stock then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would
allow such holder or prospective holder (i) to include such securities in any registration unless, under the terms of such agreement,
such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of
such securities will not reduce the number of the Registrable Securities of the Holders that are included or (ii) to initiate a
demand for registration of any securities held by such holder or prospective holder.
2.11
“Market Stand-off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent
of the managing underwriter, during the period commencing on the date of the final prospectus relating to the IPO and ending on
the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days), (i) lend;
offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant
any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock
or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock held immediately prior
to the effectiveness of the registration statement for the IPO or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise.
The foregoing provisions of this Section 2.11 shall not apply to (a) the sale of any shares to an underwriter pursuant to
an underwriting agreement, or (b) the transfer of any shares to any trust for the direct or indirect benefit of the Holder or the
immediate family of the Holder, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth
herein, or (c) the transfer of any shares owned by a Holder in the Company to its Affiliates, provided that the Affiliate of the
Holder agrees to be bound in writing by the restrictions set forth herein, or (d) shares subscribed for or purchased by a Holder
in the open market or in such IPO, and provided further that any such transfer in the case of (b) or (c) above shall not involve
a disposition for value, and shall be applicable to the Holders only if all officers and directors and all stockholders individually
owning more than one percent (1%) of the Company’s outstanding Common Stock (after giving effect to conversion into Common
Stock of all outstanding Preferred Stock) are subject to the same restrictions. The underwriters in connection with such registration
are intended third party beneficiaries of this Section 2.11 and shall have the right, power, and authority to enforce the
provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably
requested by the underwriters in connection with such registration that are consistent with this Section 2.11 or that are
necessary to give further effect thereto. In the event that the Company or the managing underwriter waives or terminates any of
the restrictions contained in this Section 2.11 or in a lock-up agreement with respect to the securities of any Holder,
officer, director or greater than one-percent stockholder of the Company (in any such case, the “Released Securities”),
the restrictions contained in this Section 2.11 and in any lock-up agreements executed by the Holders shall be waived or
terminated, as applicable, to the same extent and with respect to the same percentage of securities of each Holder as the percentage
of Released Securities represent with respect to the securities held by the applicable Holder, officer, director or greater than
one-percent stockholder.
2.12
Restrictions on Transfer.
(a)
The Preferred Stock and the Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company
shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge, or
transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions
of the Securities Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Preferred Stock and
Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions
specified in this Agreement. The Company may, in its sole discretion, require a transferring Holder to pay the Company’s
reasonable out-of-pocket expenses in connection with a transfer, unless the transferee is an Affiliate of the transferring Holder.
Notwithstanding the foregoing, the Company shall not require any transferee of shares pursuant to an effective registration statement
or, following the IPO, SEC Rule 144, in each case, to be bound by the terms of this Agreement.
(b)
Each certificate, instrument, or book entry representing (i) the Preferred Stock, (ii) the Registrable Securities, and (iii)
any other securities issued in respect of the securities referenced in clauses (i) and (ii), upon any stock split, stock dividend,
recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Section 2.12(c))
bear a legend substantially in the following form:
THE SECURITIES REPRESENTED HEREBY
HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT
BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SAID ACT.
THE SECURITIES REPRESENTED HEREBY
MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN INVESTORS’ RIGHTS AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER,
A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
The Holders consent to
the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order
to implement the restrictions on transfer set forth in this Section 2.12.
(c)
The holder of each certificate, instrument or book-entry representing Restricted Securities, by acceptance thereof, agrees
to comply in all respects with the provisions of this Section 2.12. Before any proposed sale, pledge, or transfer of any
Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction
or, following the IPO, the transfer is made pursuant to SEC Rule 144, the Holder thereof shall give notice to the Company of such
Holder’s intention to effect such sale, pledge, or transfer. Each such notice shall describe the manner and circumstances
of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied
at such Holder’s expense by either (i) a written opinion of legal counsel who shall,
and whose legal opinion shall, be reasonably
satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration
under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer
of such Restricted Securities without registration will not result in a recommendation by the staff of the SEC that action be taken
with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed
sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon
the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance
with the terms of the notice given by the Holder to the Company. The Company will not require such a notice, legal opinion or “no
action” letter (x) in any transaction in compliance with SEC Rule 144; or (y) in any transaction in which such Holder distributes
Restricted Securities to an Affiliate of such Holder for no consideration; provided that, other than in connection with
a transfer in compliance with SEC Rule 144 following the IPO, each transferee agrees in writing to be subject to the terms of this
Section 2.12. Each certificate, instrument, or book entry representing the Restricted Securities transferred as above provided
shall bear, except if such transfer is made pursuant to SEC Rule 144 or pursuant to an effective registration statement, the appropriate
restrictive legend set forth in Section 2.12(b), except that such certificate instrument, or book entry shall not bear such
restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish
compliance with any provisions of the Securities Act.
2.13
Termination of Registration Rights. The right of any Holder to request registration or inclusion of Registrable Securities
in any registration pursuant to Sections 2.1 or 2.2 shall terminate upon the earliest to occur of:
(a)
the closing of a Deemed Liquidation Event, as such term is defined in the Certificate of Incorporation, and only after fulfillment
of the obligations set forth under Article Fourth, Part B, Section 2.3.2 of the Certificate of Incorporation in connection with
such Deemed Liquidation Event;
(b)
such time after consummation of the IPO as SEC Rule 144 or another similar exemption under the Securities Act is available
for the sale of all of such Holder’s shares without limitation during a three-month period without registration; and
(c)
the third (3rd) anniversary of the Qualified IPO (as defined in the Certificate of Incorporation).
3.
Rights to Future Stock Issuances.
3.1
Right of First Offer. Subject to the terms and conditions of this Section 3.1 and applicable securities laws,
if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to each Major Investor.
A Major Investor shall be entitled to apportion the right of first offer hereby granted to it in such proportions as it deems appropriate,
among (i) itself, (ii) its Affiliates and (iii) its beneficial interest holders, such as limited partners, members or any other
Person having “beneficial ownership,” as such term is defined in Rule 13d-3 promulgated under the Exchange Act, of
such Major Investor (“Investor Beneficial Owners”); provided that each such Affiliate or Investor Beneficial
Owner agrees to enter into this Agreement and each of the Voting Agreement and Right of First Refusal and Co-Sale Agreement
of
even date herewith among the Company, the Investors and the other parties named therein, as an “Investor” under each
such agreement.
(a)
The Company shall give notice (the “Offer Notice”) to each Major Investor, stating (i) its bona fide
intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if
any, upon which it proposes to offer such New Securities.
(b)
By notification to the Company within twenty (20) days after the Offer Notice is given, each Major Investor may elect to
purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities
which equals the proportion that the Common Stock then held by such Major Investor (including all shares of Common Stock issued
and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other
Derivative Securities then held by such Major Investor) bears to the total Common Stock of the Company then outstanding (assuming
full conversion and/or exercise, as applicable, of all Preferred Stock and other Derivative Securities). At the expiration of such
twenty (20) day period, the Company shall promptly notify each Major Investor that elects to purchase or acquire all the shares
available to it (each, a “Fully Exercising Investor”) of any other Major Investor’s failure to do likewise.
During the ten (10) day period commencing after the Company has given such notice, each Fully Exercising Investor may, by giving
notice to the Company, elect to purchase or acquire, in addition to the number of shares specified above, up to that portion of
the New Securities for which Major Investors were entitled to subscribe but that were not subscribed for by the Major Investors
which is equal to the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or
exercise, as applicable, of Preferred Stock and any other Derivative Securities then held, by such Fully Exercising Investor bears
to the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the
Preferred Stock and any other Derivative Securities then held, by all Fully Exercising Investors who wish to purchase such unsubscribed
shares. The closing of any sale pursuant to this Section 3.1(b) shall occur within the later of one hundred and twenty (120)
days of the date that the Offer Notice is given and the date of initial sale of New Securities pursuant to Section 3.1(b).
(c)
If all New Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Section
3.1(b), the Company may, during the ninety (90) day period following the expiration of the period provided in Section 3.1(b),
offer and sell the remaining unsubscribed portion of such New Securities to any Person or Persons at a price not less than, and
upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement
for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution
thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered
to the Major Investors in accordance with this Section 3.1.
The right of first
offer in this Section 3.1 shall not be applicable to (i) Exempted Securities (as defined in the Certificate of Incorporation);
(ii) shares of Common Stock issued in the IPO; and (iii) the issuance of shares of Preferred Stock pursuant to the Purchase Agreement.
3.2
Termination. The covenants set forth in Section 3.1 shall terminate and be of no further force or effect (i) immediately
before the consummation of the IPO, or (ii) upon the closing of a Deemed Liquidation Event, as such term is defined in the Certificate
of Incorporation, whichever event occurs first.
4.
Additional Covenants.
4.1
Information Rights.
(a)
Delivery of Financial Statements. Subject to Section 4.1(c) of this Agreement, the Company shall deliver to
each Major Investor, provided that the Board has not reasonably determined that such Major Investor is a competitor of the
Company (provided further that venture capital or other investment funds shall not be considered competitors of the Company):
(i)
as soon as practicable, but in any event no later than sixty (60) days before the end of each fiscal year, a budget and
business plan for the next fiscal year (collectively, the “Budget”), prepared on a monthly basis, including
balance sheets, income statements, and statements of cash flow for such months and, promptly after prepared, any other budgets
or revised budgets prepared by the Company;
(ii)
as soon as practicable, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Company,
(A) a balance sheet as of the end of such year, (B) statements of income and of cash flows for such year and (C) a statement of
stockholders’ equity as of the end of such year, all such financial statements audited and certified by an independent public
accountant selected by the Board, together with a written report comparing the foregoing to the Budget for such fiscal year; provided,
however, that the Board (including both Series A Directors) may waive the audit requirement in any given fiscal year for
the financial statements set forth in this Section 4.1(a);
(iii)
as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters
of each fiscal year of the Company, unaudited statements of income and cash flows for such fiscal quarter, and an unaudited balance
sheet as of the end of such fiscal quarter all prepared in accordance with GAAP (except that such financial statements may (A)
be subject to normal year-end audit adjustments and (B) not contain all notes thereto that may be required in accordance with GAAP),
together with a written report comparing the foregoing to the Budget;
(iv)
as soon as practicable, but in any event within forty-five (45) days after the end of each quarter of each fiscal year of
the Company, a statement showing the number of shares of each class and series of capital stock and securities convertible into
or exercisable for shares of capital stock outstanding at the end of the period, the Common Stock issuable upon conversion or exercise
of any outstanding securities convertible or exercisable for Common Stock and the exchange ratio or exercise price applicable thereto,
and the number of shares of issued stock options and stock options not yet issued but reserved for issuance, if any, all in sufficient
detail as to permit the Major Investors to calculate their respective percentage equity ownership in the Company; and
(v)
as soon as practicable, but in any event within thirty (30) days of the end of each month, an unaudited income statement
and statement of cash flows for such month, and an unaudited balance sheet as of the end of such month, all prepared in accordance
with GAAP (except that such financial statements may (A) be subject to normal year-end audit adjustments and (B) not contain all
notes thereto that may be required in accordance with GAAP), together with a written report comparing the foregoing to the Budget
for such month.
(b)
Subsidiaries. If, for any period, the Company has any subsidiary whose accounts are consolidated with those of the
Company, then in respect of such period the financial statements delivered pursuant to the foregoing sections shall be the consolidated
and consolidating financial statements of the Company and all such consolidated subsidiaries.
(c)
Registration. Notwithstanding anything else in this Section 4.1 to the contrary, the Company may cease providing
the information set forth in this Section 4.1 during the period starting with the date sixty (60) days before the Company’s
good-faith estimate of the date of filing of a registration statement if it reasonably concludes it must do so to comply with the
SEC rules applicable to such registration statement and related offering; provided that the Company’s covenants under
this Section 4.1 shall be reinstated at such time as the Company is no longer actively employing its commercially reasonable
efforts to cause such registration statement to become effective.
4.2
Successor Indemnification. If the Company or any of its successors or assignees consolidates with or merges into
any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent
necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company
with respect to indemnification of members of the Board as in effect immediately before such transaction, whether such obligations
are contained in the Company’s Bylaws, the Certificate of Incorporation, or elsewhere, as the case may be.
4.3
Inspection. The Company shall permit each Major Investor (provided that the Board has not reasonably determined
that such Major Investor is a competitor of the Company); provided, further, that venture capital or other investment
funds shall not be considered competitors of the Company), at such Major Investor’s expense, to visit and inspect the Company’s
properties; examine its books of account and records; and discuss the Company’s affairs, finances, and accounts with its
officers, during normal business hours of the Company as may be reasonably requested by the Major Investor; provided, however,
that the Company shall not be obligated pursuant to this Section 4.3 to provide access to any information that it reasonably
and in good faith considers to be a trade secret or confidential information (unless covered by an enforceable confidentiality
agreement, in form acceptable to the Company) or the disclosure of which would adversely affect the attorney-client privilege between
the Company and its counsel.
4.4
Observer Rights. (a) As long as Versant or its Affiliates owns any shares of Preferred Stock of the Company, the
Company shall invite a representative of Versant to attend all meetings of its Board in a nonvoting observer capacity; (b) as long
as FCDI or its Affiliates owns any shares of Preferred Stock of the Company, the Company shall invite a representative of FCDI
to attend all meetings of its Board in a nonvoting observer capacity; (c) as long as Casdin or its Affiliates owns any shares of
Preferred Stock of the Company, the Company shall invite a representative of Casdin to attend all meetings of its Board in a nonvoting
observer capacity; and
(d) as long as Bayer or its Affiliates owns any shares of Preferred Stock of the Company, the Company shall
invite a representative of Bayer to attend all meetings of its Board in a nonvoting observer capacity. The Company shall give any
such representative copies of all notices, minutes, consents, and other materials that it provides to its directors at the same
time and in the same manner as provided to such directors; provided, however, that such representative shall agree to hold in confidence
and trust and to act in a fiduciary manner with respect to all information so provided; and provided, further, that the Company
reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access
to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and
its counsel or result in disclosure of trade secrets or a conflict of interest, or if such Investor or its representative is a
competitor of the Company (provided that venture capital or other investment funds shall not be considered competitors of the Company).
4.5
Termination of Information and Observer Rights. The covenants set forth in Section 4.1, Section 4.3
and Section 4.4 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO,
or (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange
Act, or (iii) upon the closing of a Deemed Liquidation Event, as such term is defined in
the Certificate of Incorporation, whichever event occurs first.
4.6
Confidentiality. Each Investor agrees that such Investor will keep confidential and will not disclose, divulge, or
use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company
by virtue of such Investor’s status as a stockholder (including notice of the Company’s intention to file a registration
statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result
of a breach of this Section 4.6 by such Investor), (b) is or has been independently developed or conceived by such Investor
without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Investor by a
third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however,
that an Investor may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals
to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective
purchaser of any shares of capital stock from such Investor, if such prospective purchaser agrees to be bound by the provisions
of this Section 4.6; (iii) to any existing or prospective Affiliate, partner, member, stockholder, or wholly owned subsidiary
of such Investor in the ordinary course of business or fundraising purposes, provided that such Investor informs such Person
that such information is confidential and directs such Person to maintain the confidentiality of such information; or (iv) as may
otherwise be required by law, provided that such Investor promptly notifies the Company of such disclosure and takes reasonable
steps to minimize the extent of any such required disclosure.
4.7
Insurance. The Company shall use its commercially reasonable efforts to obtain, within sixty (60) days of the date
hereof, from financially sound and reputable insurers Directors and Officers liability insurance in an amount of at least Two Million
Dollars ($2,000,000) and on terms and conditions satisfactory to the Board, including at least two (2) Preferred Directors, and
will use commercially reasonable efforts to cause such insurance policies to be maintained until such time as the Board determines
that such insurance should be discontinued.
4.8
Employee Agreements. The Company will cause (i) each person now or hereafter employed by it or by any subsidiary
(or engaged by the Company or any subsidiary as a consultant/independent contractor) with access to confidential information and/or
trade secrets to enter into a nondisclosure and proprietary rights assignment agreement and (ii) each Key Employee to enter into
a one (1) year noncompetition and nonsolicitation agreement, substantially in the form approved by the Board, including at least
two (2) Preferred Directors. In addition, the Company shall not amend, modify, terminate, waive, or otherwise alter, in whole or
in part, any of the above-referenced agreements or any restricted stock agreement between the Company and any employee, without
the consent of at least two (2) Preferred Directors.
4.9
Employee Stock. Unless otherwise approved by the Board, including at least two (2) Preferred Directors, all future
employees and consultants of the Company who purchase, receive options to purchase, or receive awards of shares of the Company’s
capital stock after the date hereof shall be required to execute restricted stock or option agreements, as applicable, providing
for (i) vesting of shares over a four (4) year period, with the first twenty-five percent (25%) of such shares vesting following
twelve (12) months of continued employment or service, and the remaining shares vesting in equal monthly installments over the
following thirty-six (36) months, without any vesting acceleration rights, and (ii) a market stand-off provision substantially
similar to that in Section 2.11 of this Agreement. In addition, unless otherwise approved by the Board, including at least
two (2) Preferred Directors, the Company shall retain a “right of first refusal” until the Company’s IPO on employee
transfers and shall have the right to repurchase unvested shares at cost upon termination of employment or service of a holder
of restricted stock.
4.10
Reserved.
4.11
Matters Requiring Preferred Director Approval. During such time or times as
the holders of Preferred Stock are entitled to elect
at least two (2) Preferred Directors and such seats are filled, the Company hereby covenants and agrees with each of the Investors
that it shall not, without approval of the Board of Directors, which approval must include at least two (2) Preferred Directors:
(a)
amend, alter or repeal in any material respect the nature or purpose of the Company’s business as set forth in Section
4.16;
(b)
approve any Budget, or modify or amend any existing Budget if such modification or amendment, taken together with any other
modifications or amendments for such Budget, would result in an increase to the previously-allocated aggregate budget amount for
such period by an amount greater than 20% of such Budget;
(c)
make, or permit any subsidiary to make, any loan or advance to, or own any stock or other securities of, any subsidiary
or other corporation, partnership, or other entity unless it is wholly owned by the Company;
(d)
make, or permit any subsidiary to make, any loan or advance to any Person, including, without limitation, any employee or
director of the Company or any subsidiary, except advances and similar expenditures in the ordinary course of business or under
the terms of an employee stock or option plan approved by the Board of Directors;
(e)
guarantee, directly or indirectly, or permit any subsidiary to guarantee, directly or indirectly, any indebtedness except
for trade accounts of the Company or any subsidiary arising in the ordinary course of business;
(f)
incur any aggregate indebtedness in excess of $1,000,000 that is not already included in the Budget, other than trade credit
incurred in the ordinary course of business;
(g)
enter into any agreement or transaction with any executive officer, director or stockholder of the Company, or any of their
respective Affiliates, except for compensation arrangements with employees in the ordinary course of business;
(h)
hire, terminate, or change the compensation of the executive officers, including approving any option grants or stock awards
to the Chief Executive Officer or the Chief Financial Officer; or
(i)
enter any agreement or commitment to do any of the foregoing.
4.12
Board Matters. The Board shall meet at least quarterly in accordance with an agreed-upon schedule. The Company shall
reimburse the Preferred Directors for all reasonable out-of-pocket travel expenses incurred (consistent with the Company’s
travel policy) in connection with attending meetings of the Board.
4.13
Expenses of Counsel. In the event of a transaction which is a Sale of the Company (as defined in the Voting Agreement
of even date herewith among the Investors and the Company), the reasonable fees and disbursements, not to exceed $50,000, of one
counsel for the Major Investors (“Investor Counsel”), in their capacities as stockholders, shall be borne and
paid by the Company. At the outset of considering a transaction which, if consummated would constitute a Sale of the Company, the
Company shall obtain the ability to share with the Investor Counsel (and such counsel’s clients) and shall share the confidential
information (including, without limitation, the initial and all subsequent drafts of memoranda of understanding, letters of intent
and other transaction documents and related noncompete, employment, consulting and other compensation agreements and plans) pertaining
to and memorializing any of the transactions which, individually or when aggregated with others would constitute the Sale of the
Company. The Company shall be obligated to share (and cause the Company’s counsel and investment bankers to share) such materials
when distributed to the Company’s executives and/or any one (1) or more of the other parties to such transaction(s). In the
event that Investor Counsel deems it appropriate, in its reasonable discretion, to enter into a joint defense agreement or other
arrangement to enhance the ability of the parties to protect their communications and other reviewed materials under the attorney
client privilege, the Company shall, and shall direct its counsel to, execute and deliver to Investor Counsel and its clients such
an agreement in form and substance reasonably acceptable to Investor Counsel. In the event that one (1) or more of the other party
or parties to such transactions require the clients of Investor Counsel to enter into a confidentiality agreement and/or joint
defense agreement in order to receive such information, then the Company shall share whatever information can be shared without
entry into such agreement and shall, at the same time, in good faith work expeditiously to enable Investor Counsel and its clients
to negotiate and enter into the appropriate agreement(s) without undue burden to the clients of Investor Counsel.
4.14
Indemnification Matters. The Company hereby acknowledges that one (1) or more of the directors nominated to serve
on the Board by the Investors (each a “Fund Director”) may have certain rights to indemnification, advancement
of expenses and/or insurance provided by one (1) or more of the Investors and certain of their affiliates (collectively, the “Fund
Indemnitors”). The Company hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations
to any such Fund Director are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification
for the same expenses or liabilities incurred by such Fund Director are secondary), (b) that it shall be required to advance the
full amount of expenses incurred by such Fund Director and shall be liable for the full amount of all expenses, judgments, penalties,
fines and amounts paid in settlement by or on behalf of any such Fund Director to the extent legally permitted and as required
by the Certificate of Incorporation or Bylaws of the Company (or any agreement between the Company and such Fund Director), without
regard to any rights such Fund Director may have against the Fund Indemnitors, and, (c) that it irrevocably waives, relinquishes
and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other
recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf
of any such Fund Director with respect to any claim for which such Fund Director has sought indemnification from the Company shall
affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement
or payment to all of the rights of recovery of such Fund Director against the Company.
4.15
Right to Conduct Activities. The Company hereby agrees and acknowledges that each of Casdin, Bayer, Versant, FCDI,
MW XO Health Innovations Fund, LP (“MW”), The Biotech Growth Trust PLC and OrbiMed Genesis Master Fund, L.P.
(collectively, “OrbiMed”), TNY Holdings Limited (“H Investor”) RA Capital Management L.P.
(“RA Capital”), (together with each of their respective Affiliates) are professional investment funds, and as
such invest in numerous portfolio companies, some of which may be deemed competitive with the Company’s business (as currently
conducted or as currently proposed to be conducted). The Company hereby agrees that, to the extent permitted under applicable law,
none of Casdin, Bayer, Versant, FCDI, MW, OrbiMed, H Investor nor RA Capital shall be liable to the Company for any claim arising
out of, or based upon, (i) the investment by Casdin or its Affiliates, Bayer or its Affiliates, Versant or its Affiliates, FCDI
or its Affiliates, MW or its Affiliates, OrbiMed or its Affiliates, H Investor or its Affiliates or RA Capital or its Affiliates,
as applicable, in any entity competitive with the Company, or (ii) actions taken by any partner, officer or other representative
of Casdin or its Affiliates, Bayer or its Affiliates, Versant or its Affiliates, FCDI or its Affiliates, MW or its Affiliates,
OrbiMed or its Affiliates, H Investor or its Affiliates or RA Capital or its Affiliates, as applicable, to assist any such competitive
company, whether or not such action was taken as a member of the board of directors of such competitive company or otherwise, and
whether or not such action has a detrimental effect on the Company; provided, however, that the foregoing shall not relieve (x)
any of the Investors from liability associated with the unauthorized disclosure of the Company’s confidential information,
or (y) any director or officer of the Company from any liability associated with his or her fiduciary duties to the Company.
4.16
Business of the Company. The Investors and the Company agree that the business and purpose of the Company will be
the development and commercialization of cancer
immunotherapy products based on human iPSC manufactured by FCDI or its Affiliates
(including TiPSC-derived T/NK cells).
4.17
Real Property Holding Corporation. Promptly following (and in any event within ten (10) days after receipt of) written
request by a non-U.S. Investor, the Company shall provide such Investor with a written statement informing such Investor whether
such Investor’s interest in the Company constitutes a United States real property interest. The Company’s determination
shall comply with the requirements of Treasury Regulation Section 1.897-2(h)(1) or any successor regulation, and the Company shall
provide timely notice to the Internal Revenue Service, in accordance with and to the extent required by Treasury Regulation Section
1.897-2(h)(2) or any successor regulation, that such statement has been made. The Company’s obligation to furnish such written
statement shall continue notwithstanding the fact that a class of the Company’s stock may be regularly traded on an established
securities market or the fact that there is no Preferred Stock then outstanding; provided that no written statement shall be provided
to an Investor who, within prior the 5-year period, holds five percent (5%) or less of any class of stock that is regularly traded
on an established securities market.
4.18
No Use of Trademarks or Logos. Without the prior written consent of H Investor, neither the Company nor any of its
Affiliates shall use, publish, reproduce, or refer to H Investor, its related parties, controlling persons, or any similar name,
trademark or logo in any non-internal discussion, documents or materials, including without limitation for marketing, advertising
or publicity purposes.
4.19
Termination of Covenants. The covenants set forth in this Section 4, except for Sections 4.2 and 4.14,
or as set forth in Section 4.5, shall terminate and be of no further force or effect (i) immediately before the consummation
an IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange
Act or (iii) upon the consummation of a Deemed Liquidation Event, but only after fulfillment of the obligations set forth under
Article Fourth, Part B, Section 2.3.2 of the Certificate of Incorporation in connection with such Deemed Liquidation Event, whichever
event occurs first.
5.
Tag-Along Rights.
5.1
In the event one or more Investors (referred to as the “Concerned Party” for purposes of this Section
5) agrees to sell or transfer (a “Transfer”) any shares of Common Stock or Preferred Stock (collectively,
“Securities”) to a third party (other than an Affiliate of such Investor) acting alone or in concert (referred
to as the “Acquiror” in this Section 5), in a single Transfer or a series of related Transfers, and as
a result of such Transfer, the Acquiror would hold, immediately or on a due date, more than fifty percent (50%) of the outstanding
Securities of the Company on an as-converted basis (“Control” for purposes of this Section 5) then the
other Investors (hereafter referred to as the “Non-Concerned Parties”) shall have a full tag-along right, pursuant
to which each of the Non-Concerned Parties may transfer to the Acquiror all of its Securities on the same terms and conditions
as offered by the Acquiror to the Concerned Party.
5.2
Accordingly, prior to completing the Transfer of any or all of its Securities to an Acquiror and as a condition of entering
into any binding commitment in respect of such Transfer, the Concerned Party shall secure the Acquiror’s irrevocable undertaking
to purchase any
such Securities of the Non-Concerned Parties that they may wish to sell, on the same terms and conditions as offered
by the Acquiror to the Concerned Party.
5.3
In the circumstances referred to in Section 5.1 above, the Concerned Party shall provide written notice to the Company,
which will then provide written notice to each of the Non-Concerned Parties (a “Proposed Transfer Notice”),
of the proposed Transfer by the Concerned Party of Securities to the Acquiror, the terms and conditions of such proposed Transfer,
and that the Non-Concerned Parties may exercise their full tag-along right provided for in this Section 5 with respect to
such proposed Transfer.
5.4
Each Non-Concerned Party shall have a period of thirty (30) days from receipt of the Proposed Transfer Notice to exercise
their full tag-along right in accordance with the following terms and conditions:
(a)
If a Non-Concerned Party wishes to exercise its full tag-along right, they shall notify the Concerned Party, prior to the
expiration of the thirty (30)-day period referred to above, of the number of Securities that they own and wish to transfer (the
“Offered Securities”).
(b)
In the event of exercise by any Non-Concerned Party of its full tag-along right, the terms and conditions of the proposed
Transfer of the Offered Securities, including the purchase price per Security payable by the Acquiror for the Offered Securities,
will be the same as offered by the Acquiror to the Concerned Party; the purchase price per Security so determined shall be based
upon the total purchase price payable by the Acquiror with respect to all Securities to be acquired by the Acquiror in such transactions,
which shall then be allocated among the Investors selling Securities to the Acquiror on a pro rata basis.
(c)
In the event of exercise by any of the Non-Concerned Parties of its full tag-along right, the Transfer of the Offered Securities
shall take place within fifteen (15) days of the latter of (i) the expiration of the thirty (30)-day period provided for exercise
of the full tag-along right set forth in this Section 5 and (ii) the date of receipt of all approvals and termination of
all waiting periods, in each case, under applicable law in connection with such proposed Transfer. In order to ensure the purchase
by the Acquiror of the Offered Securities and payment thereof within said period, the Concerned Party shall only transfer ownership
of the Securities to the Acquiror and receive the price therefor if the Acquiror is simultaneously transferred ownership of, and
pays the transfer price of, the Offered Securities.
(d)
In the event that no Non-Concerned Party shall exercise its full tag-along right, the Concerned Party may proceed with the
Transfer on the terms set forth in the Proposed Transfer Notice within thirty (30) days of the later of (i) the expiry of the full
tag-along right exercise period and (ii) the date of receipt of any required governmental approvals for the consummation of the
Transfer. Should the Concerned Party fail to complete such Transfer within such period, it shall be bound, prior to any Transfer
of its Shares, to comply with the provisions of this Section 5.
6.
Miscellaneous.
6.1
Successors and Assigns. The rights under this Agreement may be assigned (but only with all related obligations) by
a Holder to a transferee of Registrable Securities that (i)
is an Affiliate of a Holder; (ii) is a Holder’s Immediate Family
Member or trust for the benefit of an individual Holder or one (1) or more of such Holder’s Immediate Family Members; or
(iii) after such transfer, holds at least 500,000 shares of Registrable Securities (subject to appropriate adjustment for stock
splits, stock dividends, combinations, and other recapitalizations) or, if less, all of the Registrable Securities held by such
Holder; provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with
written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are
being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to
the terms and conditions of this Agreement, including the provisions of Section 2.11. For the purposes of determining the
number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder
of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder
or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided,
further that all transferees who would not qualify individually for assignment of rights shall have a single attorney-in-fact
for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions
of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective
successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except
as expressly provided herein.
6.2
Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the
state of Delaware, without regard to conflict of law principles that would result in the application of any law other than the
law of the State of Delaware.
6.3
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic
mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000) or other transmission method
and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
6.4
Titles and Subtitles. The titles and subtitles used in this Agreement are for convenience only and are not to be
considered in construing or interpreting this Agreement.
6.5
Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall
be deemed effectively given upon the earlier of actual receipt or: (a) personal delivery to the party to be notified, (b) when
sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed,
then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) one (1) business day after the business day of deposit with a nationally recognized overnight courier,
freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent
to the respective parties at their address or email address as set forth on the signature page or on Schedule A hereto or
to such email address, facsimile number or address as subsequently modified by written notice given in accordance with this Section
6.5. If notice is given to the Company, a copy (which
copy shall not constitute notice) shall also be sent to Troutman Pepper
Hamilton Sanders LLP, 3000 Two Logan Square, Eighteenth and Arch Streets, Philadelphia, PA 19103-2799, Attn: Rachael M. Bushey,
rachael.bushey@troutman.com; and if notice is given to Versant or its Affiliates, a copy (which shall
not constitute notice) shall also be sent to Versant Venture Capital VI, L.P., One Sansome Street, Suite 3630, San Francisco, CA
94104, Attention: Robin L. Praeger.
6.6
Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent
of the Company and the holders of a majority of the Registrable Securities, voting as a separate class and on an as-converted basis;
provided that, the Company may in its sole discretion waive compliance with Section 2.12(c) (and the Company’s
failure to object promptly in writing after notification of a proposed assignment allegedly in violation of Section 2.12(c)
shall be deemed to be a waiver); and provided, further that any provision hereof may be waived by any waiving party
on such party’s own behalf, without the consent of any other party. Notwithstanding the foregoing, (i) this Agreement may
not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written
consent of such Investor, unless such amendment, termination, or waiver applies to all Investors, in the same fashion (it being
agreed that a waiver of the provisions of Section 3 with respect to a particular transaction shall be deemed to apply to
all Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Investors may nonetheless,
by agreement with the Company, purchase securities in such transaction), (ii) Section 4.4(d), Section 4.15, this
Section 6.6 and Section 6.13 may not be amended without the written consent of Bayer, (iii) Section 4.4(c),
Section 4.15, this Section 6.6 and Section 6.13 may not be amended without the written consent of Casdin,
(iv) Section 4.4(b), Section 4.15, this Section 6.6 and Section 6.13 may not be amended without the
written consent of FCDI, (v) Section 4.4(a), Section 4.15, this Section 6.6 and Section 6.13 may not
be amended without the written consent of Versant, and (vi) Section 4.15 may not be amended without the written consent
of each of MW, OrbiMed, H Investor and RA Capital, and (vii) this Agreement may not be amended to impose any additional restrictions
on the rights of an Investor to transfer or dispose of, directly or indirectly, any securities issued by the Company without the
written consent of Casdin, Bayer, FCDI and Versant. The Company shall give prompt notice of any amendment or termination hereof
or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver. Any amendment,
termination, or waiver effected in accordance with this Section 6.6 shall be binding on all parties hereto, regardless of
whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement,
in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition,
or provision.
6.7
Severability. If any provision or provisions of this Agreement shall be held by a court of competent jurisdiction
to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever the validity, legality and enforceability of
the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law.
6.8
Aggregation of Stock. All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together
for the purpose of determining the availability of any
rights under this Agreement and such Affiliated persons may apportion such
rights as among themselves in any manner they deem appropriate. Upon the effectiveness of this Agreement, the Prior Agreement shall
be deemed amended and restated and superseded and replaced in its entirety by this Agreement, and shall be of no further force
or effect.
6.9
Entire Agreement. This Agreement (including any Schedules and Exhibits hereto) constitutes the full and entire understanding
and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to
the subject matter hereof existing between the parties is expressly canceled.
6.10
Dispute Resolution. WAIVER OF JURY TRIAL: EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF
OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING
NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH
OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND
REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
6.11
Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this
Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of
such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default,
or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver
of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.
6.12
Acknowledgment. The Company acknowledges that certain of the Investors are in the business of venture capital investing
and therefore review the business plans and related proprietary information of many enterprises, including enterprises which may
have products or services which compete directly or indirectly with those of the Company. Nothing in this Agreement will preclude
or restrict the Investors from investing or participating in any particular enterprise.
6.13
Submission to Jurisdiction. Each of the parties irrevocably agrees that any legal action or proceeding arising out
of or relating to this Agreement brought by any party or its successors or assigns against the other party shall be brought and
determined in any New York state or federal court sitting in the Borough of Manhattan in The City of New York (or, if such court
lacks subject matter jurisdiction, in any appropriate New York state or federal court), and each of the parties hereby irrevocably
submits to the exclusive jurisdiction of the aforesaid courts
for itself and with respect to its property, generally and unconditionally,
with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby.
Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above
in New York, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any
such court in New York as described herein. Each of the parties further agrees that notice as provided herein shall constitute
sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties
hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise,
in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim
that it is not personally subject to the jurisdiction of the courts in New York as described herein for any reason, (b) that it
or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise)
and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit,
action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
6.14
Massachusetts Business Trust. A copy of the Agreement and Declaration of Trust of each Investor advised or sub-advised
by Fidelity Management & Research Company LLC (each, a “Fidelity Investor”) or any Affiliate thereof is on file
with the Secretary of State of the Commonwealth of Massachusetts and notice is hereby given that this Agreement is executed on
behalf of the trustees of such Fidelity Investor or any Affiliate thereof as trustees and not individually and that the obligations
of this Agreement are not binding on any of the trustees, officers or stockholders of such Fidelity Investor or any Affiliate thereof
individually but are binding only upon such Fidelity Investor or any Affiliate thereof and its assets and property.
[Signature Pages
to Follow]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
COMPANY:
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CENTURY THERAPEUTICS, INC.
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By:
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/s/ Osvaldo Flores, Ph.D.
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Name:
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Osvaldo Flores, Ph.D.
|
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Title:
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President and Chief Executive Officer
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
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INVESTORS:
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AVIDITY MASTER FUND LP
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By:
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/s/ Michael Gregory
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Name:
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Michael Gregory
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Title:
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Director
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
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INVESTORS:
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AVIDITY CAPITAL FUND II LP
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By:
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/s/ Michael Gregory
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Name:
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Michael Gregory
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Title:
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Director
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
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INVESTORS:
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|
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VERSANT VENTURE CAPITAL VI, L.P.
|
|
|
By:
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Versant Ventures VI GP, L.P.
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By:
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Versant Ventures VI GP-GP, LLC
|
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Its: General Partner
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By:
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/s/ Thomas Woiwode
|
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|
Name:
|
Thomas Woiwode
|
|
|
Title:
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Managing Director
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
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INVESTORS:
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VERSANT VENTURE II, L.P.
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By:
|
Versant Ventures II GP, L.P.
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By:
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Versant Ventures II GP-GP, LLC
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|
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Its: General Partner
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By:
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/s/ Thomas Woiwode
|
|
|
Name:
|
Thomas Woiwode
|
|
|
Title:
|
Managing Director
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
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INVESTORS:
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RA CAPITAL HEALTHCARE FUND, L.P.
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By: RA Capital Healthcare Fund GP, LLC
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|
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Its: General Partner
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By:
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/s/ Rajeev Shah
|
|
|
Name:
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Rajeev Shah
|
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|
Title:
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Manager
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Address:
|
RA Capital Management, L.P.
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|
200 Berkeley Street, 18th Floor
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Boston, MA 02116
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Attn: General Counsel
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
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INVESTORS:
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RA CAPITAL NEXUS FUND II, L.P.
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By: RA Capital Nexus Fund II GP, LLC
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Its: General Partner
|
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By:
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/s/ Rajeev Shah
|
|
|
Name:
|
Rajeev Shah
|
|
|
Title:
|
Manager
|
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|
|
Address:
|
RA Capital Management, L.P.
|
|
|
|
200 Berkeley Street, 18th Floor
|
|
|
|
Boston, MA 02116
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|
|
Attn: General Counsel
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
INVESTORS:
|
|
|
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|
|
ORBIMED GENESIS MASTER FUND, L.P.
|
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|
|
By: OrbiMed Genesis GP LLC,
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|
|
its General Partner
|
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|
|
By: OrbiMed Advisors LLC,
|
|
|
its Managing Member
|
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|
|
By:
|
/s/ Geoffrey Hsu
|
|
|
Name:
|
Geoffrey Hsu
|
|
|
Title:
|
Member
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
INVESTORS:
|
|
|
|
|
|
THE BIOTECH GROWTH TRUST PLC
|
|
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|
|
By:
|
OrbiMed Capital LLC, solely in its
Capacity as Portfolio Manager
|
|
|
|
|
|
By:
|
/s/ Geoffrey Hsu
|
|
|
Name:
|
Geoffrey Hsu
|
|
|
Title:
|
Member
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
INVESTORS:
|
|
|
|
|
|
OCTAGON INVESTMENTS MASTER FUND LP
|
|
|
|
|
|
By: Octagon Capital Advisors LP,
|
|
|
its Investment Manager
|
|
|
|
|
|
By:
|
/s/ Ting Jia
|
|
|
Name:
|
Ting Jia
|
|
|
Title:
|
Managing Member
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
|
|
|
INVESTORS:
|
|
|
|
|
|
OCTAGON PRIVATE OPPORTUNITIES FUND LP
|
|
|
|
|
|
By: Octagon Capital Advisors LP,
|
|
|
its Investment Manager
|
|
|
|
|
|
By:
|
/s/ Ting Jia
|
|
|
Name:
|
Ting Jia
|
|
|
Title:
|
Managing Member
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
INVESTORS:
|
|
|
|
|
|
MW XO HEALTH INNOVATIONS FUND LP
|
|
|
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|
|
By:
|
Marshall Wace North America, LP
|
|
|
Its:
|
Investment Manager
|
|
|
|
|
|
By:
|
Marshall Wace LLC
|
|
|
Its:
|
General Partner of the Investment Manager
|
|
|
By:
|
/s/ Michael Sargent
|
|
|
Name:
|
Michael Sargent
|
|
|
Title:
|
Authorized Signatory
|
|
|
|
|
|
By:
|
/s/ Courtney Lewis
|
|
|
Name:
|
Courtney Lewis
|
|
|
Title:
|
Authorized Signatory
|
|
|
Address:
|
DMS Corporate Services Ltd
|
|
|
|
PO Box 1344, Suite 5B20, 2nd Floor
|
|
|
|
One Nexus Way, Camana Bay
|
|
|
|
Grand Cayman KY1-1108,
|
|
|
|
Cayman Islands
|
|
|
With a copy (which shall not constitute notice) to:
|
|
|
|
|
|
Crowell & Moring LLP
|
|
|
Attn: Lex Eley
|
|
|
1001 Pennsylvania Ave. NW
|
|
|
Washington, DC 20004
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
INVESTORS:
|
|
|
|
|
|
LOGOS OPPORTUNITIES FUND II, L.P.
|
|
|
By: Logos Opportunities GP, LLC
|
|
|
Its General Partner
|
|
|
|
|
|
By:
|
/s/ Graham Walmsley
|
|
|
Name:
|
Graham Walmsley
|
|
|
Title:
|
Managing Member
|
|
|
Address:
|
1 Letterman Drive
|
|
|
|
Building D, Suite D3-700
|
|
|
|
San Francisco, CA 94129
|
|
|
|
|
|
|
By:
|
/s/ Arsani William
|
|
|
Name:
|
Arsani William
|
|
|
Title:
|
Managing Partner
|
|
|
Address:
|
1 Letterman Drive
|
|
|
|
Building D, Suite D3-700
|
|
|
|
San Francisco, CA 94129
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
INVESTORS:
|
|
|
|
|
|
FIDELITY SELECT PORTFOLIOS:
|
|
|
BIOTECHNOLOGY PORTFOLIO
|
|
|
|
|
|
By:
|
/s/ Chris Maher
|
|
|
Name:
|
Chris Maher
|
|
|
Title:
|
Authorized Signatory
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
INVESTORS:
|
|
|
|
|
|
FIDELITY ADVISOR SERIES VII: FIDELITY
|
|
|
ADVISOR BIOTECHNOLOGY FUND
|
|
|
|
|
|
By:
|
/s/ Chris Maher
|
|
|
Name:
|
Chris Maher
|
|
|
Title:
|
Authorized Signatory
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
INVESTORS:
|
|
|
|
|
|
FIDELITY MT. VERNON STREET TRUST:
FIDELITY GROWTH COMPANY K6 FUND
|
|
|
|
|
|
By:
|
/s/ Chris Maher
|
|
|
Name:
|
Chris Maher
|
|
|
Title:
|
Authorized Signatory
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
|
|
|
INVESTORS:
|
|
|
|
|
|
QH OIL INVESTMENTS LLC
|
|
|
|
|
|
By:
|
/s/ Mohammed Al-Jalahma
|
|
|
Name:
|
Mohammed Al-Jalahma
|
|
|
Title:
|
Director and Chairman
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
|
|
|
INVESTORS:
|
|
|
|
|
|
FEDERATED HERMES KAUFMANN FUND
|
|
|
|
|
|
By: Federated Global Investment Management Corp., as attorney-in-fact for Federated Hermes Kaufmann Fund, a portfolio of Federated Hermes Equity Funds
|
|
|
|
|
|
By:
|
/s/ Stephen Van Meter
|
|
|
Name:
|
Stephen Van Meter
|
|
|
Title:
|
Vice President and Chief Compliance Officer
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
INVESTORS:
|
|
|
|
|
|
FEDERATED HERMES KAUFMANN SMALL CAP FUND
|
|
|
|
|
|
By: Federated Global Investment Management Corp., as attorney-in-fact for Federated Hermes Kaufmann Small Cap Fund, a portfolio of Federated Hermes Equity Funds
|
|
|
|
|
|
By:
|
/s/ Stephen Van Meter
|
|
|
Name:
|
Stephen Van Meter
|
|
|
Title:
|
Vice President and Chief Compliance Officer
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
INVESTORS:
|
|
|
|
|
|
FEDERATED HERMES KAUFMANN FUND II
|
|
|
|
|
|
By: Federated Global Investment Management Corp., as attorney-in-fact for Federated Hermes Kaufmann Fund II, a portfolio of Federated Hermes Insurance Series
|
|
|
|
|
|
By:
|
/s/ Stephen Van Meter
|
|
|
Name:
|
Stephen Van Meter
|
|
|
Title:
|
Vice President and Chief Compliance Officer
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
INVESTORS:
|
|
|
|
|
|
CASDIN PARTNERS MASTER FUND, L.P.
|
|
|
|
|
|
By: Casdin Partners GP, LLC, its General Partner
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kevin O’Brien
|
|
|
Name:
|
Kevin O’Brien
|
|
|
Title:
|
General Counsel
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
|
|
|
INVESTORS:
|
|
|
|
|
|
CASDIN PRIVATE GROWTH EQUITY FUND, L.P.
|
|
|
|
|
|
By: Casdin Private Growth Equity Fund GP, LLC,
|
|
|
its General Partner
|
|
|
|
|
|
By:
|
/s/ Kevin O’Brien
|
|
|
Name:
|
Kevin O’Brien
|
|
|
Title:
|
General Counsel
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
INVESTORS:
|
|
|
|
|
|
BAYER HEALTHCARE LLC
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kelly Gast
|
|
|
Name:
|
Kelly Gast
|
|
|
Title:
|
President
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
INVESTORS:
|
|
|
|
|
|
TNY HOLDINGS LIMITED
|
|
|
|
|
|
By:
|
|
|
Its:
|
|
|
|
|
|
|
|
|
By:
|
/s/ Colm O’Connell
|
|
|
Name:
|
Colm O’Connell
|
|
|
Title:
|
Authorized Signatory
|
|
|
Address:
|
89 Nexus Way, Camana Bay
|
|
|
|
P.O. Box 31106
|
|
|
|
Grand Cayman KY1-1205
|
|
|
|
Cayman Islands
|
|
|
|
Emails: zczhang@hillhousecap.com
|
|
|
|
/ myi@hillhousecap.com
|
|
|
With a copy (which shall not constitute notice
|
|
|
to):
|
|
|
|
|
|
C Suite 2202, 22nd Floor
|
|
|
Two International Finance Centre
|
|
|
8 Finance Street
|
|
|
Central, Hong Kong
|
|
|
Attention: Adam Hornung
|
|
|
Email: legal@hillhousecapital.com
|
|
|
With a copy (which shall not constitute notice
|
|
|
to):
|
|
|
|
|
|
Goodwin Proctor (Hong Kong) LLP
|
|
|
38th Floor, Edinburgh Tower
|
|
|
The Landmark
|
|
|
15 Queen’s Road Central, Hong Kong
|
|
|
Attention: Yash Rana /Abhishek
|
|
|
Krishnan
|
|
|
Email: yrana@goodwinlaw.com
akrishnan@goodwinlaw.com
|
[Signature
Page to Investors’ Rights Agreement]
IN WITNESS WHEREOF, the parties have executed
this Investors’ Rights Agreement as of the date first written above.
|
|
|
|
|
INVESTORS:
|
|
|
|
|
|
FUJIFILM CELLULAR DYNAMICS INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Takeshi Yamamoto
|
|
|
Name:
|
Takeshi Yamamoto
|
|
|
Title:
|
President and Chief Executive Officer
|
[Signature
Page to Investors’ Rights Agreement]
SCHEDULE A
INVESTORS
Name and Address
|
Versant Vantage II, L.P.
One Sansome Street Suite 3630
San Francisco, CA 94104
Attention: Robin L. Praeger
|
|
Versant Venture Capital VI, L.P.
One Sansome Street Suite 3630
San Francisco, CA 94104
Attention: Robin L. Praeger
|
|
Bayer HealthCare LLC
100 Bayer Boulevard
Whippany, NJ 07981
Attention: Juergen Eckhardt; Pamela Sisson
Email: Juergen Eckhardt@bayer.com;
pamela.sisson@bayer.com
|
|
FUJIFILM Cellular Dynamics Inc.
525 Science Drive
Madison, WI 53711
|
|
Casdin Partners Master Fund, L.P.
c/o Casdin Capital, LLC
1350 Avenue of the Americas, 26th Floor
New York, NY 10019
|
|
Casdin Private Growth Equity Fund, L.P.
c/o Casdin Capital, LLC
1350 Avenue of the Americas, 26th Floor
New York, NY 10019
|
|
Fidelity Select Portfolios: Biotechnology Portfolio
c/o Mag & Co.
c/o Brown Brothers Harriman & Co.
Attn: Corporate Actions /Vault
140 Broadway
New York, NY 10005
BBH.Fidelity.CA.Notifications@BBH.com
|
|
Fidelity
Advisor Series VII: Fidelity Advisor Biotechnology Fund
|
|
c/o State Street Bank & Trust
PO Box 5756
Boston, Massachusetts 02206
Attn: Bangle & Co fbo Fidelity Advisor Series VII: Fidelity
Advisor Biotechnology Fund
Email: SSBCORPACTIONS@StateStreet.com
Fax number: 617-988-9110
|
|
Fidelity Mt. Vernon Street Trust: Fidelity Growth Company K6
Fund
c/o BNY Mellon
PO Box 392002
Pittsburgh PA 15230
fidelitycorporateevents@bnymellon.com
|
|
Federated Hermes Kaufmann Fund
4000 Ericsson Drive
Warrendale, PA 15086-7561
Attn: Christine Zorovich
|
|
Federated Hermes Kaufmann Small Cap Fund
4000 Ericsson Drive
Warrendale, PA 15086-7561
Attn: Christine Zorovich
|
|
Federated Hermes Kaufmann Fund II
4000 Ericsson Drive
Warrendale, PA 15086-7561
Attn: Christine Zorovich
|
|
MW XO Health Innovations Fund, LP
c/o DMS Corporate Services Ltd
PO Box 1344, Suite 5B20, 2nd Floor
One Nexus Way, Camana Bay
Grand Cayman KY1-1108, Cayman Islands
With a copy (which shall not constitute notice) to:
Crowell & Moring LLP
Attn: Lex Eley
1001 Pennsylvania Ave. NW
Washington, DC 20004
|
|
Logos Opportunities Fund II, L..
Attn:
Virginia Yee
c/o Logos Capital
1 Letterman Dr, Ste. D3-700
|
|
San Francisco, CA 94129
virginia@logoscapital.com
|
|
RA Capital Healthcare Fund, L.P.
c/o RA Capital Management, L.P.
200 Berkeley Street
18th Floor
Boston, MA 02116
Attn: General Counsel
|
|
RA Capital NEXUS Fund II, L.P.
c/o RA Capital Management, L.P.
200 Berkeley Street
18th Floor
Boston, MA 02116
Attn: General Counsel
|
|
TNY Holdings Limited
89 Nexus Way, Camana Bay
P.O. Box 31106
Grand Cayman KY1-1205
Cayman Islands
Emails: zczhang@hillhousecap.com / myi@hillhousecap.com
With a copy to (which shall not constitute notice to):
Suite 2202, 22nd Floor,
Two International Finance Centre
8 Finance Street
Central, Hong Kong
Attention: Adam Hornung
Email: legal@hillhousecapital.com
With a copy to (which shall not constitute notice to):
Goodwin Proctor (Hong Kong) LLP
38th Floor, Edinburgh Tower
The Landmark
15 Queen’s Road Central, Hong Kong
Attention: Yash Rana / Abhishek Krishnan
Email: yrana@goodwinlaw.com / akrishnan@goodwinlaw.com
|
|
The Biotech Growth Trust PLC
Attention: General Counsel
601 Lexington Avenue, 54th Floor
New York, NY 10022
Phone: (212) 739-6400
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Email: Legal@OrbiMed.com
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OrbiMed Genesis Master Fund, L.P.
Attention: General Counsel
601 Lexington Avenue, 54th Floor
New York, NY 10022
Phone: (212) 739-6400
Email: Legal@OrbiMed.com
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Avidity Master Fund LP
2828 N. Harwood St.
Suite 1220
Dallas, TX 75201
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Avidity Capital Fund II LP
2828 N. Harwood St.
Suite 1220
Dallas, TX 75201
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Octagon Investments Master Fund LP
c/o Octagon Capital Advisors
654 Madison Ave, 16th Floor
New York, NY 10065
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Octagon Private Opportunities Fund LP
c/o Octagon Capital Advisors
654 Madison Ave, 16th Floor
New York, NY 10065
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QH Oil Investments LLC
Ooredoo Tower (Building 14),
Al Dafna Street (Street 801),
Al Dafna (Zone 61),
Doha, Qatar
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Exhibit
4.3
THIS
WARRANT, AND THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT, OR ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT
AGREEMENT
To
Purchase Units of
CENTURY
THERAPEUTICS, LLC
Dated
as of September 14, 2020 (the “Effective Date”)
WHEREAS,
CENTURY THERAPEUTICS, LLC, a Delaware limited liability company, has entered into a Loan and Security Agreement of even date herewith
(as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”) with Hercules
Capital, Inc., a Maryland corporation, in its capacity as administrative and collateral agent, (the “Agent”)
and the other lender parties thereto; and
WHEREAS,
the Company (as defined below) grants to Hercules Technology Management Co II, Inc., a Delaware corporation (the “Warrantholder”)
in consideration for, among other things, the financial accommodations provided for in the Loan Agreement, the right to purchase
Units (as defined below) pursuant to this Warrant Agreement (as amended, restated, supplemented or otherwise modified from time
to time, this “Agreement”);
NOW,
THEREFORE, in consideration of the Agent and the lenders party thereto executing and delivering the Loan Agreement and providing
the financial accommodations contemplated therein, and in consideration of the mutual covenants and agreements contained herein,
the Company and the Warrantholder agree as follows:
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SECTION 1.
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GRANT OF THE RIGHT TO PURCHASE UNITS.
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For
value received, the Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject
to the conditions hereinafter set forth, to subscribe for and purchase, from the Company, an aggregate number of Units equal to
the quotient derived by dividing (a) the Warrant Coverage (as defined below) by (b) the Exercise Price (as defined below). The
Exercise Price of such Units is subject to adjustment as provided in Section 8. As of the Effective Date, the Warrantholder is
entitled to subscribe for and purchase the number of Units set forth on Schedule A. Schedule A shall be automatically updated
as of each Advance Date (as defined in the Loan Agreement) by Warrantholder and such update shall be deemed to be correct absent
manifest error.
As
used herein, the following terms shall have the following meanings:
“Business
Day” means any day other than Saturday, Sunday and any other day on which banking institutions in the State of California
are closed for business.
“Company”
means CENTURY THERAPEUTICS, LLC, a Delaware limited liability company, and any successor or surviving entity that assumes the
obligations of the Company under this Agreement pursuant to Section 8(a).
“Exercise
Price” means $5.55 per Unit, subject to adjustment pursuant to Section 8.
“Initial
Public Offering” means the initial underwritten public offering of the common equity of the Company (or any corporation
resulting from one or more reorganization transactions effected prior to such offering) pursuant to a registration statement under
the Securities Act, which registration statement has been declared effective by the Securities and Exchange Commission (the “SEC”).
“Merger
Event” means any of the following:
(a) a
sale, lease, exclusive license or other transfer of all or substantially all assets of the Company to a non-Affiliated third-party;
or
(b) any
merger or consolidation involving the Company in which the Company is not the surviving entity, or in which the Company’s
outstanding equity interests are otherwise converted into or exchanged for equity interests, other securities or property of another
entity other than any such merger or consolidation in which the equity securities of the Company immediately prior to such merger
or consolidation, continue to represent a majority of the voting power of the surviving entity (or, if the surviving entity is
a wholly owned subsidiary, its parent) immediately after such merger or consolidation (provided that, all Units issuable upon
exercise of warrants outstanding immediately prior to such consolidation or merger shall be deemed to be outstanding immediately
prior to such merger or consolidation and, if applicable, converted or exchanged in such merger or consolidation on the same terms
as the actual outstanding equity interests are converted or exchanged).
“Operating
Agreement” means that certain Amended and Restated Limited Liability Company Agreement of the Company, dated as of June
21, 2019, as amended, restated, supplemented or otherwise modified from time to time.
“Organizational
Documents” means the Company’s Certificate of Formation, Operating Agreement or other constitutional document,
as amended, restated, supplemented or otherwise modified from time to time.
“Purchase
Price” means, with respect to any exercise of this Agreement, an amount equal to the Exercise Price, as of the relevant
time multiplied by the number of Units requested to be exercised under this Agreement pursuant to such exercise.
“Securities
Act” means the Securities Act of 1933, as amended.
“Units”
means the Units of the Company, and, to the extent provided in Sections 8(a) and 8(b), any other equity interests into
or for which such Units may be converted or exchanged.
“Warrant
Coverage” means an amount equal to 2.25% of the aggregate original principal amount of the Term Loan Advances (as defined
in the Loan Agreement) actually made to the Company pursuant to Section 2.2 of the Loan Agreement.
“Warrantholder”
has the meaning set forth in the preamble of this Agreement.
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SECTION 2.
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TERM OF THE AGREEMENT.
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Except
as otherwise provided for herein, the term of this Agreement and the right to purchase Units as granted herein shall commence
on the Effective Date and shall be exercisable for a period ending on the tenth (10th) anniversary of the Effective Date.
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SECTION
3.
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EXERCISE
OF THE PURCHASE RIGHTS.
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(a)
Exercise. The purchase rights set forth in this Agreement
are exercisable by the Warrantholder, in whole or in part, at any time, or from time to time, prior to the expiration of the term
set forth in Section 2, by tendering to the Company at its principal office a notice of exercise in the form attached hereto
as Exhibit I (the “Notice of Exercise”), duly completed and executed. Promptly upon receipt of the Notice
of Exercise and the payment of the Purchase Price in accordance with the terms set forth below, and in no event later than three
(3) Business Days thereafter, the Company shall issue to the Warrantholder a certificate for the number of Units purchased and
shall execute the acknowledgment of exercise in the form attached hereto as Exhibit II (the “Acknowledgment of Exercise”)
indicating the number of Units which remain subject to future purchases, if any. If the applicable Units are not then certificated
by the Company, the Company will deliver to the Warrantholder such evidence of the issuance of such Units to Warrantholder as
required or permitted under the Operating Agreement or, if there be none, such evidence as the Warrantholder may reasonably request.
(b) The Purchase Price may be paid at the Warrantholder’s election
either (i) by cash or check, or (ii) by surrender of all or a portion of the Warrant for Units to be exercised under this Agreement
and, if applicable, an amended Agreement representing the remaining number of units purchasable hereunder, as determined below
(“Net Issuance”). If the Warrantholder elects Net Issuance, the Company will issue Units in accordance with the following
formula:
X
= Y(A-B)
A
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Where:
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X=
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the number of Units to be issued to the Warrantholder.
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Y =
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the number of Units requested
to be exercised under this Agreement.
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A =
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the
current fair market value of one (1) Unit at the time of issuance of such Units.
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For
purposes of the above calculation, current fair market value of Units shall mean with respect to each Unit:
(i) if
the exercise is in connection with an Initial Public Offering, and if the Company’s registration statement relating to such
Initial Public Offering has been declared effective by the SEC, then the fair market value per unit shall be the product of (1)
initial “Price to Public” of the equity interests specified in the final prospectus with respect to the offering (the
“Capital Stock”) and (2) the applicable conversion or exchange ratio of the Units for such Capital Stock, if
any;
(ii) if
the exercise is after, and not in connection with an Initial Public Offering, and:
(A)
if the Capital Stock is traded on a securities exchange, the fair
market value shall be the product of (x) the average last sale price of a share of Capital Stock reported for the five (5) trading
days ending three (3) days before the day the current fair market value of the securities is being determined and (y) the applicable
conversion or exchange ratio of Units for such Capital Stock, if any; or
(B)
if the Capital Stock is traded or quoted over-the-counter, the
fair market value shall be the product of (x) the average of the closing bid and asked price quoted on the NASDAQ National Market
(or similar system) for such Capital Stock for the five (5) trading days ending three (3) days before the day the current fair
market value of the securities is being determined and (y) the applicable conversion or exchange ratio of Units for such Capital
Stock, if any;
(iii) if
at any time the Units (or Capital Stock, if applicable) are not listed on any securities exchange or quoted in the NASDAQ National
Market (or similar system) or the over-the-counter market, the current fair market value of each Unit shall be the highest price
per unit which the Company could obtain from a willing buyer (not a current employee or manager) for a Unit sold by the Company,
from authorized but unissued Units, as determined in good faith by its Board of Managers, unless the Company shall become subject
to a Merger Event, in which case the fair market value of a Unit shall be deemed to be the per unit value received by each holder
of a Unit pursuant to such Merger Event.
Upon
partial exercise by either cash or Net Issuance, the Company shall promptly issue an amended Agreement representing the remaining
number of Units purchasable hereunder. Except for the number of Units, all other terms and conditions of such amended Agreement
shall be identical to those set forth herein, including, but not limited to the Effective Date hereof.
(c) Exercise
Prior to Expiration. To the extent this Agreement is not previously exercised as to all Units subject hereto, and if the fair
market value of one Unit is greater than the Exercise Price then in effect, this Agreement shall be deemed automatically exercised
pursuant to Section 3(a) (even if not surrendered) immediately before its expiration. For purposes of such automatic exercise,
the fair market value of one Unit upon such expiration shall be determined pursuant to Section 3(a). To the extent this
Agreement or any portion thereof is deemed automatically exercised pursuant to this Section 3(c). the Company agrees to
promptly notify the Warrantholder of the number of Units, if any, the Warrantholder is to receive by reason of such automatic
exercise.
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SECTION
4.
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RESERVATION
OF UNITS.
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During
the term of this Agreement, the Company will at all times have authorized and reserved a sufficient number of its Units to provide
for the exercise of the rights to purchase Units as provided for herein.
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SECTION
5.
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NO
FRACTIONAL UNIT.
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No
fractional unit shall be issued upon the exercise of this Agreement, but in lieu of such fractional units the Company shall make
a cash payment therefor upon the basis of the then fair market value of one Unit.
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SECTION
6.
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NO RIGHTS AS MEMBER.
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This
Agreement does not entitle the Warrantholder to any voting rights or other rights as a member of the Company prior to the exercise
of this Agreement. Upon exercise of this Agreement, the Company agrees that the Warrantholder shall be admitted as a Member (as
defined in the Operating Agreement) under the Operating Agreement with respect to the Units issued upon such exercise automatically
and without any further action by any person, and the Warrantholder and such Units shall, subject to the provisions of Section
12 below, thereupon be subject to and bound by the Operating Agreement. The Warrantholder shall, promptly upon the exercise
hereof, execute and deliver a counterpart signature page, joinder agreement, instrument of accession or similar instrument to
the Operating Agreement, in substantially the form attached hereto as Exhibit IV.
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SECTION 7.
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WARRANTHOLDER REGISTRY.
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The
Company shall maintain a registry showing the name and address of the registered holder of this Agreement. The Warrantholder’s
initial address, for purposes of such registry, is set forth below the Warrantholder’s signature on this Agreement. The
Warrantholder may change such address by giving written notice of such changed address to the Company.
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SECTION 8.
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ADJUSTMENT
RIGHTS.
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The
Exercise Price and the number of Units purchasable hereunder are subject to adjustment, as follows:
(a) Merger
Event. If at any time there shall be a Merger Event, then, as a part of such Merger Event, lawful provision shall be made
so that the Warrantholder shall receive,
concurrently with
the closing of such Merger Event, the number of Units or other securities or property, if any, (collectively, “Reference
Property”) that the Warrantholder would have received in connection with such Merger Event if the Warrantholder had
exercised this Agreement immediately prior to the Merger Event pursuant to the Net Issuance provisions of this Warrant Agreement
without actually exercising such right.
(b) Reclassification
of Units. Except for any Merger Event subject to Sections 8(a) and 8(f), if the Company at any time shall, by
combination, reclassification, exchange or subdivision of securities or otherwise, change any of the securities as to which purchase
rights under this Agreement exist into the same or a different number of securities of any other class or classes, this Agreement
shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of
such change with respect to the securities which were subject to the purchase rights under this Agreement immediately prior to
such combination, reclassification, exchange, subdivision or other change. The provisions of this Section 8(b) shall similarly
apply to any successive combination, reclassification, exchange, subdivision or other change.
(c) Subdivision or Combination of Units. If the Company at
any time shall combine or subdivide its Units, (i) in the case of a subdivision, the Exercise Price shall be proportionately decreased
and the number of Units issuable hereunder shall be proportionately increased, or (ii) in the case of a combination, the Exercise
Price shall be proportionately increased and the number of Units issuable hereunder shall be proportionately decreased.
(d)
Dividends. If the Company at any time while this Agreement
is outstanding and unexpired shall:
(i)
pay a dividend or distribution with respect to the Units payable
in Units, then the Exercise Price shall be adjusted, from and after the date of determination of holders entitled to receive such
dividend or distribution, to that price determined by multiplying the Exercise Price in effect immediately prior to such date
of determination by a fraction (A) the numerator of which shall be the total number of Units outstanding immediately prior to
such dividend or distribution, and (B) the denominator of which shall be the total number of Units outstanding immediately after
such dividend or distribution; or
(ii)
make any other distribution with respect to Units, except for
a distribution of cash upon the outstanding units of a class of equity interests made solely for the purpose of permitting the
holders thereof to satisfy their respective federal and state tax obligations in respect of the taxable income of the Company,
or any distribution specifically provided for in any other clause of this Section 8. then, in each such case, provision
shall be made by the Company such that the Warrantholder shall receive upon exercise or conversion of this Agreement a proportionate
share of any such distribution as though it were the holder of the Units as of the record date fixed for the determination of
the members of the Company entitled to receive such distribution.
(e) Reserved.
(f) Notice of Adjustments. If: (i) the Company shall declare
any dividend or distribution upon its Units, whether in Units, cash, property or other securities; (ii) there shall be any Merger
Event; (iii) there shall be an Initial Public Offering; (iv) the Company shall sell, lease, license or otherwise transfer all
or substantially all of its assets; or (v) there shall be any reorganization, voluntary dissolution, liquidation or winding up
of the Company; then, in connection with each such event, the Company shall send to the Warrantholder: (A) at least thirty (30)
days’ prior written notice of the date on which the books of the Company shall close or a record shall be taken for such
dividend, distribution, subscription rights (specifying the date on which the holders of Units shall be entitled thereto) or for
determining rights to vote in respect of such Merger Event, reorganization, dissolution, liquidation or winding up; (B) in the
case of any such Merger Event, sale, lease, license or other transfer of all or substantially all assets, reorganization, dissolution,
liquidation or winding up, at least thirty (30) days’ prior written notice of the date when the same shall take place (and
specifying the date on which the holders of Units shall be entitled to exchange their Units for securities or other property deliverable
upon such Merger Event, reorganization, dissolution, liquidation or winding up); and (C) in the case of an Initial Public Offering,
the Company shall give the Warrantholder at least thirty (30) days’ written notice prior to the effective date thereof.
Each
such written notice shall set forth, in reasonable detail, (i) the event requiring the notice, and (ii) if any adjustment is required
to be made, (A) the amount of such adjustment, (B) the method by which such adjustment was calculated, (C) the adjusted Exercise
Price (if the Exercise Price has been adjusted), and (D) the number of Units subject to purchase hereunder after giving effect
to such adjustment, and shall be given in accordance with Section 13(g) below.
(g)
Timely Notice. Failure to timely provide such notice required
by Section 8(f) above shall entitle the Warrantholder to retain the benefit of the applicable notice period notwithstanding
anything to the contrary contained in any insufficient notice received by the Warrantholder. For purposes of this Section 8(g).
and notwithstanding anything to the contrary in Section 13(g), the notice period shall begin on the date the Warrantholder
actually receives a written notice containing all the information required to be provided in such Section 13(g).
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SECTION
9.
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
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(a)
Reservation of Units. As of the Effective Date, the maximum
number of Units that may become issuable upon exercise of the Warrantholder’s rights under this Agreement have been duly
and validly reserved and, when issued in accordance with the provisions of this Agreement, will be validly issued, and will be
free of any taxes, liens, charges or encumbrances of any nature whatsoever; provided, that the Units issuable pursuant
to this Agreement may be subject to restrictions on transfer under state and/or federal securities laws. The Company has made
available to the Warrantholder true, correct and complete copies of its Organizational Documents. The issuance of certificates
for Units upon exercise of this Agreement shall be made without charge to the Warrantholder for any issuance tax in respect thereof,
or other cost incurred by the Company in connection with such exercise and the related issuance of Units; provided, that the Company
shall not be required to pay any tax which may be payable in respect of any transfer and the issuance and delivery of any certificate
in a name other than that of the Warrantholder.
(b) Due Authority. The execution and delivery by the Company
of this Agreement and the performance of all obligations of the Company hereunder, including the issuance to the Warrantholder
of the right to acquire the Units, have been duly authorized by all necessary action on the part of the Company. This Agreement:
(i) does not violate the Organizational Documents; (ii) does not contravene any law or governmental rule, regulation or order
applicable to the Company; (iii) does not give rise to any right of participation or similar right, except for any such right,
which has been waived in writing, a copy of such waiver having been provided to the Warrantholder as of the date of exercise;
and (iv) does not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract or
other instrument to which the Company is a party or by which it is bound. This Agreement constitutes a legal, valid and binding
agreement of the Company, enforceable in accordance with its terms.
(c) Consents
and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other action in respect
of any state, federal or other governmental authority or agency is required with respect to the execution, delivery and performance
by the Company of its obligations under this Agreement, except for the filing of notices pursuant to Regulation D under the Securities
Act and any filing required by applicable state securities law, which filings will be effective by the time required thereby.
(d) Issued
Securities. All issued and outstanding units or other equity interests of the Company have been duly authorized and validly
issued. All outstanding units and any other equity interests were issued in full compliance with all federal and state securities
laws. In addition, as of the date immediately preceding the Effective Date:
(i)
The authorized capital of the Company consists of 108,968,247
Units of which 93,370,681 Units are issued and outstanding and 121,620 Unit Equivalents, none of which are issued and outstanding.
(ii)
There are no options, warrants, conversion privileges or other
rights presently outstanding to purchase or otherwise acquire any authorized but unissued Units of the Company except as set forth
on the capitalization table attached hereto as Appendix I. The Company has no outstanding loans to any employee, officer
or director of the Company.
(iii)
No holder of Units of the Company has preemptive rights with respect
to the issuance of this Agreement or the purchase of Units hereunder which have not been waived.
(e)
Registration Rights. The Company agrees that any common
equity issued and issuable upon conversion of the Units shall have the “Piggyback,” and S-3 registration rights pursuant
to and as set forth in the Registration Rights Agreement attached as Exhibit B to the Operating Agreement (the “Registration
Rights Agreement”) to be entered into by and among the Company and the Members promptly following the Company IPO (as
defined in the Operating Agreement) on a pari passu basis with the parties thereto. The form of Registration Rights Agreement
may not be amended, modified or waived in a manner adverse to the Warrantholder without the prior written consent of the Warrantholder
unless such amendment, modification or waiver affects the rights associated with the Units issued and issuable upon exercise hereof
in the
same
manner as such amendment, modification, or waiver affects the rights associated with all outstanding Units whose holders are parties
thereto.
(f) Other
Commitments to Register Securities. Except as set forth in this Agreement, the Company is not, pursuant to the terms of any
other agreement currently in existence, under any obligation to register under the Securities Act any of its presently outstanding
equity interests or any of its securities which may hereafter be issued.
(g) Exempt Transaction. Subject to the accuracy of the Warrantholder’s
representations in Section 10, the issuance of the Units upon exercise of this Agreement will constitute a transaction
exempt from (i) the registration requirements of Section 5 of the Securities Act, in reliance upon Section 4(a)(2) thereof, and
(ii) the qualification requirements of the applicable state securities laws.
(h) Compliance
with Rule 144. If the Warrantholder proposes to sell Units issuable upon the exercise of this Agreement in compliance with
Rule 144 promulgated by the SEC, then, upon the Warrantholder’s written request to the Company, the Company shall furnish
to the Warrantholder, within ten days after receipt of such request, a written statement confirming the Company’s compliance
with the filing requirements of the SEC as set forth in such Rule, as such Rule may be amended from time to time.
(i) Information Rights. During the term of this Agreement,
the Warrantholder shall be entitled to the information rights contained in Section 7.1(b), (c), and (i) of the Loan Agreement,
and Section 7.1(b), (c), and (i) of the Loan Agreement is hereby incorporated into this Agreement by this reference as
though fully set forth herein.
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SECTION 10.
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REPRESENTATIONS AND COVENANTS
OF THE WARRANTHOLDER.
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This
Agreement has been entered into by the Company in reliance upon the following representations and covenants of the Warrantholder:
(a) Investment Purpose. The right to acquire Units is being
acquired for investment and not with a view to the sale or distribution of any part thereof, and the Warrantholder has no present
intention of selling or engaging in any public distribution of such rights or the Units except pursuant to an effective registration
statement or an exemption from the registration requirements of the Securities Act.
(b) Private
Issue. The Warrantholder understands (i) that the Units issuable upon exercise of this Agreement is not registered under the
Securities Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Agreement
will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such
exemption is predicated on the representations set forth in this Section 10.
(c) Financial Risk. The Warrantholder has such knowledge and
experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the
ability to bear the economic risks of its investment.
(d) Risk of No Registration. The Warrantholder understands
that if the Company does not register with the SEC pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or file reports pursuant to Section 15(d) of the Exchange Act, or if a registration statement covering
the securities under the Securities Act is not in effect when it desires to sell (i) the rights to purchase Units pursuant to
this Agreement or (ii) the Units issued or issuable upon exercise of the right to purchase, it may be required to hold such securities
for an indefinite period. The Warrantholder also understands that any sale of (A) its rights hereunder to purchase Units or (B)
Units issued or issuable hereunder which might be made by it in reliance upon Rule 144 under the Securities Act may be made only
in accordance with the terms and conditions of that Rule.
(e) Accredited
Investor. The Warrantholder is an “accredited investor” within the meaning of the Securities and Exchange Rule
501 of Regulation D, as presently in effect.
Subject
to compliance with applicable federal and state securities laws, this Agreement and all rights hereunder are transferable, in
whole or in part, to an Affiliate of the Warrantholder or otherwise in accordance with Section 10.01(a) of the Operating Agreement,
without charge to the holder hereof (except for transfer taxes) upon surrender of this Agreement properly endorsed. Each taker
and holder of this Agreement, by taking or holding the same, consents and agrees that this Agreement, when endorsed in blank,
shall be deemed negotiable, and that the holder hereof, when this Agreement shall have been so endorsed and its transfer recorded
on the Company’s books, shall be treated by the Company and all other persons dealing with this Agreement as the absolute
owner hereof for any purpose and as the person entitled to exercise the rights represented by this Agreement. The transfer of
this Agreement shall be recorded on the books of the Company upon receipt by the Company of a notice of transfer in the form attached
hereto as Exhibit III (the “Transfer Notice”), at its principal offices and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. Until the Company receives such Transfer Notice, the Company may
treat the registered owner hereof as the owner for all purposes. The Warrantholder may not transfer this Warrant to a competitor
of the Company, as reasonably determined by the Board of Managers.
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SECTION 12.
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TAX TREATMENT OF WARRANT.
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(a) Application
of Noncompensatory Option Treasury Regulations. The parties hereto acknowledge and agree that at the time of the execution
of this Agreement, the Company and the Warrantholder intend that the Agreement be treated as a “noncompensatory option”
within the meaning of Treasury Regulations Section 1.721-2(f). Therefore, unless and until this Agreement is exercised in accordance
with its terms, the Company is taxed as a corporation under the Internal Revenue Code of 1986, as amended, or any successor statute
the (“Code”) (and only as to all periods commencing thereon or thereafter), or there is superseding authority under
which the Company’s tax counsel determines in writing (and a copy thereof provided to the Warrantholder) such treatment
is not appropriate, or a Final Determination (as defined below) to the contrary has been made, for federal and applicable state
and local income tax purposes, the parties hereto agree to (i) treat the issuance of the Agreement as an open transaction and
not as the issuance of a partnership or membership interest in the Company, (ii) treat each Warrantholder,
with respect to ownership
of the Agreement, as the holder of a warrant or option exercisable for limited liability company units or interests and not as
a partner or a Member of the Company, and (iii) consistent with the regulations promulgated by the Treasury Department (“Treasury
Regulations”) under the Code regarding noncompensatory partnership options, not allocate any profits or losses or other
items of income, gain, deduction, loss or credit to a Warrantholder of this Agreement with respect to this Agreement or the limited
liability company interests issuable on exercise hereof prior to the exercise of this Agreement. The parties shall file all tax
returns and information reports in a manner consistent with the foregoing, except to the extent otherwise required by the adoption
of any superseding authority under which the Company’s tax counsel determines in writing (and a copy thereof provided to
the Warrantholder) such treatment is not appropriate or a Final Determination. To the extent the Company, after consultation with
its tax counsel, determines that it is required to make any disclosure regarding the treatment of this Agreement described above
under Code Section 6662 or otherwise on its tax returns or other tax filings, the Company shall promptly notify the Warrantholder
and, prior to filing, give the Warrantholder and its agents and representatives an opportunity to review and comment on any such
disclosure. For purposes of this Section 12, “Final Determination” means, with respect to any issue,
(x) a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgment, decree or other
order has become final and not subject to further appeal, (y) a closing agreement entered into under Code Section 7121 or any
other binding settlement agreement entered into in connection with or in contemplation of an administrative or judicial proceeding,
or (z) the completion of the highest level of administrative proceedings if a judicial contest is not or is no longer available.
(b) Exercise
of Warrant. Upon exercise of this Agreement, the parties agree, with respect to all periods prior to the date (if any) on
which the Company began to be taxed as a corporation, to treat the exercise of this Agreement consistently with applicable Treasury
Regulations, including, without limitation, to the extent allowed thereunder (i) establishing an initial Capital Account (as defined
in the Operating Agreement) for the Warrantholder equal to the consideration paid or deemed paid to the Company for the issuance
of this Agreement plus the fair market value of any property contributed to the Company upon exercise of this Agreement, if any,
(ii) revaluing all Company assets and property immediately following exercise of this Agreement and allocating built-in gain or
loss in the Company’s assets and property to the Warrantholder and then to the historic Members as contemplated under the
Treasury Regulations and, to the extent such allocation is insufficient to adjust the Warrantholder’s Capital Account in
accordance with its right to share in capital, shifting capital between the Warrantholder and the historic Members as contemplated
under the Treasury Regulations, and (iii) making associated tax allocations required by the Treasury Regulations, including any
necessary corrective allocations and Code Section 704(c) allocations, including, as applicable, remedial allocations under Section
1.704-3(d) of the Treasury Regulations.
(c) Effect
on Tax Distributions. For purposes of determining the amount of any tax distribution made under the Operating Agreement to
an exercising Warrantholder who becomes a Member, any Code Section 704(c) allocations or “corrective allocations”
made as contemplated in Section 12(b) to such Member shall be treated as taxable income allocated to such Member by the
Company, a tax distribution shall be made with respect to such allocations, and any and all tax distributions to an exercising
Warrantholder (whether made pursuant to this Section 12(c) or the Operating Agreement) shall be computed in accordance
with the Operating
Agreement. If, pursuant to a Final Determination or otherwise, the Warrantholder is allocated taxable income
with respect to this Agreement in respect of any period prior to exercise hereof and such Warrantholder has not otherwise received
a tax distribution under the Operating Agreement with respect to such amounts, and/or if the Warrantholder is, with respect to
any period prior to exercise hereof, treated by federal or state tax authorities as a Member and the Units issuable upon exercise
hereof treated as outstanding pursuant to Treasury Regulation 1.761-3 and/or any corresponding applicable state tax regulation,
then promptly upon making such required allocation of taxable income to the Warrantholder or receipt of the Warrantholder’s
written notice of such Final Determination, as applicable, the Company shall indemnify the Warrantholder from and against, and
shall either make a payment to all appropriate taxing authorities (if required) in satisfaction of, or shall make a distribution
of cash to the Warrantholder to cover, such Warrantholder’s aggregate federal and state tax liabilities in respect of such
amount of taxable income or treatment (which shall include, without limitation, (x) all interest, penalties and fines thereon,
(y) and all penalties, fines and interest thereon, if any, in respect of the Warrantholder’s liability for failure to file
tax returns in all applicable jurisdictions with respect to such periods for which such taxing authorities treat the Warrantholder
as the owner of the Units, and (z) all amounts necessary for the Warrantholder to satisfy its aggregate federal and state tax
liabilities in respect of such Company payments or distributions to the Warrantholder), and such payment or distribution shall
be made prior to making any other subsequent distributions under the Operating Agreement. For the avoidance of doubt, any tax
distributions to, or indemnification payments on behalf of, a Warrantholder made pursuant to this Section 12(c) or, as applicable,
in accordance with Section 7.03 of the Operating Agreement applied in conjunction with this Section 12(c), will be treated for
purposes of the Operating Agreement as advances on distributions pursuant to Section 7.02(a)(i) and Section 13.03(c)(iii) of the
Operating Agreement and will reduce, dollar-for-dollar, the amount otherwise Distributable to such Member pursuant to Section
7.02(a)(i) and Section 13.03(c)(iii) of the Operating Agreement. Notwithstanding the foregoing, this Section 12(c) shall
not apply with respect to income to the Warrantholder from its sale or other disposition of this Agreement or of any securities
issued on exercise hereof.
(d) Conversion
Liability. Notwithstanding anything to the contrary in this Section 12, the Company’s obligations under Section
12(c) above shall not apply to any tax liability or obligation of the Warrantholder under the Code or Treasury Regulations
(or applicable state tax laws or regulations) arising upon and by reason of any Company (or any such successor entity’s)
reorganization, conversion, tax election or the like following which the Company (or any successor entity) is taxed as a corporation
under the Code.
(e) Survival.
The provisions of this Section 12 shall survive (i) the exercise of this Agreement and the sale or other disposition by
the Warrantholder of the Units, and (ii) the expiration or earlier termination of this Agreement.
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SECTION 13.
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MISCELLANEOUS.
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(a) Effective Date. The provisions of this Agreement shall
be construed and shall be given effect in all respects as if it had been executed and delivered by the Company on the date hereof.
This Agreement shall be binding upon any successors or assigns of the Company.
(b) Remedies. In the event of any default hereunder, the non-defaulting
party may proceed to protect and enforce its rights either by suit in equity and/or by action at law, including but not limited
to an action for damages as a result of any such default, and/or an action for specific performance for any default where the
Warrantholder will not have an adequate remedy at law and where damages will not be readily ascertainable. The Company expressly
agrees that it shall not oppose an application by the Warrantholder or any other person entitled to the benefit of this Agreement
requiring specific performance of any or all provisions hereof or enjoining the Company from continuing to commit any such breach
of this Agreement.
(c) No Impairment of Rights. The Company will not, by amendment
of its Organizational Documents or through any other means, avoid or seek to avoid the observance or performance of any of the
terms of this Agreement, but will at all times in good faith assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against impairment.
(d) Additional
Documents. The Company, upon execution of this Agreement, shall provide the Warrantholder with certified resolutions of the
Company’s Board of Managers evidencing approval of the form and content of this Agreement and the authorization and reservation
of Units that may become issuable upon exercise of this Warrant. The Company shall also supply documentation reasonably necessary
to evaluate whether to exercise this Agreement, including without limitation, (i) any merger/purchase/asset sale agreement and
related documents and estimated payout allocations to each of the respective Members, warrant and option holders in connection
with a Merger Event, (ii) the most recent capitalization tables, 409A valuations (if any), and board determination of unit value
(including any waterfall or per unit allocations provided to the unitholders), and (iii) most recent Organizational Documents.
(e)
Attorney’s Fees. In any litigation, arbitration or
court proceeding between the Company and the Warrantholder relating hereto, the prevailing party shall be entitled to attorneys’
fees and expenses and all costs of proceedings incurred in enforcing this Agreement. For the purposes of this Section 13(e), attorneys’
fees shall include, without limitation, fees incurred in connection with the following: (i) contempt proceedings; (ii) discovery;
(iii) any motion, proceeding or other activity of any kind in connection with an insolvency proceeding; (iv) garnishment, levy,
and debtor and third party examinations; and (v) post-judgment motions and proceedings of any kind, including without limitation
any activity taken to collect or enforce any judgment.
(f) Severability.
In the event any one or more of the provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable,
the remaining provisions of this Agreement shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced
by a mutually acceptable valid, legal and enforceable provision, which comes closest to the intention of the parties underlying
the invalid, illegal or unenforceable provision.
(g) Notices.
Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other
communication that is required, contemplated, or permitted under this Agreement or with respect to the subject matter hereof shall
be in writing, and shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (i) the day
of transmission by facsimile or hand delivery if transmission or delivery
occurs on a business day at or before 5:00 pm in the
time zone of the recipient, or, if transmission or delivery occurs on a non-business day or after such time, the first business
day thereafter, or the first business day after deposit with an overnight express service or overnight mail delivery service;
or (ii) the third (3rd) calendar day after deposit in the United States mails, with proper first class postage prepaid, and shall
be addressed to the party to be notified as follows:
If
to the Warrantholder:
HERCULES
TECHNOLOGY MANAGEMENT CO II, INC. Legal Department
Attention:
Chief Legal Officer and R. Bryan Jadot
400
Hamilton Avenue, Suite 310
Palo
Alto, CA 94301
Facsimile:
650-473-9194
Telephone:
650-289-3060
With
a copy to (which shall not constitute notice):
Barnes
& Thornburg LLP
Attention: Troy Zander
655 W. Broadway, Suite 900
San Diego, C A 92101
Telephone: (650) 260-4767
(i) If
to the Company:
CENTURY
THERAPEUTICS, LLC
Attention:
Douglas Carr
3675
Market Street
Philadelphia,
PA 19104
Facsimile:
Telephone:
With
a copy to (which shall not constitute notice):
Troutman
Pepper Hamilton Sanders LLP
Attention: Rachael Bushey and Kathryn Nordick
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
Telephone: (215)981-4379
or
to such other address as each party may designate for itself by like notice.
(h) Entire
Agreement: Amendments. This Agreement constitutes the entire agreement and understanding of the parties hereto in respect
of the subject matter hereof, and supersedes and replaces in their entirety any prior proposals, term sheets, letters, negotiations
or other documents or agreements, whether written or oral, with respect to the subject matter hereof,
including
the Warrantholder’s proposal letter dated June 23, 2020. None of the terms of this Agreement may be amended except by an
instrument executed by each of the parties hereto.
(i) Headings.
The various headings in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of
this Agreement or any provisions hereof.
(j) No
Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by
the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
(k) No
Waiver. No omission or delay by the Warrantholder at any time to enforce any right or remedy reserved to it, or to require
performance of any of the terms, covenants or provisions hereof by the Company at any time designated, shall be a waiver of any
such right or remedy to which the Warrantholder is entitled, nor shall it in any way affect the right of the Warrantholder to
enforce such provisions thereafter.
(l) Survival. All agreements, representations and warranties
contained in this Agreement or in any document delivered pursuant hereto shall be for the benefit of the Warrantholder and shall
survive the execution and delivery of this Agreement and the expiration or other termination of this Agreement.
(m) Governing
Law. This Agreement has been negotiated and delivered to the Warrantholder in the State of California, and shall have been
accepted by the Warrantholder in the State of California. Delivery of Units to the Warrantholder by the Company under this Agreement
is due in the State of California. This Agreement shall be governed by, and construed and enforced in accordance with, the laws
of the State of Delaware, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.
(n) Consent
to Jurisdiction and Venue. All judicial proceedings arising in or under or related to this Agreement may be brought in any
state or federal court of competent jurisdiction located in the State of California. By execution and delivery of this Agreement,
each party hereto generally and unconditionally: (i) consents to personal jurisdiction in Santa Clara County, State of California;
(ii) waives any objection as to jurisdiction or venue in Santa Clara County, State of California; (iii) agrees not to assert any
defense based on lack of jurisdiction or venue in the aforesaid courts; and (iv) irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement. Service of process on any party hereto in any action arising out of or relating
to this Agreement shall be effective if given in accordance with the requirements for notice set forth in Section 13(g),
and shall be deemed effective and received as set forth in Section 13(g). Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any
other jurisdiction.
(o) Mutual
Waiver of Jury Trial. Because disputes arising in connection with complex financial transactions are most quickly and economically
resolved by an experienced and
expert person and the parties wish applicable state and federal laws to apply (rather than arbitration
rules), the parties desire that their disputes be resolved by a judge applying such applicable laws. EACH OF THE COMPANY AND THE
WARRANTHOLDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSSCLAIM, COUNTERCLAIM,
THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY THE COMPANY AGAINST THE WARRANTHOLDER OR
ITS ASSIGNEE OR BY THE WARRANTHOLDER OR ITS ASSIGNEE AGAINST THE COMPANY. This waiver extends to all such Claims, including Claims
that involve persons other than Company and the Warrantholder; Claims that arise out of or are in any way connected to the relationship
between the Company and the Warrantholder; and any Claims for damages, breach of contract, specific performance, or any equitable
or legal relief of any kind, arising out of this Agreement.
(p) Judicial
Reference. If the waiver of jury trial set forth above is ineffective or unenforceable, the parties agree that all Claims
shall be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before
a mutually acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of Santa Clara County,
California. Such proceeding shall be conducted in Santa Clara County, California, with California rules of evidence and discovery
applicable to such proceeding.
(q) Prejudgment
Relief. In the event Claims are to be resolved by arbitration, either party may seek from a court of competent jurisdiction
identified in Section 13(n), any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief
enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by judicial
reference.
(r) Counterparts.
This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and
by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of
which counterparts shall constitute but one and the same instrument.
[Remainder
of Page Intentionally Left Blank]
[SIGNATURE
PAGE TO WARRANT AGREEMENT TO PURCHASE UNITS]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by its officers thereunto duly authorized as of
the Effective Date.
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COMPANY:
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CENTURY THERAPEUTICS, LLC
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By:
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/s/ Douglas
Carr
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Name:
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Douglas Carr
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Title:
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Vice
President Finance & Operations
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WARRANTHOLDER:
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HERCULES TECHNOLOGY MANAGEMENT CO II, INC.
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By:
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/s/ Jennifer Choe
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Name:
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Jennifer Choe
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Title:
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Associate General Counsel
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[Signature
Page to Warrant Agreement]
EXHIBIT
I
NOTICE
OF EXERCISE
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To:
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CENTURY
THERAPEUTICS, LLC
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(1)
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The
undersigned Warrantholder hereby elects to purchase to purchase [________] Units of
CENTURY THERAPEUTICS, LLC, pursuant to the terms of the Warrant Agreement dated September 14, 2020 (the “Agreement”)
between CENTURY THERAPEUTICS, LLC and the Warrantholder, and [CASH PAYMENT: tenders herewith payment of the Purchase Price in
full, together with all applicable transfer taxes, if any.] [NET ISSUANCE: elects pursuant to Section 3(a) of the Agreement to
effect a Net Issuance.]
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(2)
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Please
issue a certificate or certificates representing said Units in the name of the undersigned
or in such other name as is specified below.
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(Name)
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(Address)
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WARRANTHOLDER:
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HERCULES TECHNOLOGY MANAGEMENT CO II, INC.
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By:
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Name:
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Title:
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Date:
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EXHIBIT
II
ACKNOWLEDGMENT
OF EXERCISE
The
undersigned CENTURY THERAPEUTICS, LLC, hereby acknowledges receipt of the Notice of Exercise from HERCULES TECHNOLOGY
MANAGEMENT CO II, INC. (“Warrantholder”) to purchase [________] Units of CENTURY THERAPEUTICS, LLC, pursuant to
the terms of the Warrant Agreement by and between CENTURY THERAPEUTICS, LLC and Warrantholder, dated as of September 14, 2020
(the “Agreement”), and further acknowledges that [_________________] units remain subject to purchase
under the terms of the Agreement.
COMPANY:
CENTURY THERAPEUTICS, LLC
EXHIBIT
III
TRANSFER
NOTICE
(To
transfer or assign the foregoing Agreement execute this form and supply required information. Do not use this form to purchase
units.)
FOR
VALUE RECEIVED, the foregoing Agreement and all rights evidenced thereby are hereby transferred and assigned to
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(Please Print)
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whose address is
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Dated:
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Holder’s Signature:
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Holder’s Address:
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Signature
Guaranteed: _________________________________
NOTE:
The signature to this Transfer Notice must correspond with the name as it appears on the face of the Agreement, without alteration
or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Agreement.
EXHIBIT
Iv
FORM
OF JOINDER AGREEMENt
Reference
is hereby made to the Amended and Restated Limited Liability Company Agreement of Century Therapeutics, LLC, dated June 21, 2019,
as amended, restated and/or otherwise modified from time to time (the “LLC Agreement”), among Century Therapeutics,
LLC, a company organized under the laws of Delaware (the “Company”), and the members of the Company that are
party thereto. Pursuant to and in accordance with Section 4.01(b) of the LLC Agreement, the undersigned hereby acknowledges that
it has received and reviewed a complete copy of the LLC Agreement and agrees that upon execution of this Joinder Agreement, such
Person will become a party to the LLC Agreement and will be fully bound by, and subject to, all of the covenants, terms and conditions
of the LLC Agreement as though an original party thereto and will be deemed, and is hereby admitted as, a Member for all purposes
thereof and entitled to all the rights incidental thereto.
Capitalized
terms used herein without definition will have the meanings ascribed thereto in the LLC Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of [DATE].
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[NEW MEMBER]
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By:
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Name:
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Title:
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APPENDIX
I
CAPITALIZATION
TABLE
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Record Owners
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Number of Units
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Number of Unit
Equivalents
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Percentage
Ownership
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Century Therapeutics, Inc.
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67,226,891
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-
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72
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%
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Bayer Healthcare, LLC
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26,143,790
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-
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28
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%
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Reserved
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15,598,186
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121,620
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-
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Total:
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108,968,867
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121,620
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-
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Pursuant
to the Commitment Agreement by and among the Company, Century Therapeutics, Inc. (“Century”), and Bayer HealthCare,
LLC (“Bayer”), dated as of June 21, 2019 and as amended by that certain First Amendment to Commitment Agreement,
the Company will issue 12,621,140 Units to Bayer promptly following the Second Tranche Closing (as defined therein).
Pursuant
to Section 8.14 of the Operating Agreement, the Company will issue 2,855,426 Units to Century promptly following the Second Tranche
Closing.
SCHEDULE
A
UNITS
As
of the Effective Date – 40,540 Units
Exhibit
10.1
INDEMNIFICATION
AGREEMENT
THIS INDEMNIFICATION
AGREEMENT (the “Agreement”) is made and entered into as of [___________], 2020 between Century Therapeutics,
LLC, a Delaware limited liability company (the “Company”), and [___________] (“Indemnitee”).
WITNESSETH THAT:
WHEREAS,
highly competent persons have become more reluctant to serve companies as managers or in other capacities unless they are provided
with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the company;
WHEREAS,
the Board of Managers of the Company (the “Board”) has determined that, in order to attract and retain qualified
individuals to serve on the Board, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance
to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance
has been a customary and widespread practice among United States-based companies and other business enterprises, the Company believes
that, given current market conditions and trends, such insurance may not be available to it on terms that the Company considers
to be commercially reasonable or, if available to it on commercially reasonable terms during some period of time, may be available
to it in the future only at higher premiums and with more exclusions. At the same time, managers, officers, and other persons in
service to companies or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating
to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself.
The Amended and Restated Limited Liability Company Agreement (as the same may be amended and/or restated from time to time, the
“LLC Agreement”) of the Company requires indemnification of the officers and managers of the Company. Indemnitee
may also be entitled to indemnification pursuant to the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101,
et seq. (the “LLC Act”). The LLC Agreement and the LLC Act expressly provide that the indemnification provisions
set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members
of the Board, officers and other persons with respect to indemnification;
WHEREAS,
the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such
persons to serve on the Board;
WHEREAS,
the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests
of the Company’s members and that the Company should act to assure such persons that there will be increased certainty of
such protection in the future;
WHEREAS,
it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses
on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified;
WHEREAS,
this Agreement is a supplement to and in furtherance of the LLC Agreement and any resolutions adopted pursuant thereto, and shall
not be deemed a substitute
therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;
WHEREAS,
Indemnitee does not regard the protection available under the LLC Agreement and insurance as adequate in the present circumstances,
and may not be willing to serve as a director/manager without adequate protection, and the Company desires Indemnitee to serve
in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company
on the condition that Indemnitee be so indemnified;
WHEREAS,
Indemnitee may have certain rights to indemnification and/or insurance provided by Indemnitee’s employer or other third parties
and certain of their affiliates which is intended to be secondary to the primary obligation of the Company to indemnify Indemnitee
as provided herein, with the Company’s acknowledgement and agreement to the foregoing being a material condition to Indemnitee’s
willingness to serve on the Board; and
WHEREAS,
certain capitalized terms used herein are defined in Section 13 hereof.
NOW, THEREFORE,
in consideration of Indemnitee’s agreement to serve or continue to serve, as applicable, as director/manager of the Company
from and after the date hereof, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Indemnity
of Indemnitee. The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law,
as such may be amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality
thereof.
(a) Proceedings
Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided
in this Section l(a) if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be made, a party
to or participant in any Proceeding other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a),
Indemnitee shall be indemnified against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably
incurred by Indemnitee, or on Indemnitee’s behalf, in connection with such Proceeding or any claim, issue or matter therein,
if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests
of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was
unlawful.
(b) Proceedings
by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section
1(b) if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be made, a party to or participant
in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b), Indemnitee shall be indemnified
against all Expenses actually and reasonably incurred by Indemnitee, or on Indemnitee’s behalf, in connection with such
Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company; provided, however, if applicable law so provides, no indemnification against such Expenses
shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be
liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware (or such other court in which
the Proceeding is properly brought) shall determine that Indemnitee is fairly and reasonably entitled to indemnification.
(c) Indemnification
for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of Indemnitee’s Company Status, a party to and is successful, on the merits or otherwise, in
any Proceeding, Indemnitee shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time,
against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. If
Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less
than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or
matter. For purposes of this Section 1 and without limitation, the termination of any claim, issue or matter in such a Proceeding
by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
(d) [Indemnification
of Appointing Unitholder. Without diminishing or impairing the obligations of the Company set forth in Section 14.02(b) of
the LLC Agreement, if (i) Indemnitee is or was affiliated with one or more venture capital funds or other investment entities
that has invested in the Company (an “Appointing Unitholder”) and (ii) the Appointing Unitholder
is, or is threatened to be made, a party to or a participant in any Proceeding relating to or arising by reason of Appointing Unitholder’s
appointment of or affiliation with Indemnitee or any other director/manager, including, without limitation, any alleged misappropriation
of a Company asset or corporate opportunity, any claim of misappropriation or infringement of intellectual property relating to
the Company, any alleged false or misleading statement or omission made by the Company (or on its behalf) or its employees or agents,
or any allegation of inappropriate control or influence over the Company or its Board members, officers, equity holders or debt
holders, then the Appointing Unitholder will be entitled to indemnification hereunder for Expenses to the same extent as Indemnitee,
and the terms of this Agreement as they relate to procedures for indemnification of Indemnitee and advancement of Expenses shall
apply to any such indemnification of Appointing Unitholder.]1
[The rights provided
to the Appointing Unitholder under this Section 2 shall (i) be suspended during any period during which the Appointing
Unitholder does not have a representative on the Company’s Board, and (ii) terminate on an initial public offering of the
units or common stock of a corporate successor or affiliate of the Company; provided, however, that in the event
of any such suspension or termination, the Appointing Unitholder’s rights to indemnification will not be suspended or terminated
with respect to any Proceeding based in whole or in part on facts and circumstances occurring at any time prior to such suspension
or termination regardless of whether the Proceeding arises before or after such suspension or termination. The Company and Indemnitee
agree that the Appointing Unitholder is an express third party beneficiary of the terms of this Section 1(d).]
2. Additional
Indemnity. In addition to, and without regard to any limitations on, the indemnification provided for in Section 1
of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf if, by reason
of Indemnitee’s Company Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding
(including a Proceeding by or
1
NTD: Delete this section and revise/remove corresponding references for non-member appointed directors.
in the right of the Company), including, without limitation, all liability arising out of the negligence or
active or passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company’s obligations pursuant
to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined
(under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful.
3. Contribution.
(a) Whether
or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending
or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action,
suit or proceeding), to the fullest extent permitted under applicable law, the Company shall pay, in the first instance, the entire
amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment
and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not
enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be
if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted
against Indemnitee.
(b) Without
diminishing or impairing the obligations of the Company set forth in the Section 3(a) above, if, for any reason, Indemnitee
shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action,
suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding),
to the fullest extent permitted under applicable law, the Company shall contribute to the amount of Expenses, judgments, fines
and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative
benefits received by the Company and all officers, managers or employees of the Company, other than Indemnitee, who are jointly
liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other
hand, from the transaction or events from which such action, suit or proceeding arose; provided, however, that the
proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by
reference to the relative fault of the Company and all officers, managers or employees of the Company other than Indemnitee who
are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee,
on the other hand, in connection with the transaction or events that resulted in such expenses, judgments, fines or settlement
amounts, as well as any other equitable considerations which applicable law may require to be considered. The relative fault of
the Company and all officers, managers or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee
(or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined
by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage,
the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.
(c) To
the fullest extent permitted under applicable law, the Company hereby agrees to fully indemnify and hold Indemnitee harmless from
any claims of contribution which may be brought by officers, managers, or employees of the Company, other than Indemnitee, who
may be jointly liable with Indemnitee.
(d) To
the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee
for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee,
whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses actually and
reasonably incurred, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as
is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits
received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding and/or
(ii) the relative fault of the Company (and its managers, officers, employees and agents) and Indemnitee in connection with such
event(s) and/or transaction(s).
4. Indemnification
for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason
of Indemnitee’s Company Status, a witness, or is made (or asked) to respond to discovery requests, in any Proceeding to which
Indemnitee is not a party, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee
or on Indemnitee’s behalf in connection therewith.
5. Advancement
of Expenses. Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses actually and reasonably
incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Company Status within
thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances
from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably
evidence the Expenses actually and reasonably incurred by Indemnitee and shall include or be preceded or accompanied by a written
undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is
not entitled to be indemnified against such Expenses. Advances shall be made without regard to Indemnitee’s ability to repay
Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement.
Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free.
6. Procedures
and Presumptions for Determination of Entitlement to Indemnification. It is the intent of this Agreement to secure for Indemnitee
rights of indemnity that are as favorable as may be permitted under applicable law, including, without limitation, the LLC Act
and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall
apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:
(a) To
obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith
such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and
to what extent Indemnitee is entitled to indemnification. The Chief Executive Officer, President, Secretary or other appropriate
officer of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee
has requested indemnification. Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company,
or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee
unless, and to the extent that, such
failure actually and materially prejudices the interests of the Company its affiliates and
subsidiaries.
(b) Upon
written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination
with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods,
which shall be at the election of the Board (1) by a majority vote of the Disinterested Managers, even though less than a quorum,
(2) by a committee of Disinterested Managers designated by a majority vote of the Disinterested Managers, even though less than
a quorum, (3) if there are no Disinterested Managers or if the Disinterested Managers so direct, by Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee, or (4) if so directed by the Board, by the members of the
Company.
(c) If
the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof,
the Independent Counsel shall be selected as provided in this Section 6(c). The Independent Counsel shall be selected by
the Board and written notice of such selection shall be given to Indemnitee. Indemnitee may, within ten (10) days after such written
notice of selection of Independent Counsel shall have been given, deliver to the Company a written objection to such selection;
provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does
not meet the requirements of “Independent Counsel” as defined in Section 13 of this Agreement, and the
objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person
so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected
may not serve as Independent Counsel unless and until such objection is withdrawn or a court of competant jurisdiction has determined
that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification
pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company
or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution
of any objection which shall have been made by Indemnitee to the Board’s selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and
the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under
Section 6(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such
Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable
fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel
was selected or appointed.
(d) In
making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination
shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption
shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of the Company
(including by its managers or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification
is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the
Company (including by its managers or Independent Counsel) that Indemnitee has not met such
applicable standard of conduct, shall
be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(e) To
the fullest extent permitted by applicable law, including the LLC Act, Indemnitee shall be deemed to have acted in good faith if
Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on
information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel
for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions,
or failure to act, of any director/manager, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for
purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section
6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption
shall have the burden of proof and the burden of persuasion by clear and convincing evidence.
(f) If
the person, persons or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification
shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall, to the fullest extent permitted by applicable law, including the LLC Act,
be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of
a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided,
however, that such sixty (60) day period may be extended for a reasonable time, not to exceed an additional thirty (30)
days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires
such additional time to obtain or evaluate documentation and/or information relating thereto; and provided, further,
that the foregoing provisions of this Section 6(f) shall not apply if the determination of entitlement to indemnification
is to be made by the members of the Company pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days
after receipt by the Company of the request for such determination, the Board or the Disinterested Managers, if appropriate, resolve
to submit such determination to the members for their consideration thereof at the next regularly scheduled meeting of the members,
to be held within seventy five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of
members is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held
for such purpose within sixty (60) days after having been so called and at which, such determination is made.
(g) Indemnitee
shall reasonably cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement
to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and
reasonably necessary to such determination. Any Independent Counsel, member of the Board or member of the Company shall act reasonably
and in good faith in making a determination regarding Indemnitee’s entitlement to indemnification under this Agreement.
Any costs or expenses (including reasonable attorneys’
fees and disbursements) incurred by Indemnitee in so cooperating
with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination
as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless
therefrom.
(h) The
Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to
avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which Indemnitee
is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement
of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee
has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption
shall have the burden of proof and the burden of persuasion by clear and convincing evidence.
(i) The
termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a
plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely
affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner
which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal
Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
7. Remedies
of Indemnitee.
(a) In
the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no
determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within ninety (90) days
after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this
Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) payment of indemnification is not
made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination
is deemed to have been made pursuant to Section 6 of this Agreement, or (vi) the Company or any other person takes or threatens
to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding
designed to deny, or to recover from, Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, Indemnitee
shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction,
of Indemnitee’s entitlement to such indemnification. Indemnitee shall commence such proceeding seeking an adjudication within
one hundred eighty (180) days following the date on which Indemnitee first has the right to commence such proceeding pursuant
to this Section 7(a); provided, however, that the foregoing clause shall not apply in respect of any proceeding
brought by Indemnitee to enforce Indemnitee’s rights under Section 4 of this Agreement. The Company shall not oppose
Indemnitee’s right to seek any such adjudication.
(b) In
the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled
to indemnification, any judicial proceeding
commenced pursuant to this Section 7 shall be conducted in all respects as a
de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b).
(c) If
a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification,
the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement
not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification
under applicable law.
(d) In
the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of Indemnitee’s rights under,
or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance
policies maintained by the Company, the Company shall pay on Indemnitee’s behalf, in advance, any and all expenses (of the
types described in the definition of Expenses in Section 13 of this Agreement) actually and reasonably incurred by Indemnitee
in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification,
advancement of expenses or insurance recovery.
(e) The
Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures
and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company
is bound by all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all Expenses actually
and reasonably incurred and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written
request therefore) advance, to the extent not prohibited by law, such Expenses to Indemnitee, which are actually and reasonably
incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the
Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company,
regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance
recovery, as the case may be.
(f) Notwithstanding
anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be
required to be made prior to the final disposition of the Proceeding.
8. Non-Exclusivity;
Survival of Rights; Insurance; Primacy of Indemnification; Subrogation.
(a) The
rights of indemnification and the right to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive
of any other rights to which Indemnitee may at any time be entitled under applicable law, the LLC Agreement, any agreement, a vote
of members, a resolution of managers of the Company, or otherwise. No amendment, alteration or repeal of this Agreement or of any
provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted
by such Indemnitee in Indemnitee’s Company Status prior to such amendment, alteration or repeal. To the extent that a change in the LLC
Act, whether by statute or judicial decision, permits greater indemnification or advancement of expenses than would be afforded
currently under the
LLC Agreement and this Agreement, it
is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.
No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy
shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other right or remedy.
(b) To
the extent that the Company or its affiliates or subsidiaries maintain an insurance policy or policies providing liability insurance
for managers, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, limited liability
company, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company,
Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage
available for any director/manager, officer, employee, agent or fiduciary under such policy or policies. If, at the time of the
receipt of a notice of a claim pursuant to the terms hereof, the Company has directors’ and officers’ liability insurance
in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures
set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers
to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.
(c) [The
Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement of expenses and/or insurance
provided by Indemnitee’s employer or other third parties and certain of their affiliates (collectively, the “Other
Indemnitors”). The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations
to Indemnitee are primary and any obligation of the Other Indemnitors to advance expenses or to provide indemnification for the
same expenses or liabilities incurred by Indemnitee are secondary), (ii) that it shall be required to advance the full amount
of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts
paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the LLC Agreement of the
Company (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the
Other Indemnitors and (iii) that it irrevocably waives, relinquishes and releases the Other Indemnitors from any and all claims
against the Other Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further
agrees that no advancement or payment by the Other Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee
has sought indemnification from the Company shall affect the foregoing and the Other Indemnitors shall have a right of contribution
and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company.
The Company and Indemnitee agree that the Other Indemnitors are express third party beneficiaries of the terms of this Section 8(c).]2
(d) Except
as provided in Section 8(c) above, in the event of any payment under this Agreement, the Company shall be subrogated to
the extent of such payment to all of the rights of recovery of Indemnitee
(other than against the Other Indemnitors), who shall execute all papers required and take all action necessary to secure such
rights, including
2
NTD: Delete this section and revise/remove corresponding references for non-member appointed directors.
execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
(e) Except
as provided in Section 8(c) above, the Company shall not be liable under this Agreement to make any payment of amounts otherwise
indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy,
contract, agreement or otherwise and has no obligation to return or repay such funds.
(f) Except
as provided in Section 8(c) above, the Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee
who is or was serving at the request of the Company as a director/manager, officer, employee or agent of any other corporation,
partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any
amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership,
limited liability company, joint venture, trust, employee benefit plan or other enterprise. The Company shall not adopt any amendment
to the LLC Agreement, the effect of which would be to deny, diminish or encumber Indemnitee’s right to indemnification under
this Agreement.
9. Exception
to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this
Agreement to make any indemnity in connection with any claim made against Indemnitee:
(a) for
which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except
with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision, provided, that the foregoing
shall not affect the rights of Indemnitee or the Other Indemnitors set forth in Section 8(c) above; or
(b) for
an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company its
affiliates or subsidiaries within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar
provisions of state statutory law or common law; or
(c) except
as otherwise expressly contemplated by this Agreement, in connection with any Proceeding (or any part of any Proceeding) initiated
by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its managers,
officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior
to its initiation, or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the
Company under applicable law.
10. Duration
of Agreement. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is
a director/manager of the Company (or is or was serving at the request of the Company as a director/manager, officer, employee
or agent of another corporation, partnership, limited liability company, joint venture, trust or other enterprise) and shall continue
thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 hereof)
by reason of Indemnitee’s Company Status, whether or not Indemnitee is acting or serving in any such capacity at the time
any liability or expense is incurred for which indemnification can be
provided under this Agreement. This
Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors
(including any direct or indirect successor by reorganization, purchase, merger, consolidation or otherwise to all or substantially
all of the business, units or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.
11. Security.
To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security
to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral.
Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of Indemnitee.
12. Enforcement.
(a) The
Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby
in order to induce Indemnitee to serve as a director/manager of the Company, and the Company acknowledges that Indemnitee is relying
upon this Agreement in serving as a director/manager of the Company.
(b) This
Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes
all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter
hereof.
(c) The
Company shall not seek from a court, or agree to, a "bar order" which would have the effect of prohibiting or limiting
Indemnitee’s rights to receive advancement of expenses under this Agreement.
13. Definitions.
For purposes of this Agreement:
(a) “Company
Status” means the status of a person who is or was a director/manager, officer, employee, agent or fiduciary of the Company
or of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise
that such person is or was serving at the express written request of the Company.
(b) “Disinterested
Manager” means a director/manager of the Company who is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(c) “Enterprise”
shall mean the Company and any other corporation, partnership, limited liability company, joint venture, trust, employee benefit
plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director/manager,
officer, employee, agent or fiduciary.
(d) “Expenses”
shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements
or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating,
participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery
in any
Proceeding. Expenses also shall include
Expenses actually and reasonably incurred in connection with any appeal resulting from any Proceeding, including without limitation
the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent.
Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(e) “Independent
Counsel” means a law firm, or a member of a law firm, or a solo practitioner that is experienced and licensed in matters
of limited liability company law in the relevant jurisdiction and neither presently is, nor in the past five years has been, retained
to represent (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters
concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any
other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent
Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights
under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify
such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.
(f) “Proceeding”
includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of
the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved
as a party or otherwise, by reason of Indemnitee’s Company Status, by reason of any action taken by Indemnitee or of any
inaction on Indemnitee’s part while acting in Indemnitee’s Company Status; in each case whether or not Indemnitee is
acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided
under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee
pursuant to Section 7 of this Agreement to enforce Indemnitee’s rights under this Agreement.
14. Severability.
The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.
Further, the invalidity or unenforceability of any provision hereof as to either Indemnitee or Appointing Unitholder shall in no
way affect the validity or enforceability of any provision hereof as to the other. Without limiting the generality of the foregoing,
this Agreement is intended to confer upon Indemnitee and Appointing Unitholder indemnification rights to the fullest extent permitted
by applicable laws. In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified,
consistent with the aforementioned intent, to the extent necessary to resolve such conflict.
15. Modification
and Waiver. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing
by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
16. Notice
By Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any
summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may
be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation
which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially
prejudices the Company.
17. Notices.
All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively
given (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during
normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having
been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:
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(a)
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To Indemnitee at the address set forth below Indemnitee signature hereto.
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(b)
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To the Company at:
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Century Therapeutics, LLC
3675 Market Street
Philadelphia PA 19104
Attention: Chief Executive Officer
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With a copy (which shall not constitute notice) to:
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c/o Century Therapeutics, Inc.
3675 Market Street
Philadelphia PA 19104
Attention: Chief Executive Officer
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or to such other
address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
18. Counterparts.
This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same the same instrument. Counterparts
may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal
ESIGN Act of 2000, e.g., www.docusign.com) or other transmission
method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for
all purposes.
19. Headings.
The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part
of this Agreement or to affect the construction thereof.
20. Governing
Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and
construed and enforced in accordance with,
the laws of the State of Delaware, without regard to its conflict of laws rules.
The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or
in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the
“Delaware Court”), and not in any other state or federal court in the United States of America or any
court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any
action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of
any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any
such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF,
the parties hereto have executed this Indemnification Agreement on and as of the day and year first above written.
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CENTURY THERAPEUTICS, LLC
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By:
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Name:
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Title:
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INDEMNITEE
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Name:
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Address:
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Last updated August 2013
Exhibit
10.2
CENTURY
THERAPEUTICS, INC.
2018
STOCK OPTION AND GRANT PLAN
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SECTION
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1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS
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The name of the
plan is the Century Therapeutics, Inc. 2018 Stock Option and Grant Plan (the “Plan”). The purpose of the Plan
is to encourage and enable the officers, employees, directors, Consultants and other key persons of Century Therapeutics, Inc.,
a Delaware corporation (including any successor entity, the “Company”) and its Subsidiaries, upon whose judgment,
initiative and efforts the Company largely depends for the successful conduct of its business, to acquire a proprietary interest
in the Company.
The following terms shall be defined
as set forth below:
“Affiliate”
of any Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with the first mentioned Person. A Person shall be deemed to control another Person if such first Person possesses
directly or indirectly the power to direct, or cause the direction of, the management and policies of the second Person, whether
through the ownership of voting securities, by contract or otherwise.
“Award”
or “Awards,” except where referring to a particular category of grant under the Plan, shall include Incentive
Stock Options, Non-Qualified Stock Options, Restricted Stock Awards, Unrestricted Stock Awards, Restricted Stock Units or any
combination of the foregoing.
“Award
Agreement” means a written or electronic agreement setting forth the terms and provisions applicable to an Award granted
under the Plan. Each Award Agreement may contain terms and conditions in addition to those set
forth in the Plan; provided, however, in the event of any conflict in the terms of the Plan and the Award Agreement, the
terms of the Plan shall govern.
“Board”
means the Board of Directors of the Company.
“Cause”
shall have the meaning as set forth in the Award Agreement(s). In the case that any Award Agreement does not contain a definition
of “Cause,” it shall mean (i) the grantee’s dishonest statements or acts with respect to the Company or any
Affiliate of the Company, or any current or prospective customers, suppliers vendors or other third parties with which such entity
does business; (ii) the grantee’s commission of (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty
or fraud; (iii) the grantee’s failure to perform his assigned duties and responsibilities to the reasonable satisfaction
of the Company which failure continues, in the reasonable judgment of the Company, after written notice given to the grantee by
the Company; (iv) the grantee’s gross negligence, willful misconduct or insubordination with respect to the Company or any
Affiliate of the Company; or (v) the grantee’s material violation of any provision of any agreement(s) between the grantee
and the Company relating to noncompetition, nonsolicitation, nondisclosure and/or assignment of inventions.
“Chief
Executive Officer” means the Chief Executive Officer of the Company or, if there is no Chief Executive Officer, then
the President of the Company.
“Code”
means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.
“Committee”
means the Committee of the Board referred to in Section 2.
“Consultant”
means any natural person that provides bona fide services to the Company (including a Subsidiary), and such services are not in
connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain
a market for the Company’s securities.
“Disability”
means “disability” as defined in Section 422(c) of the Code.
“Effective
Date” means the date on which the Plan is adopted as set forth on the final page of the Plan.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
“Fair Market
Value” of the Stock on any given date means the fair market value of the Stock determined in good faith by the Committee
based on the reasonable application of a reasonable valuation method not inconsistent with Section 409A of the Code. If the Stock
is admitted to trade on a national securities exchange, the determination shall be made by reference to the closing price reported
on such exchange. If there is no closing price for such date, the determination shall be made by reference to the last date preceding
such date for which there is a closing price. If the date for which Fair Market Value is determined is the first day when trading
prices for the Stock are reported on a national securities exchange, the Fair Market Value shall be the “Price to the Public”
(or equivalent) set forth on the cover page for the final prospectus relating to the Company’s Initial Public Offering.
“Good
Reason” shall have the meaning as set forth in the Award Agreement(s). In the case that any Award Agreement does not
contain a definition of “Good Reason,” it shall mean (i) a material diminution in the grantee’s base salary
except for across-the-board salary reductions similarly affecting all or substantially all similarly situated employees of the
Company or (ii) a change of more than 50 miles in the geographic location at which the grantee provides services to the Company,
so long as the grantee provides at least 90 days’ notice to the Company following the initial occurrence of any such event
and the Company fails to cure such event within 30 days thereafter.
“Grant
Date” means the date that the Committee designates in its approval of an Award in accordance with applicable law as the
date on which the Award is granted, which date may not precede the date of such Committee approval.
“Holder”
means, with respect to an Award or any Shares, the Person holding such Award or Shares, including the initial recipient of the
Award or any Permitted Transferee.
“Incentive
Stock Option” means any Stock Option designated and qualified as an “incentive stock option” as defined in
Section 422 of the Code.
“Initial
Public Offering” means the consummation of the first firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act covering the offer and sale by the Company of its equity securities, as a result
of or following which the Stock shall be publicly held.
“Non-Qualified
Stock Option” means any Stock Option that is not an Incentive Stock Option.
“Option”
or “Stock Option” means any option to purchase shares of Stock granted pursuant to Section 5.
“Permitted
Transferees” shall mean any of the following to whom a Holder may transfer Shares hereunder (as set forth in Section
9(a)(ii)(A)): the Holder’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the Holder’s household (other than a tenant or employee), a trust in which these persons
have more than fifty percent of the beneficial interest, a foundation in which these persons control the management of assets,
and any other entity in which these persons own more than fifty percent of the voting interests; provided, however, that
any such trust does not require or permit distribution of any Shares during the term of the Award Agreement unless subject to its
terms. Upon the death of the Holder, the term Permitted Transferees shall also include such deceased Holder’s estate, executors,
administrators, personal representatives, heirs, legatees and distributees, as the case may be.
“Person”
shall mean any individual, corporation, partnership (limited or general), limited liability company, limited liability partnership,
association, trust, joint venture, unincorporated organization or any similar entity.
“Restricted
Stock Award” means Awards granted pursuant to Section 6 and “Restricted Stock” means Shares issued
pursuant to such Awards.
“Restricted
Stock Unit” means an Award of phantom stock units to a grantee, which may be settled in cash or Shares as determined
by the Committee, pursuant to Section 8.
“Sale
Event” means the consummation of (i) the dissolution or liquidation of the Company, (ii) the sale of all or
substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (iii) a merger,
reorganization or consolidation pursuant to which the holders of the Company’s outstanding voting power immediately
prior to such transaction do not own a majority of the outstanding voting power of the surviving or resulting entity (or its
ultimate parent, if applicable), (iv) the acquisition of all or a majority of the outstanding voting stock of the Company in
a single transaction or a series of related transactions by a Person or group of Persons, or (v) any other acquisition of the
business of the Company, as determined by the Board; provided, however, that the Company’s Initial Public
Offering, any subsequent public offering or another capital raising event, or a merger effected solely to change the
Company’s domicile shall not constitute a “Sale Event.”
“Section
409A” means Section 409A of the Code and the regulations and other guidance promulgated thereunder.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
“Service
Relationship” means any relationship as a full-time employee, part-time employee, director or other key person (including
Consultants) of the Company or any Subsidiary or any successor entity (e.g., a Service Relationship shall be deemed to continue
without interruption in the event an individual’s status changes from full-time employee to part-time employee or Consultant).
“Shares”
means shares of Stock.
“Stock”
means the Common Stock, par value $0.0001 per share, of the Company.
“Subsidiary”
means any corporation or other entity (other than the Company) in which the Company has more than a 50 percent interest, either
directly or indirectly.
“Ten Percent
Owner” means an employee who owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code)
more than 10 percent of the combined voting power of all classes of stock of the Company or any parent of the Company or any Subsidiary.
“Termination
Event” means the termination of the Award recipient’s Service Relationship with the Company and its Subsidiaries
for any reason whatsoever, regardless of the circumstances thereof, and including, without limitation, upon death, disability,
retirement, discharge or resignation for any reason, whether voluntarily or involuntarily. The following shall not constitute a
Termination Event: (i) a transfer to the service of the Company from a Subsidiary or from the Company to a Subsidiary, or from
one Subsidiary to another Subsidiary or (ii) an approved leave of absence for military service or sickness, or for any other purpose
approved by the Committee, if the individual’s right to re-employment is guaranteed either by a statute or by contract or
under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing.
“Unrestricted
Stock Award” means any Award granted pursuant to Section 7 and “Unrestricted Stock” means Shares
issued pursuant to such Awards.
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SECTION
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2.
ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS
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(a)
Administration of Plan. The Plan shall be administered by the Board, or at the discretion of the Board, by a committee
of the Board, comprised of not less than two directors. All references herein to the “Committee” shall be deemed
to refer to the group then responsible for administration of the Plan at the relevant time (i.e., either the Board of Directors
or a committee or committees of the Board, as applicable).
(b)
Powers of Committee. The Committee shall have the power and authority to grant Awards consistent with the terms of
the Plan, including the power and authority:
(i) to select the individuals to whom Awards may from time to time be granted;
(ii) to
determine the time or times of grant, and the amount, if any, of Incentive Stock Options, Non-Qualified Stock Options, Restricted
Stock Awards, Unrestricted Stock Awards, Restricted Stock Units, or any combination of the foregoing, granted to any one or more
grantees;
(iii) to
determine the number of Shares to be covered by any Award and, subject to the provisions of the Plan, the price, exercise price,
conversion ratio or other price relating thereto;
(iv) to
determine and, subject to Section 12, to modify from time to time the terms and conditions, including restrictions, not inconsistent
with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and grantees, and to approve
the form of Award Agreements;
(v) to accelerate at any time the exercisability or vesting of all or any portion of any Award;
(vi) to
impose any limitations on Awards, including limitations on transfers, repurchase provisions and the like, and to exercise repurchase
rights or obligations;
(vii) subject
to Section 5(a)(ii) and any restrictions imposed by Section 409A, to extend at any time the period in which Stock Options may
be exercised; and
(viii)
at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own
acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including Award
Agreements); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in
connection with the Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the
Committee shall be binding on all persons, including the Company and all Holders.
(c)
Award Agreement. Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions
and limitations for each Award.
(d)
Indemnification. Neither the Board nor the Committee, nor any member of either or any delegate thereof, shall be
liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and
the members of the Board and the Committee (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement
by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees)
arising or resulting therefrom to the fullest extent permitted by law and/or under the Company’s governing documents, including
its certificate of incorporation or bylaws, or any directors’ and officers’ liability insurance coverage which may
be in effect from time
to time and/or any indemnification agreement between such individual and the Company.
(e)
Foreign Award Recipients. Notwithstanding any provision of the Plan to the contrary, in order to comply with the
laws in other countries in which the Company and any Subsidiary operate or have employees or other individuals eligible for Awards,
the Committee, in its sole discretion, shall have the power and authority to: (i) determine which Subsidiaries, if any, shall be
covered by the Plan; (ii) determine which individuals, if any, outside the United States are eligible to participate in the Plan;
(iii) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign
laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Committee determines
such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to the Plan as appendices);
provided, however, that no such subplans and/or modifications shall increase the share limitation contained in Section
3(a) hereof; and (v) take any action, before or after an Award is made, that the Committee determines to be necessary or advisable
to obtain approval or comply with any local governmental regulatory exemptions or approvals.
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SECTION
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3. STOCK ISSUABLE UNDER THE PLAN; MERGERS AND OTHER TRANSACTIONS; SUBSTITUTION
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(a)
Stock Issuable. The maximum number of Shares reserved and available for issuance under the Plan shall be 10,000,000
Shares, subject to adjustment as provided in Section 3(b). For purposes of this limitation, the Shares underlying any Awards
that are forfeited, canceled, reacquired by the Company prior to vesting, satisfied without the issuance of Stock or otherwise
terminated (other than by exercise) and Shares that are withheld upon exercise of an Option or settlement of an Award to cover
the exercise price or tax withholding shall be added back to the Shares available for issuance under the Plan. Subject to such
overall limitations, Shares may be issued up to such maximum number pursuant to any type or types of Award, and no more than 10,000,000
Shares may be issued pursuant to Incentive Stock Options. The Shares available for issuance under the Plan may be authorized but
unissued Shares or Shares reacquired by the Company. Beginning on the date that the Company becomes subject to Section 162(m) of
the Code, Options with respect to no more than 10,000,000 Shares shall be granted to any one individual in any calendar year period.
(b)
Changes in Stock. Subject to Section 3(c) hereof, if, as a result of any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other similar change in the Company’s capital stock,
the outstanding Shares are increased or decreased or are exchanged for a different number or kind of shares or other securities
of the Company, or additional Shares or new or different shares or other securities of the Company or other non-cash assets are
distributed with respect to such Shares or other securities, in each case, without the receipt of consideration by the Company,
or, if, as a result of any merger or consolidation, or sale of all or substantially all of the assets of the Company, the outstanding
Shares are converted into or exchanged for other securities of the Company or any successor entity (or a parent or subsidiary
thereof), the Committee shall make an appropriate and proportionate adjustment in (i) the maximum number of Shares reserved for
issuance under the Plan, (ii) the number and kind of Shares or other securities subject to any then outstanding
Awards under the Plan, (iii)
the repurchase price, if any, per Share subject to each outstanding Award, and (iv) the exercise price for each Share subject to
any then outstanding Stock Options under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied
by the number of Stock Options) as to which such Stock Options remain exercisable. The adjustment by the Committee shall be final,
binding and conclusive. No fractional Shares shall be issued under the Plan resulting from any such adjustment, but the Committee
in its discretion may make a cash payment in lieu of fractional shares.
(c)
Sale Events.
(i) Options.
(A)
In the case of and subject to the consummation of a Sale Event, the Plan and all outstanding Options issued hereunder shall
terminate upon the effective time of any such Sale Event unless assumed or continued by the successor entity, or new stock options
or other awards of the successor entity or parent thereof are substituted therefor, with an equitable or proportionate adjustment
as to the number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree (after taking
into account any acceleration hereunder and/or pursuant to the terms of any Award Agreement).
(B)
In the event of the termination of the Plan and all outstanding Options issued hereunder pursuant to Section 3(c), each
Holder of Options shall be permitted, within a period of time prior to the consummation of the Sale Event as specified by the Committee,
to exercise all such Options which are then exercisable or will become exercisable as of the effective time of the Sale Event;
provided, however, that the exercise of Options not exercisable prior to the Sale Event shall be subject to the consummation
of the Sale Event.
(C)
Notwithstanding anything to the contrary in Section 3(c)(i)(A), in the event of a Sale Event, the Company shall have
the right, but not the obligation, to make or provide for a cash payment to the Holders of Options, without any consent of the
Holders, in exchange for the cancellation thereof, in an amount equal to the difference between (A) the value as determined by
the Committee of the consideration payable per share of Stock pursuant to the Sale Event (the “Sale Price”)
times the number of Shares subject to outstanding Options being cancelled (to the extent then vested and exercisable, including
by reason of acceleration in connection with such Sale Event, at prices not in excess of the Sale Price) and (B) the aggregate
exercise price of all such outstanding vested and exercisable Options.
(ii)
Restricted Stock and Restricted Stock Unit Awards.
(A)
In the case of and subject to the consummation of a Sale Event, all unvested Restricted Stock and unvested Restricted Stock
Unit Awards (other than those becoming vested as a result of the Sale Event) issued hereunder shall be forfeited immediately prior
to the effective time of any such Sale Event unless assumed or continued by the successor entity, or awards of the successor entity
or parent thereof are
substituted therefor, with an equitable or proportionate adjustment as to the number and kind of shares subject
to such awards as such parties shall agree (after taking into account any acceleration hereunder and/or pursuant to the terms of
any Award Agreement).
(B)
In the event of the forfeiture of Restricted Stock pursuant to Section 3(c)(ii)(A), such Restricted Stock shall be repurchased
from the Holder thereof at a price per share equal to the original per share purchase price paid by the Holder (subject to adjustment
as provided in Section 3(b)) for such Shares.
(C)
Notwithstanding anything to the contrary in Section 3(c)(ii)(A), in the event of a Sale Event, the Company shall have
the right, but not the obligation, to make or provide for a cash payment to the Holders of Restricted Stock or Restricted Stock
Unit Awards, without consent of the Holders, in exchange for the cancellation thereof, in an amount equal to the Sale Price times
the number of Shares subject to such Awards, to be paid at the time of such Sale Event or upon the later vesting of such Awards.
Grantees under the
Plan will be such full or part-time officers and other employees, directors, Consultants and key persons of the Company and any
Subsidiary who are selected from time to time by the Committee in its sole discretion; provided, however, that Awards
shall be granted only to those individuals described in Rule 701(c) of the Securities Act.
Upon the grant of
a Stock Option, the Company and the grantee shall enter into an Award Agreement. The terms and conditions of each such Award Agreement
shall be determined by the Committee, and such terms and conditions may differ among individual Awards and grantees.
Stock Options granted
under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options may be granted only
to employees of the Company or any Subsidiary that is a “subsidiary corporation” within the meaning of Section 424(f)
of the Code. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock
Option.
(a)
Terms of Stock Options. The Committee in its discretion may grant Stock Options to those individuals who meet the
eligibility requirements of Section 4. Stock Options shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable.
(i) Exercise
Price. The exercise price per share for the Shares covered by a Stock Option shall be determined by the Committee at the time
of grant but shall not be less than 100 percent of the Fair Market Value on the Grant Date. In the case of an Incentive Stock
Option that is granted to a Ten Percent Owner, the exercise price per share for the Shares covered by such Incentive Stock Option
shall not be less than 110 percent of the Fair Market Value on the Grant Date.
(ii) Option
Term. The term of each Stock Option shall be fixed by the Committee, but no Stock Option shall be exercisable more than ten
years from the Grant Date. In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the term of such Stock
Option shall be no more than five years from the Grant Date.
(iii)
Exercisability; Rights of a Stockholder. Stock Options shall become exercisable and/or vested at such time or times,
whether or not in installments, as shall be determined by the Committee at or after the Grant Date. The Award Agreement may permit
a grantee to exercise all or a portion of a Stock Option immediately at grant; provided that the Shares issued upon such exercise
shall be subject to restrictions and a vesting schedule identical to the vesting schedule of the related Stock Option, such Shares
shall be deemed to be Restricted Stock for purposes of the Plan, and the optionee may be required to enter into an additional or
new Award Agreement as a condition to exercise of such Stock Option. An optionee shall have the rights of a stockholder only as
to Shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options. An optionee shall not be deemed
to have acquired any Shares unless and until a Stock Option shall have been exercised pursuant to the terms of the Award Agreement
and this Plan and the optionee’s name has been entered on the books of the Company as a stockholder.
(iv) Method of Exercise. Stock Options may be exercised by an optionee in whole or in part, by the optionee giving written
or electronic notice of exercise to the Company, specifying the number of Shares to be purchased. Payment of the purchase price
may be made by one or more of the following methods (or any combination thereof) to the extent provided in the Award Agreement:
(A)
In cash, by certified or bank check, by wire transfer of immediately available funds, or other instrument acceptable to
the Committee;
(B)
If permitted by the Committee, by the optionee delivering to the Company a promissory note, if the Board has expressly
authorized the loan of funds to the optionee for the purpose of enabling or assisting the optionee to effect the exercise of his
or her Stock Option; provided, that at least so much of the exercise price as represents the par value of the Stock shall
be paid in cash if required by state law;
(C)
If permitted by the Committee and the Initial Public Offering has occurred (or the Stock otherwise becomes
publicly-traded), through the delivery (or attestation to the ownership) of Shares that have been purchased by the optionee
on the open market or that are beneficially owned by the optionee and are not then subject to restrictions under any Company
plan. To the extent required to avoid variable accounting treatment under ASC 718 or other applicable accounting rules, such
surrendered Shares if originally purchased from the Company shall have been owned by the optionee for at least six months.
Such surrendered Shares shall be valued at Fair Market Value on the exercise date;
(D)
If permitted by the Committee and the Initial Public Offering has occurred (or the Stock otherwise becomes publicly-traded),
by the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to
a broker
to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided
that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with
such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition
of such payment procedure; or
(E)
If permitted by the Committee, and only with respect to Stock Options that are not Incentive Stock Options, by a “net
exercise” arrangement pursuant to which the Company will reduce the number of Shares issuable upon exercise by the largest
whole number of Shares with a Fair Market Value that does not exceed the aggregate exercise price.
Payment instruments
will be received subject to collection. No certificates for Shares so purchased will be issued to the optionee or, with respect
to uncertificated Stock, no transfer to the optionee on the records of the Company will take place, until the Company has completed
all steps it has deemed necessary to satisfy legal requirements relating to the issuance and sale of the Shares, which steps may
include, without limitation, (i) receipt of a representation from the optionee at the time of exercise of the Option that the
optionee is purchasing the Shares for the optionee’s own account and not with a view to any sale or distribution of the
Shares or other representations relating to compliance with applicable law governing the issuance of securities, (ii) the legending
of the certificate (or notation on any book entry) representing the Shares to evidence the foregoing restrictions, and (iii) obtaining
from optionee payment or provision for all withholding taxes due as a result of the exercise of the Option. The delivery of certificates
representing the shares of Stock (or the transfer to the optionee on the records of the Company with respect to uncertificated
Stock) to be purchased pursuant to the exercise of a Stock Option will be contingent upon (A) receipt from the optionee (or a
purchaser acting in his or her stead in accordance with the provisions of the Stock Option) by the Company of the full purchase
price for such Shares and the fulfillment of any other requirements contained in the Award Agreement or applicable provisions
of laws and (B) if required by the Company, the optionee shall have entered into any stockholders agreements or other agreements
with the Company and/or certain other of the Company’s stockholders relating to the Stock. In the event an optionee chooses
to pay the purchase price by previously-owned Shares through the attestation method, the number of Shares transferred to the optionee
upon the exercise of the Stock Option shall be net of the number of Shares attested to.
(b)
Annual Limit on Incentive Stock Options. To the extent required for “incentive stock option” treatment
under Section 422 of the Code, the aggregate Fair Market Value (determined as of the Grant Date) of the Shares with respect
to which Incentive Stock Options granted under the Plan and any other plan of the Company or its parent and any Subsidiary that
become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000 or such other limit as
may be in effect from time to time under Section 422 of the Code. To the extent that any Stock Option exceeds this limit, it shall
constitute a Non-Qualified Stock Option.
(c)
Termination. Any portion of a Stock Option that is not vested and exercisable on the date of termination of an optionee’s
Service Relationship shall immediately expire and be null and void. Once any portion of the Stock Option becomes vested and exercisable,
the
optionee’s right to exercise such portion of the Stock Option (or the optionee’s representatives and legatees as
applicable) in the event of a termination of the optionee’s Service Relationship shall continue until the earliest of: (i)
the date which is: (A) 12 months following the date on which the optionee’s Service Relationship terminates due to death
or Disability (or such longer period of time as determined by the Committee and set forth in the applicable Award Agreement), or
(B) three months following the date on which the optionee’s Service Relationship terminates if the termination is due to
any reason other than death or Disability (or such longer period of time as determined by the Committee and set forth in the applicable
Award Agreement), or (ii) the Expiration Date set forth in the Award Agreement; provided that notwithstanding the foregoing,
an Award Agreement may provide that if the optionee’s Service Relationship is terminated for Cause, the Stock Option shall
terminate immediately and be null and void upon the date of the optionee’s termination and shall not thereafter be exercisable.
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SECTION
|
6. RESTRICTED STOCK AWARDS
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(a)
Nature of Restricted Stock Awards. The Committee may, in its sole discretion, grant (or sell at par value or such
other purchase price determined by the Committee) to an eligible individual under Section 4 hereof a Restricted Stock Award under
the Plan. The Committee shall determine the restrictions and conditions applicable to each Restricted Stock Award at the time of
grant. Conditions may be based on continuing employment (or other Service Relationship), achievement of pre-established performance
goals and objectives and/or such other criteria as the Committee may determine. Upon the grant of a Restricted Stock Award, the
Company and the grantee shall enter into an Award Agreement. The terms and conditions of each such Award Agreement shall be determined
by the Committee, and such terms and conditions may differ among individual Awards and grantees.
(b)
Rights as a Stockholder. Upon the grant of the Restricted Stock Award and payment of any applicable purchase price,
a grantee of Restricted Stock shall be considered the record owner of and shall be entitled to vote the Restricted Stock if, and
to the extent, such Shares are entitled to voting rights, subject to such conditions contained in the Award Agreement. The grantee
shall be entitled to receive all dividends and any other distributions declared on the Shares; provided, however,
that the Company is under no duty to declare any such dividends or to make any such distribution. Unless the Committee shall otherwise
determine, certificates evidencing the Restricted Stock shall remain in the possession of the Company until such Restricted Stock
is vested as provided in subsection (d) below of this Section, and the grantee shall be required, as a condition of the grant,
to deliver to the Company a stock power endorsed in blank and such other instruments of transfer as the Committee may prescribe.
(c)
Restrictions. Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed
of except as specifically provided herein or in the Award Agreement. Except as may otherwise be provided by the Committee either
in the Award Agreement or, subject to Section 12 below, in writing after the Award Agreement is issued, if a grantee’s Service
Relationship with the Company and any Subsidiary terminates, the Company or its assigns shall have the right, as may be specified
in the relevant instrument, to repurchase some or all of the Shares subject to the Award at such purchase price as is set forth
in the Award Agreement.
(d)
Vesting of Restricted Stock. The Committee at the time of grant shall specify in the Award Agreement the date or
dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the substantial
risk of forfeiture imposed shall lapse and the Restricted Stock shall become vested, subject to such further rights of the Company
or its assigns as may be specified in the Award Agreement.
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SECTION
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7. UNRESTRICTED STOCK AWARDS
|
The Committee may,
in its sole discretion, grant (or sell at par value or such other purchase price determined by the Committee) to an eligible person
under Section 4 hereof an Unrestricted Stock Award under the Plan. Unrestricted Stock Awards may be granted in respect of past
services or other valid consideration, or in lieu of cash compensation due to such grantee.
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|
SECTION
|
8. RESTRICTED STOCK UNITS
|
(a)
Nature of Restricted Stock Units. The Committee may, in its sole discretion, grant to an eligible person under Section
4 hereof Restricted Stock Units under the Plan. The Committee shall determine the restrictions and conditions applicable to each
Restricted Stock Unit at the time of grant. Vesting conditions may be based on continuing employment (or other Service Relationship),
achievement of pre-established performance goals and objectives and/or other such criteria as the Committee may determine. Upon
the grant of Restricted Stock Units, the grantee and the Company shall enter into an Award Agreement. The terms and conditions
of each such Award Agreement shall be determined by the Committee and may differ among individual Awards and grantees. On or promptly
following the vesting date or dates applicable to any Restricted Stock Unit, but in no event later than March 15 of the year
following the year in which such vesting occurs, such Restricted Stock Unit(s) shall be settled in the form of cash or shares of
Stock, as specified in the Award agreement. Restricted Stock Units may not be sold,
assigned, transferred, pledged, or otherwise encumbered or disposed of.
(b)
Rights as a Stockholder. A grantee shall have the rights of a stockholder only as to Shares, if any, acquired upon
settlement of Restricted Stock Units. A grantee shall not be deemed to have acquired any such Shares unless and until the Restricted
Stock Units shall have been settled in Shares pursuant to the terms of the Plan and the Award Agreement, the Company shall have
issued and delivered a certificate representing the Shares to the grantee (or transferred on the records of the Company with respect
to uncertificated stock), and the grantee’s name has been entered in the books of the Company as a stockholder.
(c)
Termination. Except as may otherwise be provided by the Committee either in the Award Agreement or in writing after
the Award Agreement is issued, a grantee’s right in all Restricted Stock Units that have not vested shall automatically
terminate upon the grantee’s cessation of Service Relationship with the Company and any Subsidiary for any reason.
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SECTION
|
9. transfer restrictions; company RIGHT OF FIRST REFUSAL; COMPANY repurchase rights
|
(a)
Restrictions on Transfer.
(i) Non-Transferability
of Stock Options. Stock Options and, prior to exercise, the Shares issuable upon exercise of such Stock Option, shall not
be transferable by the optionee otherwise than by will, or by the laws of descent and distribution, and all Stock Options shall
be exercisable, during the optionee’s lifetime, only by the optionee, or by the optionee’s legal representative or
guardian in the event of the optionee’s incapacity. Notwithstanding the foregoing, the Committee, in its sole discretion,
may provide in the Award Agreement regarding a given Stock Option that the optionee may transfer by gift, without consideration
for the transfer, his or her Non-Qualified Stock Options to his or her family members (as defined in Rule 701 of the Securities
Act), to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners
(to the extent such trusts or partnerships are considered “family members” for purposes of Rule 701 of the Securities
Act), provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan
and the applicable Award Agreement, including the execution of a stock power upon the issuance of Shares. Stock Options, and the
Shares issuable upon exercise of such Stock Options, shall be restricted as to any pledge, hypothecation, or other transfer, including
any short position, any “put equivalent position” (as defined in the Exchange Act) or any “call equivalent position”
(as defined in the Exchange Act) prior to exercise.
(ii) Shares.
No Shares shall be sold, assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of or encumbered,
whether voluntarily or by operation of law, unless (i) the transfer is in compliance with the terms of the applicable Award Agreement,
all applicable securities laws (including, without limitation, the Securities Act), and with the terms and conditions of this
Section 9, (ii) the transfer does not cause the Company to become subject to the reporting requirements of the Exchange Act, and
(iii) the transferee consents in writing to be bound by the provisions of the Plan and the Award Agreement, including this Section
9. In connection with any proposed transfer, the Committee may require the transferor to provide at the transferor’s own
expense an opinion of counsel to the transferor, satisfactory to the Committee, that such transfer is in compliance with all foreign,
federal and state securities laws (including, without limitation, the Securities Act). Any attempted transfer of Shares not in
accordance with the terms and conditions of this Section 9 shall be null and void, and the Company shall not reflect on its records
any change in record ownership of any Shares as a result of any such transfer, shall otherwise refuse to recognize any such transfer
and shall not in any way give effect to any such transfer of Shares. The Company shall be entitled to seek protective orders,
injunctive relief and other remedies available at law or in equity including, without limitation, seeking specific performance
or the rescission of any transfer not made in strict compliance with the provisions of this Section 9. Subject to the foregoing
general provisions, and unless otherwise provided in the applicable Award Agreement, Shares may be transferred pursuant to the
following specific terms and conditions (provided that with respect to any transfer of Restricted Stock, all vesting and forfeiture
provisions shall continue to apply with respect to the original recipient):
(A)
Transfers to Permitted Transferees. The Holder may transfer any or all of the Shares to one or more Permitted Transferees;
provided, however, that following such transfer, such Shares shall continue to be subject to the terms of this Plan (including
this Section 9) and such Permitted Transferee(s) shall, as a condition to any such transfer, deliver a written acknowledgment to
that effect to the Company and shall deliver a stock power to the Company with respect to the Shares. Notwithstanding the foregoing,
the Holder may not transfer any of the Shares to a Person whom the Company reasonably determines is a direct competitor or a potential
competitor of the Company or any of its Subsidiaries.
(B)
Transfers Upon Death. Upon the death of the Holder, any Shares then held by the Holder at the time of such death
and any Shares acquired after the Holder’s death by the Holder’s legal representative shall be subject to the provisions
of this Plan, and the Holder’s estate, executors, administrators, personal representatives, heirs, legatees and distributees
shall be obligated to convey such Shares to the Company or its assigns under the terms contemplated by the Plan and the Award Agreement.
(b)
Right of First Refusal. In the event that a Holder desires at any time to sell or otherwise transfer all or any
part of his or her Shares (other than shares of Restricted Stock which by their terms are not transferrable), the Holder first
shall give written notice to the Company of the Holder’s intention to make such transfer. Such notice shall state the number
of Shares that the Holder proposes to sell (the “Offered Shares”), the price and the terms at which the proposed
sale is to be made and the name and address of the proposed transferee. At any time within 30 days after the receipt of such notice
by the Company, the Company or its assigns may elect to purchase all or any portion of the Offered Shares at the price and on
the terms offered by the proposed transferee and specified in the notice. The Company or its assigns shall exercise this right
by mailing or delivering written notice to the Holder within the foregoing 30-day period. If the Company or its assigns elect
to exercise its purchase rights under this Section 9(b), the closing for such purchase shall, in any event, take place within
45 days after the receipt by the Company of the initial notice from the Holder. In the event that the Company or its assigns do
not elect to exercise such purchase right, or in the event that the Company or its assigns do not pay the full purchase price
within such 45-day period, the Holder shall be required to pay a transaction processing fee of $10,000 to the Company (unless
waived by the Committee) and then may, within 60 days thereafter, sell the Offered Shares to the proposed transferee and at the
same price and on the same terms as specified in the Holder’s notice. Any Shares not sold to the proposed transferee shall
remain subject to the Plan. If the Holder is a party to any stockholders agreements or other agreements with the Company and/or
certain other of the Company’s stockholders relating to the Shares, (i) the transferring Holder shall comply with the requirements
of such stockholders agreements or other agreements relating to any proposed transfer of the Offered Shares, and (ii) any proposed
transferee that purchases Offered Shares shall enter into such stockholders agreements or other agreements with the Company and/or
certain of the Company’s stockholders relating to the Offered Shares on the same terms and in the same capacity as the transferring
Holder.
(c)
Company’s Right of Repurchase.
(i) Right
of Repurchase for Unvested Shares Issued Upon the Exercise of an Option. Upon a Termination Event, the Company or its assigns
shall have the right and option to repurchase from a Holder of Shares acquired upon exercise of a Stock Option which are still
subject to a risk of forfeiture as of the Termination Event. Such repurchase rights may be exercised by the Company within the
later of (A) six months following the date of such Termination Event or (B) seven months after the acquisition of Shares upon
exercise of a Stock Option. The repurchase price shall be equal to the lower of the original per share price paid by the Holder,
subject to adjustment as provided in Section 3(b) of the Plan, or the current Fair Market Value of such Shares as of the date
the Company elects to exercise its repurchase rights.
(ii) Right
of Repurchase With Respect to Restricted Stock. Upon a Termination Event, the Company or its assigns shall have the right
and option to repurchase from a Holder of Shares received pursuant to a Restricted Stock Award any Shares that are still subject
to a risk of forfeiture as of the Termination Event. Such repurchase right may be exercised by the Company within six months following
the date of such Termination Event. The repurchase price shall be the lower of the original per share purchase price paid by the
Holder, subject to adjustment as provided in Section 3(b) of the Plan, or the current Fair Market Value of such Shares as of the
date the Company elects to exercise its repurchase rights.
(iii)
Procedure. Any repurchase right of the Company shall be exercised by the Company or its assigns by giving the Holder
written notice on or before the last day of the repurchase period of its intention to exercise such repurchase right. Upon
such notification, the Holder shall promptly surrender to the Company, free and clear of any liens or encumbrances, any
certificates representing the Shares being purchased, together with a duly executed stock power for the transfer of such
Shares to the Company or the Company’s assignee or assignees. Upon the Company’s or its assignee’s receipt
of the certificates from the Holder, the Company or its assignee or assignees shall deliver to him, her or them a check for
the applicable repurchase price; provided, however, that the Company may pay the repurchase price by offsetting and
canceling any indebtedness then owed by the Holder to the Company.
(d)
Reserved.
(e)
Escrow Arrangement.
(i) Escrow.
In order to carry out the provisions of this Section 9 of this Plan more effectively, the Company shall hold any Shares issued
pursuant to Awards granted under the Plan in escrow together with separate stock powers executed by the Holder in blank for transfer.
The Company shall not dispose of the Shares except as otherwise provided in this Plan. In the event of any repurchase by the Company
(or any of its assigns), the Company is hereby authorized by the Holder, as the Holder’s attorney-in-fact, to date and complete
the stock powers necessary for the transfer of the Shares being purchased and to transfer such Shares in accordance with the terms
hereof. At such time as any Shares are no longer subject to the Company’s repurchase and first refusal rights, the Company
shall, at the written request of the Holder, deliver to the Holder a certificate representing such Shares with the balance of
the Shares to be held in escrow pursuant to this Section.
(ii) Remedy.
Without limitation of any other provision of this Plan or other rights, in the event that a Holder or any other Person is required
to sell a Holder’s Shares pursuant to the provisions of Sections 9(b) or (c) hereof and in the further event that he or
she refuses or for any reason fails to deliver to the Company or its designated purchaser of such Shares the certificate or certificates
evidencing such Shares together with a related stock power, the Company or such designated purchaser may deposit the applicable
purchase price for such Shares with a bank designated by the Company, or with the Company’s independent public accounting
firm, as agent or trustee, or in escrow, for such Holder or other Person, to be held by such bank or accounting firm for the benefit
of and for delivery to him, her, them or it, and/or, in its discretion, pay such purchase price by offsetting any indebtedness
then owed by such Holder as provided above. Upon any such deposit and/or offset by the Company or its designated purchaser of
such amount and upon notice to the Person who was required to sell the Shares to be sold pursuant to the provisions of Sections
9(b) or (c), such Shares shall at such time be deemed to have been sold, assigned, transferred and conveyed to such purchaser,
such Holder shall have no further rights thereto (other than the right to withdraw the payment thereof held in escrow, if applicable),
and the Company shall record such transfer in its stock transfer book or in any appropriate manner.
(f)
Lockup Provision. If requested by the Company, a Holder shall not sell or otherwise transfer or dispose of any Shares
(including, without limitation, pursuant to Rule 144 under the Securities Act) held by him or her for such period following the
effective date of a public offering by the Company of Shares as the Company shall specify reasonably and in good faith. If requested
by the underwriter engaged by the Company, each Holder shall execute a separate letter confirming his or her agreement to comply
with this Section.
(g)
Adjustments for Changes in Capital Structure. If, as a result of any reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other similar change in the Common Stock, the outstanding Shares are increased
or decreased or are exchanged for a different number or kind of securities of the Company, the restrictions contained in this Section 9
shall apply with equal force to additional and/or substitute securities, if any, received by Holder in exchange for, or by virtue
of his or her ownership of, Shares.
(h)
Termination. The terms and provisions of Section 9(b) and Section 9(c) (except for the Company’s right to repurchase
Shares still subject to a risk of forfeiture upon a Termination Event) shall terminate upon the closing of the Company’s
Initial Public Offering or upon consummation of any Sale Event, in either case as a result of which Shares are registered under
Section 12 of the Exchange Act and publicly-traded on any national security exchange.
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SECTION
|
10. TAX WITHHOLDING
|
(a)
Payment by Grantee. Each grantee shall, no later than the date as of which the value of an Award or of any Shares
or other amounts received thereunder first becomes includable in the gross income of the grantee for income tax purposes, pay
to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state, or local taxes of
any kind required by law to be withheld by the Company with respect to such income. The Company and any Subsidiary shall, to the
extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee. The
Company’s obligation to deliver stock certificates (or evidence of book entry) to any grantee is subject to and
conditioned on any such tax withholding obligations being satisfied by the grantee.
(b)
Payment in Stock. The Company’s minimum required tax withholding obligation may be satisfied, in whole or
in part, by the Company withholding from Shares to be issued pursuant to an Award a number of Shares having an aggregate Fair
Market Value (as of the date the withholding is effected) that would satisfy the minimum withholding amount due.
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SECTION
|
11. Section 409A AWARDS.
|
To the extent that
any Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a “409A
Award”), the Award shall be subject to such additional rules and requirements as may be specified by the Committee from
time to time. In this regard, if any amount under a 409A Award is payable upon a “separation from service” (within
the meaning of Section 409A) to a grantee who is considered a “specified employee” (within the meaning of Section 409A),
then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee’s
separation from service, or (ii) the grantee’s death, but only to the extent such delay is necessary to prevent such payment
from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. The Company makes no representation
or warranty and shall have no liability to any grantee under the Plan or any other Person with respect to any penalties or taxes
under Section 409A that are, or may be, imposed with respect to any Award.
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SECTION
|
12. AMENDMENTS AND TERMINATION
|
The Board may, at
any time, amend or discontinue the Plan and the Committee may, at any time, amend or cancel any outstanding Award for the purpose
of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding
Award without the consent of the holder of the Award. The Committee may exercise its discretion to reduce the exercise price of
outstanding Stock Options or effect repricing through cancellation of outstanding Stock Options and by granting such holders new
Awards in replacement of the cancelled Stock Options. To the extent determined by the Committee to be required either by the Code
to ensure that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code or otherwise, Plan
amendments shall be subject to approval by the Company stockholders entitled to vote at a meeting of stockholders. Nothing in this
Section 12 shall limit the Board’s or Committee’s authority to take any action permitted pursuant to Section 3(c).
The Board reserves the right to amend the Plan and/or the terms of any outstanding Stock Options to the extent reasonably necessary
to comply with the requirements of the exemption pursuant to paragraph (f)(4) of Rule 12h-1 of the Exchange Act.
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SECTION
|
13.
STATUS OF PLAN
|
With respect to
the portion of any Award that has not been exercised and any payments in cash, Stock or other consideration not received by a
grantee, a grantee shall have no rights greater than those of a general creditor of the Company unless the Committee shall otherwise
expressly so determine in connection with any Award.
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SECTION
|
14. GENERAL PROVISIONS
|
(a) No
Distribution; Compliance with Legal Requirements. The Committee may require each person acquiring Shares pursuant to an Award
to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to distribution
thereof. No Shares shall be issued pursuant to an Award until all applicable securities law and other legal and stock exchange
or similar requirements have been satisfied. The Committee may require the placing of such stop-orders and restrictive legends
on certificates for Stock and Awards as it deems appropriate.
(b) Delivery of Stock Certificates. Stock certificates to grantees under the Plan shall be deemed delivered for all purposes
when the Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed
to the grantee, at the grantee’s last known address on file with the Company; provided that stock certificates to be held
in escrow pursuant to Section 9 of the Plan shall be deemed delivered when the Company shall have recorded the issuance in its
records. Uncertificated Stock shall be deemed delivered for all purposes when the Company or a stock transfer agent of the Company
shall have given to the grantee by electronic mail (with proof of receipt) or by United States mail, addressed to the grantee,
at the grantee’s last known address on file with the Company, notice of issuance and recorded the issuance in its records
(which may include electronic “book entry” records).
(c) No Employment Rights. The adoption of the Plan and the grant of Awards do not confer upon any Person any right to
continued employment or Service Relationship with the Company or any Subsidiary.
(d) Trading Policy Restrictions. Option exercises and other Awards under the Plan shall be subject to the Company’s
insider trading policy-related restrictions, terms and conditions as may be established by the Committee, or in accordance with
policies set by the Committee, from time to time.
(e) Designation of Beneficiary. Each grantee to whom an Award has been made under the Plan may designate a beneficiary
or beneficiaries to exercise any Award on or after the grantee’s death or receive any payment under any Award payable on
or after the grantee’s death. Any such designation shall be on a form provided for that purpose by the Committee and shall
not be effective until received by the Committee. If no beneficiary has been designated by a deceased grantee, or if the designated
beneficiaries have predeceased the grantee, the beneficiary shall be the grantee’s estate.
(f) Legend. Any certificate(s) representing the Shares shall carry substantially the following legend (and with respect
to uncertificated Stock, the book entries evidencing such shares shall contain the following notation):
The transferability of this certificate
and the shares of stock represented hereby are subject to the restrictions, terms and conditions (including repurchase and restrictions
against transfers) contained in the Century Therapeutics, Inc. 2018 Stock Option and
Grant Plan and any agreements entered into
thereunder by and between the company and the holder of this certificate (a copy of which is available at the offices of the company
for examination).
(g) Information to Holders of Options. In the event the Company is relying on the exemption from the registration requirements
of Section 12(g) of the Exchange Act contained in paragraph (f)(1) of Rule 12h-1 of the Exchange Act, the Company shall provide
the information described in Rule 701(e)(3), (4) and (5) of the Securities Act to all holders of Options in accordance with the
requirements thereunder. The foregoing notwithstanding, the Company shall not be required to provide such information unless the
optionholder has agreed in writing, on a form prescribed by the Company, to keep such information confidential.
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SECTION
|
15. EFFECTIVE DATE OF PLAN
|
The Plan shall become
effective upon adoption by the Board and shall be approved by stockholders in accordance with applicable state law and the Company’s
articles of incorporation and bylaws within 12 months thereafter. If the stockholders fail to approve the Plan within 12 months
after its adoption by the Board of Directors, then any Awards granted or sold under the Plan shall be rescinded and no additional
grants or sales shall thereafter be made under the Plan. Subject to such approval by stockholders and to the requirement that no
Shares may be issued hereunder prior to such approval, Stock Options and other Awards may be granted hereunder on and after adoption
of the Plan by the Board. No grants of Stock Options and other Awards may be made hereunder after the tenth anniversary of the
date the Plan is adopted by the Board or the date the Plan is approved by the Company’s stockholders, whichever is earlier.
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SECTION
|
16. GOVERNING LAW
|
This Plan, all Awards
and any controversy arising out of or relating to this Plan and all Awards shall be governed by and construed in accordance with
the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall
be governed by and construed in accordance with the internal laws of New York, without regard to conflict of law principles that
would result in the application of any law other than the law of the State of New York.
DATE ADOPTED BY THE BOARD OF DIRECTORS: June 1, 2018
DATE APPROVED BY THE STOCKHOLDERS: June 1, 2018
Exhibit 10.3
AMENDMENT
TO
2018 STOCK OPTION AND GRANT PLAN
OF
CENTURY THERAPEUTICS, INC.
WHEREAS, up to 10,000,000
shares of Common Stock, par value $0.0001 per share, of Century Therapeutics, Inc., a Delaware corporation (the “Company”),
are currently reserved under the Company’s 2018 Stock Option and Grant Plan (the “Plan”); and
WHEREAS, the Board
of Directors of the Company (the “Board”), pursuant to a Written Consent of the Board dated as of September
10, 2018, approved and authorized this Amendment to the Plan, pursuant to which the number of shares reserved under the Plan shall
be decreased as set forth herein.
NOW THEREFORE, Section
3(a) of the Plan is hereby amended and restated as follows:
“Stock Issuable.
The maximum number of Shares reserved and available for issuance under the Plan shall be 8,500,000 Shares, subject to adjustment
as provided in Section 3(b). For purposes of this limitation, the Shares underlying any Awards that are forfeited, canceled,
reacquired by the Company prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other than by exercise)
and Shares that are withheld upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding
shall be added back to the Shares available for issuance under the Plan. Subject to such overall limitations, Shares may be issued
up to such maximum number pursuant to any type or types of Award, and no more than 8,500,000 Shares may be issued pursuant to Incentive
Stock Options. The Shares available for issuance under the Plan may be authorized but unissued Shares or Shares reacquired by the
Company. Beginning on the date that the Company becomes subject to Section 162(m) of the Code, Options with respect to no more
than 8,500,000 Shares shall be granted to any one individual in any calendar year period.”
Except as expressly
set forth above, all of the terms and provisions of the Plan shall remain in full force and effect and all references to the Plan
shall hereinafter be deemed to be references to the Plan as amended by this Amendment.
Exhibit
10.4
AMENDMENT
NO. 2
TO
2018
STOCK OPTION AND GRANT PLAN
OF
CENTURY
THERAPEUTICS, INC.
WHEREAS, up to 8,500,000
shares of Common Stock, par value $0.0001 per share, of Century Therapeutics, Inc., a Delaware corporation (the “Company”),
are currently reserved under the Company’s 2018 Stock Option and Grant Plan (the “Plan”); and
WHEREAS, the Board
of Directors of the Company (the “Board”), pursuant to a Written Consent of the Board dated as of June 21, 2019,
approved and authorized this Amendment No. 2 to the Plan, pursuant to which the number of shares reserved under the Plan shall
be increased as set forth herein.
NOW THEREFORE, Section
3(a) of the Plan is hereby amended and restated as follows:
“Stock Issuable.
The maximum number of Shares reserved and available for issuance under the Plan shall be 15,260,038 Shares, subject to adjustment
as provided in Section 3(b). For purposes of this limitation, the Shares underlying any Awards that are forfeited, canceled, reacquired
by the Company prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) and Shares
that are withheld upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding shall be
added back to the Shares available for issuance under the Plan. Subject to such overall limitations, Shares may be issued up to
such maximum number pursuant to any type or types of Award, and no more than 15,260,038 Shares may be issued pursuant to Incentive
Stock Options. The Shares available for issuance under the Plan may be authorized but unissued Shares or Shares reacquired by the
Company. Beginning on the date that the Company becomes subject to Section 162(m) of the Code, Options with respect to no more
than 15,260,038 Shares shall be granted to any one individual in any calendar year period.”
Except as expressly
set forth above, all of the terms and provisions of the Plan shall remain in full force and effect and all references to the Plan
shall hereinafter be deemed to be references to the Plan as amended by this Amendment.
Exhibit
10.5
AMENDMENT
NO. 3
TO
2018
STOCK OPTION AND GRANT PLAN
OF
CENTURY
THERAPEUTICS, INC.
WHEREAS, up to 15,260,038
shares of Common Stock, par value $0.0001 per share, of Century Therapeutics. Inc., a Delaware corporation (the “Company”),
arc currently reserved under the Company’s 2018 Stock Option and Grant Plan (the “Plan”); and
WHEREAS, the Board
of Directors of the Company (the “Board”), pursuant at a meeting held on March 18, 2019, approved and authorized
this Amendment No. 3 to the Plan, pursuant to which the number of shares reserved under the Plan shall be increased as set forth
herein.
NOW THEREFORE, Section
3(a) of the Plan is hereby amended and restated as follows:
“Stock Issuable.
The maximum number of Shares reserved and available for issuance under the Plan shall be 16,476,891 Shares, subject to adjustment
as provided in Section 3(b). For purposes of this limitation, the Shares underlying
any Awards that are forfeited, canceled, reacquired by the Company prior to vesting, satisfied without the issuance of Stock or
otherwise terminated (other
than by exercise) and Shares that are withheld upon exercise of an Option or settlement of an Award to cover the exercise price
or tax withholding shall be
added back to the Shares available for issuance under the Plan. Subject to such overall limitations, Shares may be issued up to
such maximum number pursuant
to any type or types of Award, and no more than 16,476,891 Shares may be
issued pursuant to Incentive Stock Options. The Shares available for issuance
under the Plan may be authorized but unissued Shares or Shares reacquired by
the Company. Beginning on the date that the Company becomes subject to
Section I62(m) of the Code, Options with respect to no more than 16,476,891
Shares shall be granted to any one individual in any calendar year period.”
Except as expressly
set forth above, all of the terms and provisions of the Plan shall remain in full force and effect and all references to the Plan
shall hereinafter be deemed to be references to the Plan as amended by this Amendment.
Exhibit
10.6
AMENDMENT
NO. 4 TO
2018
STOCK OPTION AND GRANT
PLAN OF
CENTURY
THERAPEUTICS, INC.
WHEREAS, up to 16,476,891
shares of Common Stock, par value $0.0001 per share, of Century Therapeutics, Inc., a Delaware corporation (the “Company”),
are currently reserved under the Company’s 2018 Stock Option and Grant Plan (the “Plan”); and
WHEREAS, the
Board of Directors of the Company (the “Board”), pursuant at a meeting held on December 16, 2020, approved and
authorized this Amendment No. 4 to the Plan, pursuant to which the number of shares reserved under the Plan shall be
increased as set forth herein.
NOW THEREFORE,
Section 3(a) of the Plan is hereby amended and restated as follows:
“Stock Issuable.
The maximum number of Shares reserved and available for issuance under the Plan shall be 19,498,781 Shares, subject to adjustment
as provided in Section 3(b). For purposes of this limitation,
the Shares underlying any Awards that are forfeited, canceled, reacquired by the Company prior to vesting, satisfied without the
issuance of Stock
or otherwise terminated (other than by exercise) and Shares that are withheld upon exercise of an Option or settlement of an Award
to cover
the exercise price or tax withholding shall be added back to the Shares available for issuance under the Plan. Subject to such
overall limitations, Shares may be issued up to such maximum number pursuant to any type
or types of Award, and no more than 19,498,781 Shares may be issued pursuant to Incentive Stock Options. The Shares available for
issuance under the Plan may be authorized but unissued Shares or Shares
reacquired by the Company. Beginning on the date that the Company becomes subject to Section 162(m) of the Code, Options with respect
to
no more than 19,498,781 Shares shall be granted to any one individual in any calendar year period.”
Except as expressly
set forth above, all of the terms and provisions of the Plan shall remain in full force and effect and all references to the Plan
shall hereinafter be deemed to be references to the Plan as amended by this Amendment.
Exhibit
10.7
AMENDMENT
NO. 5 TO
2018
STOCK OPTION AND GRANT
PLAN OF
CENTURY
THERAPEUTICS, INC.
WHEREAS, up to 19,498,781
shares of Common Stock, par value $0.0001 per share, of Century Therapeutics, Inc., a Delaware corporation (the “Company”),
are currently reserved under the Century Therapeutics, Inc. 2018 Stock Option and Grant Plan (the “Plan”); and
WHEREAS, the Board
of Directors of the Company (the “Board”), acting by unanimous written consent dated as of February 25, 2021,
approved and authorized this Amendment No. 5 to the Plan, pursuant to which the number of shares reserved under the Plan shall
be increased as set forth herein.
NOW THEREFORE, Section
3(a) of the Plan is hereby amended and restated as follows:
“Stock Issuable.
The maximum number of Shares reserved and available for issuance under the Plan shall be 23,498,781 Shares, subject to adjustment
as provided in Section 3(b). For purposes of this limitation, the Shares underlying any Awards that are forfeited, canceled, reacquired
by the Company prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) and Shares
that are withheld upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding shall be
added back to the Shares available for issuance under the Plan. Subject to such overall limitations, Shares may be issued up to
such maximum number pursuant to any type or types of Award, and no more than 23,498,781 Shares may be issued pursuant to Incentive
Stock Options. The Shares available for issuance under the Plan may be authorized but unissued Shares or Shares reacquired by the
Company. Beginning on the date that the Company becomes subject to Section 162(m) of the Code, Options with respect to no more
than 23,498,781 Shares shall be granted to any one individual in any calendar year period.”
Except as expressly
set forth above, all of the terms and provisions of the Plan shall remain in full force and effect and all references to the Plan
shall hereinafter be deemed to be references to the Plan as amended by this Amendment.
Exhibit 10.10
RESTRICTED
STOCK AWARD NOTICE
UNDER THE CENTURY
THERAPEUTICS, INC.
2018 STOCK
OPTION AND GRANT
PLAN
Pursuant
to the Century Therapeutics, Inc. 2018 Stock Option and Grant Plan (the “Plan”), Century Therapeutics, Inc., a Delaware
corporation (together with any successor, the “Company”), hereby grants, sells and issues to the individual named below,
the Shares at the Per Share Purchase Price, subject to the terms and conditions set forth in this Restricted Stock Award Notice
(the “Award Notice”), the attached Restricted Stock Agreement (the “Agreement”) and the Plan. The Grantee
agrees to the provisions set forth herein and acknowledges that each such provision is a material condition of the Company’s
agreement to issue and sell the Shares to him or her. The Company hereby acknowledges receipt of $[ ______ ] in full payment
for the Shares. All references to share prices and amounts herein shall be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations, mergers, reorganizations and similar changes affecting the capital stock of the Company, and any shares of capital
stock of the Company received on or in respect of Shares in connection with any such event (including any shares of capital stock
or any right, option or warrant to receive the same or any security convertible into or exchangeable for any such shares or received
upon conversion of any such shares) shall be subject to this Agreement on the same basis and extent at the relevant time as the
Shares in respect of which they were issued, and shall be deemed Shares as if and to the same extent they were issued at the date
hereof.
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Name of Grantee:
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__________________(the “Grantee”)
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No. of Shares:
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____________ Shares of Common Stock (the “Shares”)
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Grant Date:
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___________ __, __
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Date of Purchase of Shares:
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___________ __, __
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Vesting Commencement Date:
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___________ __, __ (the “Vesting Commencement Date”)
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Per Share Purchase Price:
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$_______(the “Per Share Purchase Price”)
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1.
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Vesting Schedule: 25 percent of the Shares shall
vest on the first anniversary of the Vesting Commencement Date; provided that the Grantee continues to have a Service Relationship
with the Company at such time. Thereafter, the remaining 75 percent of the Shares shall vest in 36 equal monthly installments following
the first anniversary of the Vesting Commencement Date, provided the Grantee continues to have a Service Relationship with the
Company at such time. Notwithstanding anything in the Agreement to the contrary in the case of a Sale
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Event, the Shares of Restricted
Stock shall be treated as provided in Section 3(c) of the Plan.
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RESTRICTED
STOCK AGREEMENT
UNDER THE CENTURY
THERAPEUTICS, INC.
2018 STOCK
OPTION AND GRANT
PLAN
All capitalized terms used herein and
not otherwise defined shall have the respective meanings set forth in the Award Notice and the Plan.
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2.
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Purchase and Sale of Shares; Vesting; Investment Representations.
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(a)
Purchase and Sale. The Company hereby sells to the Grantee, and the Grantee hereby purchases from the Company, the
number of Shares set forth in the Award Notice for the Per Share Purchase Price.
(b)
Vesting. Initially, all of the Shares are non-transferable and subject to a substantial risk of forfeiture and are
Shares of Restricted Stock. The risk of forfeiture shall lapse with respect to the Shares on the respective dates indicated on
the Vesting Schedule set forth in the Award Notice.
(c)
Investment Representations. In connection with the purchase and sale of the Shares contemplated by Section 1(a) above,
the Grantee hereby represents and warrants to the Company as follows:
(i)
The Grantee is purchasing the Shares for the Grantee’s own account for investment only, and not for resale or with
a view to the distribution thereof.
(ii)
The Grantee has had such an opportunity as he or she has deemed adequate to obtain from the Company such information as
is necessary to permit him or her to evaluate the merits and risks of the Grantee’s investment in the Company and has consulted
with the Grantee’s own advisers with respect to the Grantee’s investment in the Company.
(iii)
The Grantee has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved
in the purchase of the Shares and to make an informed investment decision with respect to such purchase.
(iv)
The Grantee can afford a complete loss of the value of the Shares and is able to bear the economic risk of holding such
Shares for an indefinite period.
(v)
The Grantee understands that the Shares are not registered under the Act (it being understood that the Shares are being
issued and sold in reliance on the exemption provided in Rule 701 thereunder) or any applicable state securities or “blue
sky” laws and may not be sold or otherwise transferred or disposed of in the absence of an effective registration statement
under the Act and under any applicable state securities or “blue sky” laws (or exemptions from the registration requirements
thereof). The Grantee further acknowledges that certificates representing the Shares will bear
restrictive legends reflecting the foregoing
and/or that book entries for uncertificated Shares will include similar restrictive notations.
(vi)
The Grantee has read and understands the Plan and acknowledges and agrees that the Shares are subject to all of the relevant
terms of the Plan, including without limitation, the transfer restrictions set forth in Section 9 of the Plan.
(vii)
The Grantee understands and agrees that the Company has a right of first refusal with respect to the Shares pursuant to
Section 9(b) of the Plan.
(viii)
The Grantee understands and agree that the Company has certain repurchase rights with respect to the Shares pursuant to
Section 9(c) of the Plan.
(ix)
The Grantee understands and agrees that the Grantee may not sell or otherwise transfer or dispose of the Shares for a period
of time following the effective date of a public offering by the Company as described in Section 9(f) of the Plan.
3. Repurchase
Right. Upon a Termination Event, the Company shall have the right to repurchase Shares of Restricted Stock that are
unvested as of the date of such Termination Event as set forth in Section 9(c) of the Plan.
4. Restrictions
on Transfer of Shares. The Shares (whether or not vested) shall be subject to certain transfer restrictions and other limitations
including, without limitation, the provisions contained in Section 9 of the Plan.
5. Incorporation
of Plan. Notwithstanding anything herein to the contrary, this Restricted Stock Award shall be subject to and governed by
all the terms and conditions of the Plan.
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6.
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Miscellaneous Provisions.
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(a)
Record Owner; Dividends. The Grantee and any Permitted Transferees, during the duration of this Agreement, shall
be considered the record owners of and shall be entitled to vote the Shares if and to the extent the Shares are entitled to voting
rights. The Grantee and any Permitted Transferees shall be entitled to receive all dividends and any other distributions declared
on the Shares; provided, however, that the Company is under no duty to declare any such dividends or to make any
such distribution.
(b)
Section 83(b) Election. The Grantee shall consult with the Grantee’s tax advisor to determine whether it would
be appropriate for the Grantee to make an election under Section 83(b) of the Code with respect to this Award. Any such election
must be filed with the Internal Revenue Service within 30 days of the date of this Award. If the Grantee makes an election under
Section 83(b) of the Code, the Grantee shall give prompt notice to the Company (and provide a copy of such election to the Company).
(c)
Equitable Relief. The parties hereto agree and declare that legal remedies may be inadequate to enforce the provisions
of this Agreement and that equitable relief,
including specific performance and injunctive
relief, may be used to enforce the provisions of this Agreement.
(d)
Change and Modifications. This Agreement may not be orally changed, modified or terminated, nor shall any oral waiver
of any of its terms be effective. This Agreement may be changed, modified or terminated only by an agreement in writing signed
by the Company and the Grantee.
(e)
Governing Law. This Agreement shall be governed by and construed in accordance with the General Corporation Law of
the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in
accordance with the internal laws of New York, without regard to conflict of law principles that would result in the application
of any law other than the law of the State of New York.
(f)
Headings. The headings are intended only for convenience in finding the subject matter and do not constitute part
of the text of this Agreement and shall not be considered in the interpretation of this Agreement.
(g)
Saving Clause. If any provision(s) of this Agreement shall be determined to be illegal or unenforceable, such determination
shall in no manner affect the legality or enforceability of any other provision hereof.
(h)
Notices. All notices, requests, consents and other communications shall be in writing and be deemed given when delivered
personally, by telex or facsimile transmission or when received if mailed by first class registered or certified mail, postage
prepaid. Notices to the Company or the Grantee shall be addressed as set forth underneath their signatures below, or to such other
address or addresses as may have been furnished by such party in writing to the other.
(i)
Benefit and Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto,
their respective successors, assigns, and legal representatives. The Company has the right to assign this Agreement, and such assignee
shall become entitled to all the rights of the Company hereunder to the extent of such assignment.
(j)
Counterparts. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(k)
Integration. This Agreement constitutes the entire agreement between the parties with respect to this Award and supersedes
all prior agreements and discussions between the parties concerning such subject matter.
(a) Except
as provided below, any dispute arising out of or relating to the Plan or the Shares, this Agreement, or the breach,
termination or validity of the Plan, the Shares or this Agreement, shall be finally settled by binding arbitration conducted
expeditiously in
accordance with the J.A.M.S./Endispute Comprehensive Arbitration Rules and Procedures (the “J.A.M.S.
Rules”). The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. Sections 1 - 16, and
judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of
arbitration shall be New York, New York.
(b)
The arbitration shall commence within 60 days of the date on which a written demand for arbitration is filed by any party
hereto. In connection with the arbitration proceeding, the arbitrator shall have the power to order the production of documents
by each party and any third-party witnesses. In addition, each party may take up to three depositions as of right, and the arbitrator
may in his or her discretion allow additional depositions upon good cause shown by the moving party. However, the arbitrator shall
not have the power to order the answering of interrogatories or the response to requests for admission. In connection with any
arbitration, each party to the arbitration shall provide to the other, no later than seven business days before the date of the
arbitration, the identity of all persons that may testify at the arbitration and a copy of all documents that may be introduced
at the arbitration or considered or used by a party’s witness or expert. The arbitrator’s decision and award shall
be made and delivered within six months of the selection of the arbitrator. The arbitrator’s decision shall set forth a reasoned
basis for any award of damages or finding of liability. The arbitrator shall not have power to award damages in excess of actual
compensatory damages and shall not multiply actual damages or award punitive damages, and each party hereby irrevocably waives
any claim to such damages.
(c)
The Company, the Grantee, each party to the Agreement and any other holder of Shares issued pursuant to this Agreement (each,
a “Party”) covenants and agrees that such party will participate in the arbitration in good faith. This Section 6 applies
equally to requests for temporary, preliminary or permanent injunctive relief, except that in the case of temporary or preliminary
injunctive relief any party may proceed in court without prior arbitration for the limited purpose of avoiding immediate and irreparable
harm.
(d)
Each Party (i) hereby irrevocably submits to the jurisdiction of any United States District Court of competent jurisdiction
for the purpose of enforcing the award or decision in any such proceeding, (ii) hereby waives, and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the
jurisdiction of the above named courts, that its property is exempt or immune from attachment or execution (except as protected
by applicable law), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action
or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court, and (iii)
hereby waives and agrees not to seek any review by any court of any other jurisdiction which may be called upon to grant an enforcement
of the judgment of any such court. Each Party hereby consents to service of process by registered mail at the address to which
notices are to be given. Each Party agrees that its, his or her submission to jurisdiction and its, his or her consent to service
of process by mail is made for the express benefit of each other Party. Final judgment against any Party in any such action, suit
or proceeding may be enforced in other jurisdictions by suit, action or proceeding on the judgment, or in any other manner provided
by or pursuant to the laws of such other jurisdiction.
8. Waiver of Statutory Information Rights. The Grantee understands and agrees that, but for the waiver made herein,
the Grantee would be entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and
to make copies and extracts from, the Company’s stock ledger, a list of its stockholders, and its other books and records,
and the books and records of subsidiaries of the Company, if any, under the circumstances and in the manner provided in Section
220 of the General Corporation Law of Delaware (any and all such rights, and any and all such other rights of the Grantee as may
be provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first sale of Stock
of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and
Exchange Commission under the Securities Act, the Grantee hereby unconditionally and irrevocably waives the Inspection Rights,
whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant to Section 220 or otherwise, and covenants
and agrees never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be commenced
any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver shall
not affect any rights of a director, in his or her capacity as such, under Section 220. The foregoing waiver shall not apply to
any contractual inspection rights of the Grantee under any other written agreement between the Grantee and the Company.
[SIGNATURE PAGE FOLLOWS]
The
foregoing Restricted Stock Agreement is hereby accepted and the terms and conditions thereof are hereby agreed to by the
undersigned as of the date of purchase of Shares above written.
CENTURY THERAPEUTICS, INC.
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By:
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Name:
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Title:
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Address:
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The undersigned hereby
acknowledges receiving and reviewing a copy of the Plan, including, without limitation, Section 9 thereof and understands
that the Shares granted hereby are subject to the terms of the Plan and of this Agreement. This Agreement is hereby accepted,
and the terms and conditions of the Plan, the Award Notice and this Agreement, SPECIFICALLY INCLUDING THE ARBITRATION
PROVISIONS SET FORTH IN SECTION 6 AND THE WAIVER OF STATUTORY INFORMATION RIGHTS SET FORTH IN SECTION 7 OF THIS AGREEMENT,
are hereby agreed to, by the undersigned as of the date first above written.
GRANTEE:
Name:
Address:
Exhibit
10.11
NON-QUALIFIED STOCK
OPTION GRANT NOTICE
UNDER THE CENTURY THERAPEUTICS, INC.
2018 STOCK OPTION AND GRANT PLAN
Pursuant
to the Century Therapeutics, Inc. 2018 Stock Option and Grant Plan (the “Plan”), Century Therapeutics, Inc., a Delaware
corporation (together with any successor, the “Company”), has granted to the individual named below, an option (the
“Stock Option”) to purchase on or prior to the Expiration Date, or such earlier date as is specified herein, all or
any part of the number of shares of Common Stock, par value $0.0001 per share (“Common Stock”), of the Company indicated
below (the “Shares”), at the Option Exercise Price per share, subject to the terms and conditions set forth in this
Non-Qualified Stock Option Grant Notice (the “Grant Notice”), the attached Non-Qualified Stock Option Agreement (the
“Agreement”) and the Plan. This Stock Option is not intended to qualify as an “incentive stock option”
as defined in Section 422(b) of the Internal Revenue Code of 1986, as amended from time to time (the “Code”).
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Name of Optionee:
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________________ (the “Optionee”)
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No. of Shares:
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__________Shares of Common Stock
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Grant Date:
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________________
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Vesting Commencement Date:
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________________ (the “Vesting Commencement Date”)
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Expiration Date:
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________________ (the “Expiration Date”)
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Option Exercise Price/Share:
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$_______________ (the “Option Exercise Price”)
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Vesting Schedule:
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25 percent of the Shares shall vest and become exercisable on the first anniversary of the Vesting Commencement Date; provided that the Optionee continues to have a Service Relationship with the Company at such time. Thereafter, the remaining 75 percent of the Shares shall vest and become exercisable in 36 equal monthly installments following the first anniversary of the Vesting Commencement Date, provided the Optionee continues to have a Service Relationship with the Company on each vesting date. Notwithstanding anything in the Agreement to the contrary, in the case of a Sale Event, this Stock Option and the Shares shall be treated as provided in Section 3(c) of the Plan.
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NON-QUALIFIED STOCK
OPTION AGREEMENT
UNDER THE CENTURY THERAPEUTICS, INC.
2018 STOCK OPTION AND GRANT PLAN
All capitalized
terms used herein and not otherwise defined shall have the respective meanings set forth in the Grant Notice and the Plan.
1.
Vesting, Exercisability and Termination.
(a) No portion of this Stock Option may be exercised until such portion shall have vested and become exercisable.
(b) Except as set forth below, and subject to the determination of the Committee in its sole discretion to accelerate the vesting
schedule hereunder, this Stock Option shall be vested and exercisable on the respective dates indicated below:
(i)
This Stock Option shall initially be unvested and unexercisable.
(ii)
This Stock Option shall vest and become exercisable in accordance with the Vesting Schedule set forth in the Grant Notice.
(c) Termination. Except as may otherwise be provided by the Committee, if the Optionee’s Service Relationship is
terminated, the period within which to exercise this Stock Option will be subject to earlier termination as set forth below (and
if not exercised within such period, shall thereafter terminate subject, in each case, to Section 3(c) of the Plan):
(i)
Termination Due to Death or Disability. If the Optionee’s Service Relationship terminates by reason of such
Optionee’s death or Disability, this Stock Option may be exercised, to the extent exercisable on the date of such termination,
by the Optionee, the Optionee’s legal representative or legatee for a period of 12 months from the date of death or Disability
or until the Expiration Date, if earlier.
(ii)
Other Termination. If the Optionee’s Service Relationship terminates for any reason other than death or Disability,
and unless otherwise determined by the Committee, this Stock Option may be exercised, to the extent exercisable on the date of
termination, for a period of 90 days from the date of termination or until the Expiration Date, if earlier; provided however,
if the Optionee’s Service Relationship is terminated for Cause, this Stock Option shall terminate immediately upon the date
of such termination.
For purposes
hereof, the Committee’s determination of the reason for termination of the Optionee’s Service Relationship shall be
conclusive and binding on the Optionee and his or her representatives or legatees and any Permitted Transferee. Any portion of
this Stock Option that
is not vested and exercisable on the date of termination of the Service Relationship shall terminate immediately
and be null and void.
2.
Exercise of Stock Option.
(a)
The Optionee may exercise this Stock Option only in the following manner: Prior to the Expiration Date, the Optionee may
deliver a Stock Option exercise notice (an “Exercise Notice”) in the form of Appendix A hereto indicating his
or her election to purchase some or all of the Shares with respect to which this Stock Option is then exercisable. Such notice
shall specify the number of Shares to be purchased. Payment of the purchase price may be made by one or more of the methods described
in Section 5 of the Plan, subject to the limitations contained in such Section of the Plan, including the requirement that the
Committee specifically approve in advance certain payment methods.
(b)
Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be exercisable after the
Expiration Date.
3.
Incorporation of Plan. Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and
governed by all the terms and conditions of the Plan.
4.
Transferability of Stock Option. This Stock Option is personal to the Optionee and is not transferable by the Optionee
in any manner other than by will or by the laws of descent and distribution. The Stock Option may be exercised during the Optionee’s
lifetime only by the Optionee (or by the Optionee’s guardian or personal representative in the event of the Optionee’s
incapacity). The Optionee may elect to designate a beneficiary by providing written notice of the name of such beneficiary to the
Company, and may revoke or change such designation at any time by filing written notice of revocation or change with the Company;
such beneficiary may exercise the Optionee’s Stock Option in the event of the Optionee’s death to the extent provided
herein. If the Optionee does not designate a beneficiary, or if the designated beneficiary predeceases the Optionee, the legal
representative of the Optionee may exercise this Stock Option to the extent provided herein in the event of the Optionee’s
death.
5.
Restrictions on Transfer of Shares. The Shares acquired upon exercise of the Stock Option shall be subject to certain
transfer restrictions and other limitations including, without limitation, the provisions contained in Section 9 of the Plan.
6.
Miscellaneous Provisions.
(a)
Equitable Relief. The parties hereto agree and declare that legal remedies may be inadequate to enforce the provisions
of this Agreement and that equitable relief, including specific performance and injunctive relief, may be used to enforce the provisions
of this Agreement.
(b)
Adjustments for Changes in Capital Structure. If, as a result of any reorganization, recapitalization, reincorporation,
reclassification, stock dividend, stock split, reverse stock split or other similar change in the Common Stock, the outstanding
shares of
Common Stock are increased or decreased or are exchanged for a different number or kind of securities of the
Company, the restrictions contained in this Agreement shall apply with equal force to additional and/or substitute securities,
if any, received by the Optionee in exchange for, or by virtue of his or her ownership of, this Stock Option or Shares acquired
pursuant thereto.
(c)
Change and Modifications. This Agreement may not be orally changed, modified or terminated, nor shall any oral waiver
of any of its terms be effective. This Agreement may be changed, modified or terminated only by an agreement in writing signed
by the Company and the Optionee.
(d)
Governing Law. This Agreement shall be governed by and construed in accordance with the General Corporation Law of
the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in
accordance with the internal laws of New York, without regard to conflict of law principles that would result in the application
of any law other than the law of the State of New York.
(e)
Headings. The headings are intended only for convenience in finding the subject matter and do not constitute part
of the text of this Agreement and shall not be considered in the interpretation of this Agreement.
(f)
Saving Clause. If any provision(s) of this Agreement shall be determined to be illegal or unenforceable, such determination
shall in no manner affect the legality or enforceability of any other provision hereof.
(g)
Notices. All notices, requests, consents and other communications shall be in writing and be deemed given when delivered
personally, by telex or facsimile transmission or when received if mailed by first class registered or certified mail, postage
prepaid. Notices to the Company or the Optionee shall be addressed as set forth underneath their signatures below, or to such other
address or addresses as may have been furnished by such party in writing to the other.
(h)
Benefit and Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto,
their respective successors, assigns, and legal representatives. The Company has the right to assign this Agreement, and such assignee
shall become entitled to all the rights of the Company hereunder to the extent of such assignment.
(i)
Counterparts. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(j)
Integration. This Agreement constitutes the entire agreement between the parties with respect to this Stock Option
and supersedes all prior agreements and discussions between the parties concerning such subject matter.
7.
Dispute Resolution.
(a) Except
as provided below, any dispute arising out of or relating to the Plan or this Stock Option, this Agreement, or the breach,
termination or validity of the Plan, this Stock Option or this Agreement, shall be finally settled by binding arbitration
conducted expeditiously in accordance with the J.A.M.S./Endispute Comprehensive Arbitration Rules and Procedures (the
“J.A.M.S. Rules”). The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. Sections
1-16, and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The
place of arbitration shall be New York, New York.
(b)
The arbitration shall commence within 60 days of the date on which a written demand for arbitration is filed by any party
hereto. In connection with the arbitration proceeding, the arbitrator shall have the power to order the production of documents
by each party and any third-party witnesses. In addition, each party may take up to three depositions as of right, and the arbitrator
may in his or her discretion allow additional depositions upon good cause shown by the moving party. However, the arbitrator shall
not have the power to order the answering of interrogatories or the response to requests for admission. In connection with any
arbitration, each party to the arbitration shall provide to the other, no later than seven business days before the date of the
arbitration, the identity of all persons that may testify at the arbitration and a copy of all documents that may be introduced
at the arbitration or considered or used by a party’s witness or expert. The arbitrator’s decision and award shall
be made and delivered within six months of the selection of the arbitrator. The arbitrator’s decision shall set forth a reasoned
basis for any award of damages or finding of liability. The arbitrator shall not have power to award damages in excess of actual
compensatory damages and shall not multiply actual damages or award punitive damages, and each party hereby irrevocably waives
any claim to such damages.
(c)
The Company, the Optionee, each party to the Agreement and any other holder of Shares issued pursuant to this Agreement
(each, a “Party”) covenants and agrees that such party will participate in the arbitration in good faith. This Section
7 applies equally to requests for temporary, preliminary or permanent injunctive relief, except that in the case of temporary or
preliminary injunctive relief any party may proceed in court without prior arbitration for the limited purpose of avoiding immediate
and irreparable harm.
(d)
Each Party (i) hereby irrevocably submits to the jurisdiction of any United States District Court of competent jurisdiction
for the purpose of enforcing the award or decision in any such proceeding, (ii) hereby waives, and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the
jurisdiction of the above named courts, that its property is exempt or immune from attachment or execution (except as protected
by applicable law), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action
or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court, and (iii)
hereby waives and agrees not to seek any review by any court of any other jurisdiction which may be called upon to grant an enforcement
of the judgment of any such court. Each Party hereby consents to service of process by registered mail at the address to which
notices are to be given. Each Party agrees that its, his or her submission to jurisdiction
and its, his or her consent to
service of process by mail is made for the express benefit of each other Party. Final judgment against any Party in any such action,
suit or proceeding may be enforced in other jurisdictions by suit, action or proceeding on the judgment, or in any other manner
provided by or pursuant to the laws of such other jurisdiction.
8.
Waiver of Statutory Information Rights. The Optionee understands and agrees that, but for the waiver made herein,
the Optionee would be entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose,
and to make copies and extracts from, the Company’s stock ledger, a list of its stockholders, and its other books and records,
and the books and records of subsidiaries of the Company, if any, under the circumstances and in the manner provided in Section
220 of the General Corporation Law of Delaware (any and all such rights, and any and all such other rights of the Optionee as may
be provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first sale of Stock
of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and
Exchange Commission under the Securities Act, the Optionee hereby unconditionally and irrevocably waives the Inspection Rights,
whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant to Section 220 or otherwise, and covenants
and agrees never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be commenced
any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver shall
not affect any rights of a director, in his or her capacity as such, under Section 220. The foregoing waiver shall not apply to
any contractual inspection rights of the Optionee under any other written agreement between the Optionee and the Company.
[SIGNATURE PAGE
FOLLOWS]
The foregoing Agreement is hereby accepted and
the terms and conditions thereof hereby agreed to by the undersigned as of the date first above written.
CENTURY THERAPEUTICS, INC.
By:
Name:
Title:
Address:
The undersigned hereby
acknowledges receiving and reviewing a copy of the Plan, including, without limitation, Section 9 thereof, and understands
that this Stock Option is subject to the terms of the Plan and of this Agreement. This Agreement is hereby accepted, and the
terms and conditions of the Plan, the Grant Notice and this Agreement, SPECIFICALLY INCLUDING THE ARBITRATION PROVISIONS SET
FORTH IN SECTION 7 AND THE WAIVER OF STATUTORY INFORMATION RIGHTS SET FORTH IN SECTION 8 OF THIS AGREEMENT, are hereby agreed
to, by the undersigned as of the date first above written.
OPTIONEE:
Name:
Address:
Appendix A
STOCK OPTION EXERCISE NOTICE
Century Therapeutics, Inc.
Attention: ______
______________
______________
Pursuant to the terms of the grant
notice and stock option agreement between the undersigned and Century Therapeutics, Inc. (the “Company”) dated___________(the
“Agreement”) under the Century Therapeutics, Inc. 2018 Stock Option and Grant Plan, I, [Insert Name] ______________,
hereby [Circle One] partially/fully exercise such option by including herein payment in the amount of $ _________representing
the purchase price for [Fill in number of Shares] _____________Shares. I have chosen the following form(s) of payment:
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[ ]
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1.
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Cash
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[ ]
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2.
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Certified or bank check payable to Gotham Therapeutics Corporation
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[ ]
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3.
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Other (as referenced in the Agreement and described in the Plan
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(please describe))
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.
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In connection with my exercise of the
option as set forth above, I hereby represent and warrant to the Company as follows:
(i) I am purchasing the Shares for my own account for investment only, and not for resale or with a view to the distribution
thereof.
(ii) I have had such an opportunity as I have deemed adequate to obtain from the Company such information as is necessary to
permit me to evaluate the merits and risks of my investment in the Company and have consulted with my own advisers with respect
to my investment in the Company.
(iii) I have sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in
the purchase of the Shares and to make an informed investment decision with respect to such purchase.
(iv) I can afford a complete loss of the value of the Shares and am able to bear the economic risk of holding such Shares for
an indefinite period of time.
(v) I understand that the Shares may not be registered under the Securities Act of 1933 (it being understood that the Shares
are being issued and sold in reliance on the exemption provided in Rule 701 thereunder) or any applicable state
securities
or “blue sky” laws and may not be sold or otherwise transferred or disposed of in the absence of an effective registration
statement under the Securities Act of 1933 and under any applicable state securities or “blue sky” laws (or exemptions
from the registration requirement thereof). I further acknowledge that certificates representing Shares will bear restrictive legends
reflecting the foregoing and/or that book entries for uncertificated Shares will include similar restrictive notations.
(vi) I have read and understand the Plan and acknowledge and agree that the Shares are subject to all of the relevant terms of
the Plan, including without limitation, the transfer restrictions set forth in Section 9 of the Plan.
(vii) I understand and agree that the Company has a right of first refusal with respect to the Shares pursuant to Section 9(b)
of the Plan.
(viii) I understand and agree that the Company has certain repurchase rights with respect to the Shares pursuant to Section 9(c)
of the Plan.
(ix) I understand and agree that I may not sell or otherwise transfer or dispose of the Shares for a period of time following
the effective date of a public offering by the Company as described in Section 9(f) of the Plan.
(x) I understand and agree to the waiver of statutory information rights as set forth in Section 8 of the Agreement.
Sincerely yours,
Name:
Address:
Date:
Exhibit
10.12
INCENTIVE
STOCK OPTION GRANT NOTICE
UNDER THE CENTURY THERAPEUTICS, INC.
2018 STOCK OPTION AND GRANT PLAN
Pursuant
to the Century Therapeutics, Inc. 2018 Stock Option and Grant Plan (the “Plan”), Century Therapeutics, Inc., a Delaware
corporation (together with any successor, the “Company”), has granted to the individual named below, an option (the
“Stock Option”) to purchase on or prior to the Expiration Date, or such earlier date as is specified herein, all or
any part of the number of shares of Common Stock, par value $0.0001 per share (“Common Stock”), of the Company indicated
below (the “Shares”), at the Option Exercise Price per share, subject to the terms and conditions set forth in this
Incentive Stock Option Grant Notice (the “Grant Notice”), the attached Incentive Stock Option Agreement (the “Agreement”)
and the Plan. This Stock Option is intended to qualify as an “incentive stock option” as defined in Section 422(b)
of the Internal Revenue Code of 1986, as amended from time to time (the “Code”). To the extent that any portion of
the Stock Option does not so qualify, it shall be deemed a non-qualified stock option.
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Name of Optionee:
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______________________(the “Optionee”)
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No. of Shares:
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_______________Shares of Common Stock
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Grant Date:
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______________________
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Vesting Commencement Date:
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______________________(the “Vesting Commencement Date”)
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Expiration Date:
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______________________(the “Expiration Date”)
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Option Exercise Price/Share:
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$_____________________(the “Option Exercise Price”)
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Vesting Schedule:
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25 percent of the Shares shall vest and become exercisable on the first anniversary of the Vesting Commencement Date; provided that the Optionee continues to have a Service Relationship with the Company at such time. Thereafter, the remaining 75 percent of the Shares shall vest and become exercisable in 36 equal monthly installments following the first anniversary of the Vesting Commencement Date, provided the Optionee continues to have a Service Relationship with the Company on each vesting date. Notwithstanding anything in the Agreement to the contrary, in the case of a Sale Event, this Stock Option and the Shares shall be treated as provided in Section 3(c) of the Plan.
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INCENTIVE
STOCK OPTION AGREEMENT
UNDER THE CENTURY THERAPEUTICS, INC.
2018 STOCK OPTION AND GRANT PLAN
All capitalized
terms used herein and not otherwise defined shall have the respective meanings set forth in the Grant Notice and the Plan.
1.
Vesting, Exercisability and Termination.
(a)
No portion of this Stock Option may be exercised until such portion shall have vested and become exercisable.
(b)
Except as set forth below, and subject to the determination of the Committee in its sole discretion to accelerate the vesting
schedule hereunder, this Stock Option shall be vested and exercisable on the respective dates indicated below:
(i)
This Stock Option shall initially be unvested and unexercisable.
(ii)
This Stock Option shall vest and become exercisable in accordance with the Vesting Schedule set forth in the Grant Notice.
(c)
Termination. Except as may otherwise be provided by the Committee, if the Optionee’s Service Relationship is
terminated, the period within which to exercise this Stock Option will be subject to earlier termination as set forth below (and
if not exercised within such period, shall thereafter terminate subject, in each case, to Section 3(c) of the Plan):
(i)
Termination Due to Death or Disability. If the Optionee’s Service Relationship terminates by reason of such
Optionee’s death or Disability, this Stock Option may be exercised, to the extent exercisable on the date of such termination,
by the Optionee, the Optionee’s legal representative or legatee for a period of 12 months from the date of death or Disability
or until the Expiration Date, if earlier.
(ii)
Other Termination. If the Optionee’s Service Relationship terminates for any reason other than death or Disability,
and unless otherwise determined by the Committee, this Stock Option may be exercised, to the extent exercisable on the date of
termination, for a period of 90 days from the date of termination or until the Expiration Date, if earlier; provided however,
if the Optionee’s Service Relationship is terminated for Cause, this Stock Option shall terminate immediately upon the date
of such termination.
For purposes
hereof, the Committee’s determination of the reason for termination of the Optionee’s Service Relationship shall be
conclusive and binding on the Optionee and his or her representatives or legatees. Any portion of this Stock Option that is not
vested and exercisable
on
the date of termination of the Service Relationship shall terminate immediately and be null and void.
(d)
It is understood and intended that this Stock Option is intended to qualify as an “incentive stock option” as
defined in Section 422 of the Code to the extent permitted under applicable law. Accordingly, the Optionee understands that in
order to obtain the benefits of an incentive stock option under Section 422 of the Code, no sale or other disposition may be made
of Shares for which incentive stock option treatment is desired within the one-year period beginning on the day after the day of
the transfer of such Shares to him or her, nor within the two-year period beginning on the day after Grant Date of this Stock Option
and further that this Stock Option must be exercised within three months after termination of employment as an employee (or 12
months in the case of death or disability) to qualify as an incentive stock option. If the Optionee disposes (whether by sale,
gift, transfer or otherwise) of any such Shares within either of these periods, he or she will notify the Company within 30 days
after such disposition. The Optionee also agrees to provide the Company with any information concerning any such dispositions required
by the Company for tax purposes. Further, to the extent this Stock Option and any other incentive stock options of the Optionee
having an aggregate Fair Market Value in excess of $100,000 (determined as of the Grant Date) first become exercisable in any year,
such options will not qualify as incentive stock options.
2. Exercise
of Stock Option.
(a)
The Optionee may exercise this Stock Option only in the following manner: Prior to the Expiration Date, the Optionee may
deliver a Stock Option exercise notice (an “Exercise Notice”) in the form of Appendix A hereto indicating his
or her election to purchase some or all of the Shares with respect to which this Stock Option is then exercisable. Such notice
shall specify the number of Shares to be purchased. Payment of the purchase price may be made by one or more of the methods described
in Section 5 of the Plan, subject to the limitations contained in such Section of the Plan, including the requirement that the
Committee specifically approve in advance certain payment methods.
(b)
Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be exercisable after the
Expiration Date.
3. Incorporation
of Plan. Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and governed by all the terms
and conditions of the Plan.
4. Transferability
of Stock Option. This Stock Option is personal to the Optionee and is not transferable by the Optionee in any manner other
than by will or by the laws of descent and distribution. The Stock Option may be exercised during the Optionee’s lifetime
only by the Optionee (or by the Optionee’s guardian or personal representative in the event of the Optionee’s incapacity).
The Optionee may elect to designate a beneficiary by providing written notice of the name of such beneficiary to the Company,
and may revoke or change such designation at any time by filing written notice of revocation or change with the Company; such
beneficiary may exercise the Optionee’s Stock Option in the event of the Optionee’s death to the extent provided herein.
If the Optionee does not designate a beneficiary, or if the designated
beneficiary predeceases the Optionee, the legal representative
of the Optionee may exercise this Stock Option to the extent provided herein in the event of the Optionee’s death.
5. Restrictions
on Transfer of Shares. The Shares acquired upon exercise of the Stock Option shall be subject to certain transfer restrictions
and other limitations including, without limitation, the provisions contained in Section 9 of the Plan.
6. Miscellaneous Provisions.
(a)
Equitable Relief. The parties hereto agree and declare that legal remedies may be inadequate to enforce the provisions
of this Agreement and that equitable relief, including specific performance and injunctive relief, may be used to enforce the provisions
of this Agreement.
(b)
Adjustments for Changes in Capital Structure. If, as a result of any reorganization, recapitalization, reincorporation,
reclassification, stock dividend, stock split, reverse stock split or other similar change in the Common Stock, the outstanding
shares of Common Stock are increased or decreased or are exchanged for a different number or kind of securities of the Company,
the restrictions contained in this Agreement shall apply with equal force to additional and/or substitute securities, if any, received
by the Optionee in exchange for, or by virtue of his or her ownership of, this Stock Option or Shares acquired pursuant thereto.
(c)
Change and Modifications. This Agreement may not be orally changed, modified or terminated, nor shall any oral waiver
of any of its terms be effective. This Agreement may be changed, modified or terminated only by an agreement in writing signed
by the Company and the Optionee.
(d)
Governing Law. This Agreement shall be governed by and construed in accordance with the General Corporation Law of
the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in
accordance with the internal laws of New York, without regard to conflict of law principles that would result in the application
of any law other than the law of the State of New York.
(e)
Headings. The headings are intended only for convenience in finding the subject matter and do not constitute part
of the text of this Agreement and shall not be considered in the interpretation of this Agreement.
(f)
Saving Clause. If any provision(s) of this Agreement shall be determined to be illegal or unenforceable, such determination
shall in no manner affect the legality or enforceability of any other provision hereof.
(g)
Notices. All notices, requests, consents and other communications shall be in writing and be deemed given when delivered
personally, by telex or facsimile transmission or when received if mailed by first class registered or certified mail, postage
prepaid. Notices to the Company or the Optionee shall be addressed as set forth underneath their signatures below,
or to such other address or addresses as may have
been furnished by such party in writing to the other.
(h)
Benefit and Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto,
their respective successors, assigns, and legal representatives. The Company has the right to assign this Agreement, and such assignee
shall become entitled to all the rights of the Company hereunder to the extent of such assignment.
(i)
Counterparts. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(j)
Integration. This Agreement constitutes the entire agreement between the parties with respect to this Stock Option
and supersedes all prior agreements and discussions between the parties concerning such subject matter.
7. Dispute
Resolution.
(a)
Except as provided below, any dispute arising out of or relating to the Plan or this Stock Option, this Agreement, or the
breach, termination or validity of the Plan, this Stock Option or this Agreement, shall be finally settled by binding arbitration
conducted expeditiously in accordance with the J.A.M.S./Endispute Comprehensive Arbitration Rules and Procedures (the “J.A.M.S.
Rules”). The arbitration shall be governed by the United States Arbitration Act, 9
U.S.C. Sections 1 16, and judgment upon the award
rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of arbitration shall be New York,
New York.
(b)
The arbitration shall commence within 60 days of the date on which a written demand for arbitration is filed by any party
hereto. In connection with the arbitration proceeding, the arbitrator shall have the power to order the production of documents
by each party and any third-party witnesses. In addition, each party may take up to three depositions as of right, and the arbitrator
may in his or her discretion allow additional depositions upon good cause shown by the moving party. However, the arbitrator shall
not have the power to order the answering of interrogatories or the response to requests for admission. In connection with any
arbitration, each party to the arbitration shall provide to the other, no later than seven business days before the date of the
arbitration, the identity of all persons that may testify at the arbitration and a copy of all documents that may be introduced
at the arbitration or considered or used by a party’s witness or expert. The arbitrator’s decision and award shall
be made and delivered within six months of the selection of the arbitrator. The arbitrator’s decision shall set forth a reasoned
basis for any award of damages or finding of liability. The arbitrator shall not have power to award damages in excess of actual
compensatory damages and shall not multiply actual damages or award punitive damages, and each party hereby irrevocably waives
any claim to such damages.
(c)
The Company, the Optionee, each party to the Agreement and any other holder of Shares issued pursuant to this Agreement
(each, a “Party”) covenants and agrees that such party will participate in the arbitration in good faith. This Section
7 applies equally to
requests for temporary,
preliminary or permanent injunctive relief, except that in the case of temporary or preliminary injunctive relief any party may
proceed in court without prior arbitration for the limited purpose of avoiding immediate and irreparable harm.
(d)
Each Party (i) hereby irrevocably submits to the jurisdiction of any United States District Court of competent jurisdiction
for the purpose of enforcing the award or decision in any such proceeding, (ii) hereby waives, and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the
jurisdiction of the above named courts, that its property is exempt or immune from attachment or execution (except as protected
by applicable law), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action
or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court, and (iii)
hereby waives and agrees not to seek any review by any court of any other jurisdiction which may be called upon to grant an enforcement
of the judgment of any such court. Each Party hereby consents to service of process by registered mail at the address to which
notices are to be given. Each Party agrees that its, his or her submission to jurisdiction and its, his or her consent to service
of process by mail is made for the express benefit of each other Party. Final judgment against any Party in any such action, suit
or proceeding may be enforced in other jurisdictions by suit, action or proceeding on the judgment, or in any other manner provided
by or pursuant to the laws of such other jurisdiction.
8.
Waiver of Statutory Information Rights. The Optionee understands and agrees that, but for the waiver made herein,
the Optionee would be entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose,
and to make copies and extracts from, the Company’s stock ledger, a list of its stockholders, and its other books and records,
and the books and records of subsidiaries of the Company, if any, under the circumstances and in the manner provided in Section
220 of the General Corporation Law of Delaware (any and all such rights, and any and all such other rights of the Optionee as may
be provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first sale of Stock
of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and
Exchange Commission under the Securities Act, the Optionee hereby unconditionally and irrevocably waives the Inspection Rights,
whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant to Section 220 or otherwise, and covenants
and agrees never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be commenced
any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver shall
not affect any rights of a director, in his or her capacity as such, under Section 220. The foregoing waiver shall not apply to
any contractual inspection rights of the Optionee under any other written agreement between the Optionee and the Company.
[SIGNATURE PAGE FOLLOWS]
The foregoing Agreement
is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned as of the date first above written.
CENTURY THERAPEUTICS, INC.
By:
Name:
Title:
Address:
The undersigned hereby
acknowledges receiving and reviewing a copy of the Plan, including, without limitation, Section 9 thereof, and understands
that this Stock Option is subject to the terms of the Plan and of this Agreement. This Agreement is hereby accepted, and the
terms and conditions of the Plan, the Grant Notice and this Agreement, SPECIFICALLY INCLUDING THE ARBITRATION PROVISIONS SET
FORTH IN SECTION 7 AND THE WAIVER OF STATUTORY INFORMATION RIGHTS SET FORTH IN SECTION 8 OF THIS AGREEMENT, are hereby agreed
to, by the undersigned as of the date first above written.
OPTIONEE:
Name:
Address:
Appendix A
STOCK OPTION EXERCISE
NOTICE
Century Therapeutics, Inc.
Attention:
__________
__________________
__________________
Pursuant
to the terms of the grant notice and stock option agreement between the undersigned and Century Therapeutics, Inc. (the “Company”)
dated___________(the “Agreement”) under the Century Therapeutics, Inc. 2018 Stock Option and Grant Plan, I,
[Insert Name]____________, hereby [Circle One] partially/fully exercise such option by including herein payment in the
amount of $_________ representing the purchase price for [Fill in number of Shares]______________Shares. I have chosen the following
form(s) of payment:
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1.
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Cash
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2.
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Certified or bank check payable to Century Therapeutics, Inc
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3.
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Other (as referenced in the Agreement and described
in the Plan (please describe))
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In connection with my exercise
of the option as set forth above, I hereby represent and warrant to the Company as follows:
(i)
I am purchasing the Shares for my own account for investment only, and not for resale or with a view to the distribution
thereof.
(ii)
I have had such an opportunity as I have deemed adequate to obtain from the Company such information as is necessary to
permit me to evaluate the merits and risks of my investment in the Company and have consulted with my own advisers with respect
to my investment in the Company.
(iii)
I have sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in
the purchase of the Shares and to make an informed investment decision with respect to such purchase.
(iv)
I can afford a complete loss of the value of the Shares and am able to bear the economic risk of holding such Shares for
an indefinite period of time.
(v)
I understand that the Shares may not be registered under the Securities Act of 1933 (it being understood that the Shares
are being issued and sold in reliance on the exemption provided in Rule 701 thereunder) or any applicable state securities or
“blue sky” laws and may not be sold or otherwise transferred or disposed of in the absence of an effective registration
statement under the Securities Act of 1933 and
under any applicable state securities or “blue sky” laws (or exemptions
from the registration requirement thereof). I further acknowledge that certificates representing Shares will bear restrictive
legends reflecting the foregoing and/or that book entries for uncertificated Shares will include similar restrictive notations.
(vi)
I have read and understand the Plan and acknowledge and agree that the Shares are subject to all of the relevant terms of
the Plan, including without limitation, the transfer restrictions set forth in Section 9 of the Plan.
(vii)
I understand and agree that the Company has a right of first refusal with respect to the Shares pursuant to Section 9(b)
of the Plan.
(viii)
I understand and agree that the Company has certain repurchase rights with respect to the Shares pursuant to Section 9(c)
of the Plan.
(ix)
I understand and agree that I may not sell or otherwise transfer or dispose of the Shares for a period of time following
the effective date of a public offering by the Company as described in Section 9(f) of the Plan.
(x)
I understand and agree to the waiver of statutory information rights as set forth in Section 8 of the Agreement.
Sincerely yours,
Name:
Address:
Date:
Exhibit 10.13
CENTURY THERAPEUTICS, INC. 2021 EQUITY INCENTIVE
PLAN
STOCK OPTION GRANT NOTICE AND
AWARD AGREEMENT
Century
Therapeutics, Inc., a Delaware corporation (the “Company”), pursuant to its 2021 Equity Incentive Plan (the “Plan”),
hereby grants to the individual listed below (“Participant”) an option to purchase the number of Shares set forth
below (the “Option”). The Option described in this Stock Option Grant Notice (the “Grant Notice”)
is subject to the terms and conditions set forth in the Award Agreement attached hereto as Exhibit A (the “Agreement”)
and the Plan, each of which is incorporated herein by reference. Unless otherwise defined herein, capitalized terms used in this Grant
Notice and the Agreement will have the meanings defined in the Plan.
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Participant:
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[_________]
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Grant Date:
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[_________]
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Exercise Price Per Share:
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[_________]
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Total Number of Shares Subject to Option:
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[_________]
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Expiration Date:
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[_________]
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Type of Option:
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¨
Incentive Stock Option (to the extent permitted by 422(d) of the Code)
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¨ Non-Qualified Stock Option
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Vesting Schedule:
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[_________]
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By signing
below, Participant agrees to be bound by the terms and conditions of the Plan, the Agreement and this Grant Notice. This document may
be executed, including by electronic means, in multiple counterparts, each of which will be deemed an original, and all of which together
will be deemed a single instrument.
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CENTURY
THERAPEUTICS, INC.
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participant
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Name:
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Name:
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Title:
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EXHIBIT A
TO STOCK OPTION
GRANT NOTICE
AWARD AGREEMENT
1.
Award of Option. Effective as of the Grant Date set forth in the Grant Notice, the Company has granted to Participant the
Option to purchase part or all of the aggregate number of Shares set forth in the Grant Notice, subject to the terms and conditions set
forth in the Grant Notice, the Plan and this Agreement.
2.
Term of Option. The Option may not be exercised later than the Expiration Date set forth in the Grant Notice, subject to
earlier termination in accordance with the Plan and this Agreement.
3.
Option Exercise Price. The exercise price per Share of the Option (the “Exercise Price”) is set forth
in the Grant Notice.
4.
Vesting and Exercise of Option. Subject to the continued service of Participant with the Company through the relevant vesting
dates, the Option shall become vested and exercisable in such amounts and at such times as set forth in the Grant Notice. In addition:
a.
Effect of Termination of Service due to Death on the Option. Upon Participant’s death during his or her continuous
service with the Company, any portion of the Option that is outstanding and unvested immediately prior to Participant’s death will
remain outstanding for ninety (90) days, during which time the Committee may, in its sole discretion, vest all or a portion of such Option.
If the Committee decides to vest all or any portion of such Option under this Section 4.a, it may condition such vesting on the execution
by Participant’s estate and/or beneficiaries of a general release of claims against the Company and its affiliates in such form
as the Company may prescribe (each, a “Release”). Upon the ninetieth (90th) day following Participant’s death,
any portion of the unvested Option that the Committee has not determined to vest in accordance with this Section 4.a will be forfeited.
b.
Effect of Termination of Service on the Option. Unless otherwise provided in the Grant Notice, this Agreement or in Participant’s
employment agreement, the termination or survival of the Option will be determined in accordance with Section 7 of the Plan.
c.
Service with Affiliates. Solely for purposes of this Agreement, service with the Company will be deemed to include service
with an Affiliate of the Company (for only so long as such entity remains an Affiliate of the Company).
d.
Method of Exercise. Participant may exercise the Option only to the extent it is vested. To exercise the Option, Participant
must deliver a payment of the Exercise Price, any required tax withholding and written notice of exercise to the Company in accordance
with Section 5(d) of the Plan. Such notice must also be accompanied by any further documents or instruments the Company deems necessary
or desirable to carry out the purposes or intent of this Agreement.
e.
Partial Exercise. The Option may be exercised in whole or in part, provided,
however, that any exercise may apply only with a whole number of Shares.
f. Restrictions
on Exercise. The Option may not be exercised, and any purported exercise will be void, if the issuance of Shares upon such
exercise would constitute a violation of any law, regulation or exchange listing requirement. The Committee may from time to time
modify the terms of
the Option or impose additional conditions on the exercise of the Option as it deems necessary or appropriate to
facilitate compliance with any law, regulation or exchange listing requirement.
g.
Rights as Stockholder. The Option will not confer upon Participant any of the rights or privileges of a stockholder in the
Company unless and until Participant is issued Shares following Participant’s exercise of the Option.
5.
Non-Transferability of Option. The Option may not be sold, pledged, assigned, hypothecated, gifted, transferred or disposed
of in any manner, either voluntarily or involuntarily, other than by will or by the laws of descent and distribution.
6.
Adjustments. The Exercise Price, as well as the number and kind of shares subject to the Option, are subject to adjustment
in accordance with Section 3(e) of the Plan.
7.
No Continuation of Service. Neither the Plan nor this Agreement will confer upon Participant any right to continue in the
employment or service of the Company or any of its Affiliates, or limit in any respect the right of the Company or its Affiliates to discharge
Participant at any time, for any reason.
8.
Withholding. Participant acknowledges that the exercise of the Option will give rise to taxable income subject to required
withholding. In accordance with Section 15 of the Plan, the obligations of the Company hereunder are conditioned on Participant timely
paying, or otherwise making arrangements satisfactory to the Company regarding the timely satisfaction of, such required withholding.
9.
The Plan. Participant has received a copy of the Plan, has read the Plan and is familiar with its terms, and hereby accepts
the Option subject to the terms and provisions of the Plan. Pursuant to the Plan, the Committee is authorized to interpret the Plan and
to adopt rules and regulations not inconsistent with the Plan as it deems appropriate. Participant hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Committee with respect to questions arising under the Plan, the Grant Notice
or this Agreement.
10.
Company Policies. Participant agrees, in consideration for the grant of the Restricted Stock, to be subject to any policies
of the Company and its Affiliates regarding clawbacks, securities trading, and hedging or pledging of securities that may be in effect
from time to time, or as may otherwise be required by applicable law, regulation or exchange listing standard.
11.
Entire Agreement. The Grant Notice and this Agreement, together with the Plan, represent the entire agreement between the
parties with respect to the subject matter hereof and supersede any prior agreement, written or otherwise, relating to the subject matter
hereof.
12.
Amendment. This Agreement may only be amended by a writing signed by each of the parties hereto; provided that the Company
may amend this Agreement without Participant’s consent, if the amendment does not materially impair Participant’s rights hereunder
or as otherwise permitted in Section 4(f), above.
13.
Governing Law. This Agreement will be construed in accordance with the laws and judicial decisions of the State of Delaware,
without regard to the application of the principles of conflicts of laws.
14.
Headings. The headings in this Agreement are for convenience only. They form no part
of the Agreement and will not affect its interpretation.
15.
Incentive Stock Options.
a.
If the Option is designated as an Incentive Stock Option, Participant acknowledges that nonetheless a portion of the Option may
not qualify (or may cease to qualify) as an “incentive stock option” under the Code due to limitations set forth in Section
422(d) of the Code or otherwise. To the extent the Option does not qualify for treatment as an “incentive stock option” under
the Code, it will be treated as a non-qualified stock option. The Company does not guarantee any particular tax treatment for the Option
or the Shares subject to the Option.
b.
If the Option is designated as an Incentive Stock Option, Participant shall give prompt written notice to the Company of any disposition
or other transfer of any Shares acquired under the Option, if such disposition or transfer is made (i) within two years from the Grant
Date, or (ii) within one year after the transfer of such Shares to Participant. Such notice shall specify the date of such disposition
or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by Participant
in such disposition or other transfer.
16.
Electronic Delivery of Documents. Participant authorizes the Company to deliver electronically any prospectuses or other
documentation related to the Option and any other compensation or benefit plan or arrangement in effect from time to time (including,
without limitation, reports, proxy statements or other documents that are required to be delivered to participants in such arrangements
pursuant to federal or state laws, rules or regulations). For this purpose, electronic delivery will include, without limitation, delivery
by means of e-mail or e-mail notification that such documentation is available on the Company’s Intranet site. Upon written request,
the Company will provide to Participant a paper copy of any document also delivered to Participant electronically. The authorization described
in this paragraph may be revoked by Participant at any time by written notice to the Company.
Exhibit 10.14
CENTURY THERAPEUTICS, INC. 2021 EQUITY INCENTIVE
PLAN
RESTRICTED STOCK UNIT GRANT NOTICE AND
AWARD AGREEMENT
Century
Therapeutics, Inc., a Delaware corporation (the “Company”), pursuant to its 2021 Equity Incentive Plan (the “Plan”),
hereby grants to the individual listed below (“Participant”) the number of restricted stock units set forth below (the
“Restricted Stock Units”). The Restricted Stock Units described in this Restricted Stock Unit Grant Notice (the “Grant
Notice”) are subject to the terms and conditions set forth in the Award Agreement attached hereto as Exhibit A (the
“Agreement”) and the Plan, each of which is incorporated herein by reference. Unless otherwise defined herein, capitalized
terms used in this Grant Notice and the Agreement will have the meanings defined in the Plan.
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Participant:
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[_________]
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Grant Date:
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[_________]
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Total Number of Restricted Stock Units:
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[_________]
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Vesting Schedule:
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[_________]
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By signing
below, Participant agrees to be bound by the terms and conditions of the Plan, the Agreement and this Grant Notice. This document may
be executed, including by electronic means, in multiple counterparts, each of which will be deemed an original, and all of which together
will be deemed a single instrument.
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CENTURY
THERAPEUTICS, INC.
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participant
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Name:
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Name:
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Title:
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EXHIBIT A
TO RESTRICTED STOCK
Unit GRANT NOTICE
AWARD AGREEMENT
1.
Award of Restricted Stock Units. Effective as of the Grant Date set forth in the Grant Notice, the Company has granted to
Participant the number of Restricted Stock Units set forth in the Grant Notice, subject to the restrictions and on the terms and conditions
set forth in the Grant Notice, the Plan and this Agreement. Each Restricted Stock Unit represents the right to receive one Share at the
times and subject to the conditions set forth herein.
2.
Vesting of Restricted Stock Units.
a.
Subject to the continued service of Participant with the Company through the relevant vesting dates, the Restricted Stock Units
will become vested in such amounts and at such times as set forth in the Grant Notice.
b.
Solely for purposes of this Agreement, service with the Company will be deemed to include service with an Affiliate of the Company
(for only so long as such entity remains an Affiliate of the Company).
c.
Upon Participant’s death during his or her continuous service with the Company, any Restricted Stock Units that are outstanding
and unvested immediately prior to Participant’s death will remain outstanding for ninety (90) days, during which time the Committee
may, in its sole discretion, vest all or a portion of such Restricted Stock Units. If the Committee decides to vest any Restricted Stock
Units under this Section 2.c it may condition such vesting on the execution by the Participant’s estate and/or beneficiaries of
a general release of claims against the Company and its affiliates, in such form as the Company may prescribe (a “Release”).
Upon the ninetieth (90th) day following Participant’s death, any portion of the unvested Restricted Stock Units that the Committee
has not determined to vest in accordance with this Section 2.c will be forfeited.
d.
Unless otherwise provided in the Grant Notice or in Participant’s employment agreement, upon the cessation of Participant’s
service with the Company for any reason other than as described in Section 2.c above, any unvested Restricted Stock Units will be forfeited
automatically.
3.
Settlement.
a. Shares
will be issued in respect of vested Restricted Stock Units within sixty (60) days following the applicable vesting date or event. For
avoidance of doubt, this settlement timing is intended to comply with the “short-term deferral” exemption from Section 409A
of the Code.
b. The
Restricted Stock Units will not confer on Participant any rights as a stockholder of the Company until Shares are actually issued in
settlement of such Restricted Stock Units.
c. Notwithstanding
the foregoing, to the extent provided in Prop. Treas. Reg. § 1.409A-1(b)(4)(ii) or any successor provision, the Company may delay
settlement of Restricted Stock Units if it reasonably determines that such settlement would violate federal securities laws or any other
applicable law.
4.
Non-Transferability of Restricted Stock Units. Restricted Stock Units may not be sold, pledged, assigned, hypothecated,
gifted, transferred or disposed of in any manner, either voluntarily or involuntarily, other than by will or by the laws of descent and
distribution.
5.
Section 409A. The grant of Restricted Stock Units is intended to be exempt from Section 409A of the Code and should be interpreted
accordingly. Nonetheless, the Company does not guarantee the tax treatment of the Restricted Stock Units.
6.
No Continuation of Service. Neither the Plan nor this Agreement will confer upon Participant any right to continue in the
employment or service of the Company or any of its Affiliates, or limit in any respect the right of the Company or its Affiliates to discharge
Participant at any time, for any reason.
7.
The Plan. Participant has received a copy of the Plan, has read the Plan and is familiar with its terms, and hereby accepts
the Award subject to the terms and provisions of the Plan. Pursuant to the Plan, the Committee is authorized to interpret the Plan and
to adopt rules and regulations not inconsistent with the Plan as it deems appropriate. Participant hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Committee with respect to questions arising under the Plan, the Grant Notice
or this Agreement.
8.
Company Policies. Participant agrees, in consideration for the grant of the Restricted Stock Units, to be subject to any
policies of the Company and its Affiliates regarding clawbacks, securities trading, and hedging or pledging of securities that may be
in effect from time to time, or as may otherwise be required by applicable law, regulation or exchange listing standard.
9.
Entire Agreement. The Grant Notice and this Agreement, together with the Plan, represent the entire agreement between the
parties with respect to the subject matter hereof and supersede any prior agreement, written or otherwise, relating to the subject matter
hereof.
10. Amendment.
This Agreement may only be amended by a writing signed by each of the parties hereto; provided that the Company may amend this Agreement
without Participant’s consent, if the amendment does not materially impair Participant’s rights hereunder.
11.
Governing Law. This Agreement will be construed in accordance with the laws of the State of Delaware, without regard to
the application of the principles of conflicts of laws.
12.
Headings. The headings in this Agreement are for convenience only. They form no part of the Agreement and will not affect
its interpretation.
13.
Tax Withholding. Participant acknowledges that the issuance of Shares hereunder will give rise to taxable income subject
to required withholding. In accordance with Section 15 of the Plan, the obligations of the Company hereunder are conditioned on the Participant
timely paying, or otherwise making arrangements satisfactory to the Company regarding the timely satisfaction of, such required withholding.
If the Company has not elected
to settle such required withholding through the withholding of Shares and other arrangements acceptable to the Company have not been
made, the Company may require that Participant sell Shares issuable hereunder to satisfy the required withholding. Accordingly, Participant
hereby irrevocably authorizes the Company to (a) sell on Participant’s behalf such number of Shares issuable hereunder as the Company
determines to be appropriate to generate cash proceeds sufficient to satisfy the required withholding, and (b) to remit proceeds equal
to the required withholding to the applicable tax authorities (or to retain proceeds equal to the required withholding, to the extent
the Company has already deposited such amount with the applicable tax authorities). To the extent the proceeds of such sale exceed the
required withholding, the excess proceeds will be paid to Participant. Participant acknowledges that he or she will be responsible for
all broker’s fees and other costs of such sale and that the Company is under no obligation to arrange for such sale at any particular
price.
Participant further agrees to execute such
additional documents as may be reasonably necessary to facilitate such transactions.
14.
Electronic Delivery of Documents. Participant authorizes the Company to deliver electronically any prospectuses or other
documentation related to the Option and any other compensation or benefit plan or arrangement in effect from time to time (including,
without limitation, reports, proxy statements or other documents that are required to be delivered to participants in such arrangements
pursuant to federal or state laws, rules or regulations). For this purpose, electronic delivery will include, without limitation, delivery
by means of e-mail or e-mail notification that such documentation is available on the Company’s Intranet site. Upon written request,
the Company will provide to Participant a paper copy of any document also delivered to Participant electronically. The authorization described
in this paragraph may be revoked by Participant at any time by written notice to the Company.
Exhibit 10.15
[***] Certain information in this document has
been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and the registrant customarily and
actually treats as private and confidential.
CONFIDENTIAL
DOCUMENT
Execution Version
AMENDED AND RESTATED
OPTION
AGREEMENT
This Amended
and Restated Option Agreement (this “Agreement”) is made and entered into as of February 25, 2021 (the “Effective
Date”), by and between Century Therapeutics, Inc., a Delaware corporation (f/k/a Century Therapeutics, LLC, a Delaware limited
liability company) (the “Company”) and Bayer HealthCare LLC, a Delaware limited liability company (“Bayer”)
(Bayer and the Company, collectively the “Parties” and each individually, a “Party”).
RECITALS
WHEREAS,
in connection with the formation and operation of the Company, the Company, Bayer and Century Therapeutics, Inc., a Delaware corporation
(“Century”) entered into that certain Commitment Agreement, dated as of June 21, 2019 (as amended, restated and/or
otherwise modified from time to time, the “Commitment Agreement”), and that certain Amended and Restated Limited Liability
Company Agreement of Century Therapeutics, LLC, a Delaware limited liability company (as amended, restated, supplemented and/or otherwise
modified from time to time, the “LLC Agreement”);
WHEREAS,
in connection with the entry into the Commitment Agreement and the LLC Agreement, the Company, Bayer and Century entered into that certain
Option Agreement, dated as of June 21, 2019 (the “Original Agreement”), which provided certain procedures for, and
preferential rights relating to, the Transfer of certain Products researched and developed by the Company to Bayer;
WHEREAS,
prior to the effectiveness of this Agreement, the Company converted from a Delaware limited liability company into a Delaware corporation,
pursuant to a Certificate of Conversion filed with the Secretary of State of the State of Delaware (the “Conversion”)
and Century merged with and into the Company, with the Company as the surviving corporation (the “Merger”);
WHEREAS,
as a result of the Conversion, the Commitment Agreement and the LLC Agreement were terminated, and in connection with the Merger, equityholders
in Century received Capital Stock directly in the Company; and
WHEREAS,
in accordance with Section 5.6 of the Original Agreement, the Parties desire to amend and restate the Original Agreement in its entirety
and as set forth herein to, among other things, account for the Conversion and the Merger (including the termination of the Commitment
Agreement and the LLC Agreement).
NOW THEREFORE,
in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
ARTICLE
I
DEFINITIONS
The following terms will have the following meanings:
1.1 Certain
Definitions. For purposes of this Agreement, the following terms will have the meanings set forth in this Article I.
“Affiliate”
means, with respect to any Person, any other Person who, directly or indirectly (including through one or more intermediaries),
controls, is controlled by, or is under common control with such Person. For purposes of this definition, “control,”
when used with respect to any specified Person,
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting securities or partnership or other ownership interests,
by contract or otherwise; and the terms “controlling” and “controlled” will have correlative meanings. For
purposes of this Agreement, the parties hereto agree that neither Bayer nor any of its Affiliates will be deemed an Affiliate of the
Company or any of its Subsidiaries.
“Applicable
Law” means any applicable provisions of the following: (a) constitutions, treaties, statutes, laws (including the common law),
rules, regulations, decrees, ordinances, codes, proclamations, declarations or orders of any Governmental Authority; (b) any consents
or approvals of any Governmental Authority; and (c) any orders, decisions, advisory or interpretative opinions, injunctions, judgments,
awards, decrees of, or agreements with, any Governmental Authority.
“Applicable
Directors” means: (a) if Bayer is a Bidding Party, a majority of the Directors other than the Bidding Party Director (in which
case, the Bidding Party Director will be deemed an interested director for purposes of the applicable Product Transfer, and except as
otherwise required by Applicable Law, the Bidding Party Director may be excluded from any meeting of the Board or any portion thereof
relating to such Product Transfer, or if not excluded, will not be included for purposes of determining whether a quorum is present);
provided, that the Bidding Party Director will no longer be deemed a an interested director (and the Bidding Party will thereafter
be deemed a Non-Bidding Party) following the Bidding Party’s Formal Withdrawal with respect to such Product Transfer; or (b) if
Bayer is a Non-Bidding Party, a majority of all of the Directors.
“Baseball
Arbitration” means the arbitration procedures for resolving a dispute as provided for in Exhibit A.
“Bid”
means a Solicited Bid or an Unsolicited Bid, as applicable. A Bid will also include any amended Bid provided by a Person from time to
time.
“Bidding
Party” means Bayer if it or one of its Affiliates has provided a Bid for a Product; provided, that Bayer will no longer
be considered a Bidding Party following its delivery of a Formal Withdrawal.
“Bidding Party Director” means the Director
designated by the Bidding Party.
“Bidding Process” means the bidding
process for a Product Transfer as contemplated by Section 2.5.
“Board” means the Board of Directors
of the Company.
“Business Day” means a day other
than a Saturday, Sunday or other day on which commercial banks in any of (a) Philadelphia, Pennsylvania or (b) Leverkusen, Germany
are authorized or required to close.
“Bylaws”
means the Bylaws of the Company (as the same may be amended and/or restated from time to time).
“Capital
Stock” means shares of Common Stock and Preferred Stock (as defined in the Certificate of Incorporation) and any other class
or series of capital stock or other equity securities of the Company, whether authorized as of or after the Effective Date.
“Certificate
of Incorporation” means the Company’s Certificate of Incorporation (as it may be amended and/or restated from time to
time).
“Change
of Control” means, whether occurring through one transaction or a series of related transactions, any of the following: (a)
a merger or consolidation of the Company the effect of which is that the stockholders of the Company (together with their respective Affiliates)
as of immediately prior to such transaction or series of related transactions are no longer, in the aggregate, the beneficial owners,
directly or indirectly, of a majority of the Capital Stock of the Company on a Fully Diluted Basis (or the equity of the surviving entity)
(or if such surviving entity is a Subsidiary of another Person, the ultimate parent entity) after giving effect to such transaction or
series of related transactions; (b) any sale, transfer or similar disposition by the Company or its Subsidiaries of all or substantially
all of their assets on a consolidated basis to a third Person or a group of third Persons acting in concert; (c) any purchase by any Person
(or group of affiliated Persons), of Capital Stock (either through a negotiated purchase or a tender offer), the effect of which is that
the stockholders of the Company as of immediately prior to such transaction or series of related transactions are no longer, in the aggregate,
the beneficial owners, directly or indirectly, of a majority of the Capital Stock of the Company on a Fully Diluted Basis; or (d) any
other transaction pursuant to which Bayer (together with its Affiliates) owns at least [***] of the Capital Stock of the Company on a Fully
Diluted Basis after giving effect to such transaction or series of related transactions; provided, however, a merger with a special purpose
acquisition company, a reverse merger with a publicly traded shell company or other similar transaction, immediately following which the
Company’s securities become publicly traded on a national securities exchange, will not constitute a Change of Control; provided,
further, that the Initial Public Offering (and any transactions effectuated in connection therewith), any subsequent Public Offering or
any other capital raising event, or a merger effected solely to change the Company’s domicile, will not constitute a Change of Control
(unless otherwise determined by the Parties); provided, further, that any merger or consolidation involving the Company or one of its
Subsidiaries in which the equity ownership of the Company outstanding immediately prior to such merger or consolidation continue to represent,
or are converted into or exchanged for equity securities that represent, immediately following such merger or consolidation, a majority,
by voting power, of the equity ownership of (i) the surviving or resulting entity, or (ii) if the surviving or resulting entity is a wholly-owned
Subsidiary of another entity immediately following such merger or consolidation, the parent entity of such surviving or resulting entity,
will not constitute a Change of Control; provided, further, that a Single Asset Sale will not constitute a Change of Control unless (x)
otherwise determined by the Board with the Requisite Approval, or (y) at the time of such Single Asset Sale, (A) the Company and its Subsidiaries
are not researching, developing, manufacturing or commercializing at least one Product in addition to the Product that is the subject
of such Single Asset Sale and (B) there remain no material commercial rights to the Product that is the subject of such Single Asset Sale
retained by the Company.
“Chief Executive Officer”
means the Chief Executive Officer of the Company.
“Company Subsidiary” means any Subsidiary of the Company.
“CTA”
means a Clinical Trial Authorisation filed with the MHRA or EMA with respect to a Product, as described in the MHRA or EMA regulations,
including all amendments and supplements to the application.
“Director”
means an individual appointed by the requisite stockholders of the Company to serve as a member of the Board.
“Electronic
Transmission” means any form of communication not directly involving the physical transmission of paper that creates a record
that may be retained, retrieved and reviewed by a recipient thereof and that may be directly reproduced in paper form by such a recipient
through an automated process.
“EMA” means
the European Medicines Agency and any successor agency thereto.
“FDA” means the U.S. Food and Drug Administration and
any successor agency thereto.
“Formal
Withdrawal” means, with respect to a Product Transfer, written notification to the Company signed by an authorized Representative
of the Bidding Party which certifies that the Bidding Party no longer has any intent to participate in such Product Transfer process and
withdraws from such Product Transfer process in its entirety.
“Fully
Diluted Basis” means, as of any date of determination, all issued and outstanding Capital Stock and all Capital Stock issuable
upon the exercise of any outstanding Stock Equivalents as of such date, whether or not such Stock Equivalent is at the time exercisable.
“Governmental
Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality
of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental
authority (to the extent that the rules, regulations or orders of such organization or authority have the force of law), or any arbitrator,
court or tribunal of competent jurisdiction.
“IND”
means an Investigational New Drug Application filed with the FDA with respect to a Product, as described in the FDA regulations, including
all amendments and supplements to the application.
“IND
Acceptance” means, with respect to a Product, that the IND or the CTA for such Product has been accepted by the applicable Governmental
Authority, or absent any such acceptance, such Governmental Authority has allowed any time periods for review to pass without the imposition
of a clinical hold on the contemplated clinical study.
“IND
Candidate Criteria” means, on a Research Program-by-Research Program basis, the criteria approved by the Board for such Research
Program to determine if a given Research Product under such Research Program has demonstrated adequate preclinical efficacy and manufacturability
that warrants initiation of GMP manufacturing and other IND-enabling activities, as such criteria may be modified from time to time by
the Board.
“Initial
Public Offering” means the initial public offering by the Company (or any successor thereto).
“Initial Research Plan” means the initial
research plan of the Company.
“Investors’
Rights Agreement” means that certain Investors’ Rights Agreement dated as of the date hereof among the Company and certain
stockholders of the Company, as amended, restated, supplemented and/or otherwise modified from time to time.
“Last
Topping Right” means the right of the Bidding Party to submit a final Bid within [***] after delivery of the Superior Bid Notice
for a Superior Bid, which final Bid is required to (a) exceed the up-front and milestone payment components of such Superior Bid by at
least [***], (b) include other payments terms, such as royalties, with potential value at least equal to, and substantially similar conditionality
as, such Superior Bid, and (c) otherwise be on substantially equivalent terms and include substantially equivalent diligence obligations
as such Superior Bid.
“MHRA”
means the Medicines and Healthcare products Regulatory Agency in the United Kingdom and any successor agency thereto.
“Non-Bidding Party” means Bayer if it
has not provided a Bid for a Product.
“Person”
means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization,
trust, association or other entity.
“Product”
means a Research Product for which an IND Submission has been made by the Company or a Company Subsidiary.
“Product
Transfer” means a transaction pursuant to which a Product is (or would be) Transferred to a Person (other than to the Company
or to a Company Subsidiary) (a “Product Transferee”).
“Product
Transfer Agreement” means the agreement between the Company and a Product Transferee to effect a Product Transfer.
“Program
Rights” means Bayer’s preferential rights with respect to Product Transfers of certain Products as provided for in this
Agreement. For the avoidance of doubt, in no event will Bayer have Program Rights on Products that are not ROFR Products.
“Public
Offering” means any underwritten public offering pursuant to a registration statement filed in accordance with the Securities
Act.
“Relevant
Experience” means experience with valuing biopharmaceutical products and licensing transactions involving biopharmaceutical
products, which may include experience relevant to the determination of risks and costs associated with the research, development and
commercialization of biopharmaceuticals.
“Representative”
means, with respect to any Person, any director, manager, officer, employee, independent contractor, consultant, advisor (including any
financial advisor, counsel or accountant) and other agent of such Person.
“Research Plan” means the Initial Research
Plan, as amended from time to time.
“Requisite
Approval” means the affirmative approval of a majority of the Directors on the Board, which shall include, if applicable, (i)
the approval of the Series B Director (so long as there are shares of Series B Preferred Stock outstanding) and (ii) at least one Series
A Director (so long as there are shares of Series A Preferred Stock outstanding).
“Research
Product” means any compound, molecule or product being researched and developed by the Company or any Company Subsidiary under
a Research Program that comprises allogenic iPSC- derived natural killer cells, macrophages or dendritic cells.
“Research
Program” means the activities conducted by or on behalf of the Company under the Research Plan.
“ROFR Product” means any Product subject
to the Program Rights as provided for in Section 2.1(b).
“Securities Act” means the Securities
Act of 1933, as amended, or any successor federal statute, and the rules and regulations thereunder, which will be in effect at the
time.
“Series
A Directors” means, for so long as any shares of Series A Preferred Stock are outstanding, any Director of the Company that
the holders of record of the Series A Preferred Stock are entitled to elect pursuant to the Certificate of Incorporation.
“Series A Preferred Stock” means shares
of the Company’s Series A Preferred Stock, par value $0.0001 per share.
“Series B Director” means, for so
long as any shares of Series B Preferred Stock are outstanding,
any Director of the Company that the holders of record of the Series
B Preferred Stock are entitled to elect pursuant to the Certificate of Incorporation.
“Series B Preferred Stock” means shares
of the Company’s Series B Preferred Stock, par value $0.0001 per share.
“Single
Asset Sale” means the transfer (whether by way of a license or otherwise) by the Company or a Company Subsidiary of a Product
to a Party or a third-party, including as contemplated by this Agreement.
“Solicited
Bid” means a bid by a Person in connection with a Bidding Process for a Product or pursuant to the exercise of Bayer’s
rights under Section 2.4.
“Stock
Equivalents” means any security or obligation that is by its terms, directly or indirectly, convertible into or exchangeable
or exercisable for Capital Stock, and any option, warrant or other right to subscribe for, purchase or acquire Capital Stock.
“Superior
Bid” means the Bid for a Product that provides the most advantageous terms to the Company as determined by the Applicable Directors.
“Superior
Bid Notice” means a written notice of the determination of the Superior Bid for a Product, together with the material terms
of such Superior Bid.
“Third
Party” means any Person other than the Company, Bayer or any of their respective Affiliates.
“Transfer”
means a license, sale, assignment or other transfer of the right to develop and commercialize, as applicable, a Product.
“Unsolicited Bid” means a bid for a Product
that is not a Solicited Bid.
“Valuation
Firm” means a reputable investment banking firm (or a Person with expertise in providing valuations) with the Relevant Experience
to the extent reasonably practicable. The Valuation Firm will be selected by the Applicable Directors and is required to be independent
from any Party and/or any of its Affiliates unless otherwise approved by the Board (including the Requisite Approval).
“Winning
Bid” means the Superior Bid for a Product Transfer that is finally determined to be accepted by the Applicable Directors.
The following
terms will have the meanings defined in the Section or Exhibit indicated. Unless otherwise noted, the indicated Section or Exhibit refers
to the appropriate Section or Exhibit of this Agreement.
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Additional Information
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Section 2.4(a)
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Agreement
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Introduction
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Antitrust Authority
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Exhibit B
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Antitrust Approval
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Exhibit B
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Antitrust Condition
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Exhibit B
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Antitrust Filing
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Exhibit B
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Antitrust Law
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Exhibit B
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Baseball Expert
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Exhibit A
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Bayer
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Introduction
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Bayer Solicited Bid Notice
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Section 2.4(b)
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Bayer Unsolicited Bid Notice
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Section 2.3
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Century
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Recitals
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Commitment Agreement
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Recitals
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Company
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Introduction
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Conversion
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Recitals
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Counterparty
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Exhibit B
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Data Package
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Section 2.4(a)
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Effective Date
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Introduction
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Exclusive Field
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Section 2.7(a)
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Filing Party
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Exhibit B
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First Offer Period
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Section 2.4(b)
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FMV
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Section 2.4(b)(i)(A)
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FMV Bid Period
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Section 2.4(b)(i)(A)
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FMV Report
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Section 2.4(b)(i)(A)
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IND Submission
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Section 2.4(a)
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JAMS
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Exhibit A
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LLC Agreement
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Recitals
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LM Superior Bid
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Section 2.5(c)
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Merger
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Recitals
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Minimum Offer Terms
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Section 2.2
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Product Closing
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Section 2.6
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Party or Parties
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Introduction
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Original Agreement
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Recitals
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QOFMV
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Section 2.4(b)(i)(A)
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Qualifying Offer
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Section 2.2
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Required FMV Terms
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Section 2.4(b)(i)(A)
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Revised FMV Bid
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Section 2.4(b)(i)(A)
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ROFR Election Notice
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Section 2.1(b)
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ROFR Product Cap
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Section 2.1(b)
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Submission Date
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Section 2.5(a)
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Third Party Valuation
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Section 2.4(b)(i)(A)
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Winning Bidder
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Section 2.6
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ARTICLE II
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2.1
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Approval of Products and ROFR Products.
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(a) On a Research
Program-by-Research Program basis, the Company will promptly notify the Board of any Research Product that the Company reasonably believes
satisfies the IND Candidate Criteria for such Research Program. In connection with such notification, the Company will provide the Board
with a complete set of supporting data related to such Research Product that the Company has identified as a potential Product deriving
from such Research Program. The Board will determine whether such Research Product satisfies the IND Candidate Criteria for such Research
Program. If the Board does not believe that such Research Product satisfies the IND Candidate Criteria, then the Company will continue
to conduct additional research and development activities with respect to such Research Program and resubmit an IND Candidate Nomination
Package for such Research Program as and to the extent applicable. If the Board does believe that such Research Product satisfies the
IND Candidate Criteria for such Research Program, then the Board may determine to (i) continue IND-enabling activities for such Research
Product
and, ultimately, to approve the Company or a Company Subsidiary making an IND Submission for such Research Product, or (ii) abandon
further IND-enabling activities for such Research Product.
(b) Unless
otherwise determined by the Board (including the Requisite Approval), a Research Product for which an IND Submission is made will be
subject to the Program Rights (and therefore, a ROFR Product) if Bayer delivers to the Company a notice within [***] of Bayer’s
receipt of an IND Submission from the Company (a “ROFR Election Notice”), and, subject to the remainder of this Section
2.1(b), the subsequent Research Product for which an IND Submission is made will not be subject to the Program Rights (and therefore,
not a ROFR Product); provided, that Bayer’s right to designate a Research Product as a ROFR Product shall only apply to
the first ten IND Submissions from the Company, and the Program Rights will terminate with respect to any subsequent Product after ten
IND Submissions have been made. Thereafter, whether or not a Product is subject to Program Rights will be determined based on whether
Bayer exercised its Program Rights by delivering a ROFR Election Notice with respect to the previous IND Submission being made for such
Research Product (for example, if Bayer delivers a ROFR Election Notice for the first Research Product, Bayer may not deliver a ROFR
Election Notice for the second Research Product, but Bayer may deliver a ROFR Election Notice for the third Research Product or the fourth
Research Product (if Bayer did not deliver a ROFR Election Notice for the third Research Product)). For the avoidance of doubt, Bayer
may not deliver a ROFR Election Notice for a Research Product if Bayer delivered a ROFR Election Notice for the immediately preceding
Research Product for which an IND Submission was made, subject to the remainder of this Section 2.1(b). In no event will there
by more than four ROFR Products (the “ROFR Product Cap”), including as provided for in Section 2.3 and Section
2.4(c), and the Program Rights will terminate with respect to any subsequent Product once the ROFR Product Cap has been reached.
Notwithstanding the foregoing, if Bayer designates [***] of the [***] IND Submissions, then Bayer may designate [***] of the [***] IND Submissions as ROFR Products, sequentially or otherwise; provided, however, that if Bayer does not designate any,
or designates only one, of the [***] IND Submissions, then Bayer may only designate [***] IND Submissions,
and such designations will be made on a non-sequential basis (for example, if Bayer designates the [***] IND Submissions,
then Bayer may designate [***] IND Submissions, but if Bayer does not designate [***] IND
Submissions, Bayer may only designate the [***], or the [***] IND Submissions).
2.2 Minimum
Offer Terms; Qualifying Offers. Bayer agrees to only make Bids in good faith and all Bids will be in writing addressed to the Company.
To the extent reasonably practicable prior to any Solicited Bid (or, with the approval of the Applicable Directors, following any Unsolicited
Bid), the Company will provide Bayer with the Company’s current, minimum offer terms with respect to a potential Product Transfer
(“Minimum Offer Terms”), which will be adopted by the Applicable Directors from time to time and will include, at
a minimum, (a) a good faith determination of the minimum amount of up-front cash proceeds to be received by the Company in such Product
Transfer and (b) any other term if and to the extent applicable to a sublicense of any relevant intellectual property under a license
(or sublicense) to which the Company or any of its Affiliates is a party (including the License Agreement (differentiation), dated September
18, 2018, between FCDI and the Company, as amended from time to time). A Bid from Bayer or a Third Party which is made in good faith
and meets the Minimum Offer Terms in all material respects will be a “Qualifying Offer”. The Applicable Directors
will consider and evaluate any Bid in good faith and in the best interests of the Company.
2.3 Unsolicited
Bids by a Third Party. If a Third Party makes an Unsolicited Bid for a Research Product prior to the IND Submission for such
Research Product, the Company will promptly (and in any event, within [***] Business Days) provide the Directors and Bayer with
written notice of such Unsolicited Bid including all documents, data and information related to the Unsolicited Bid received by the
Third Party in tangible form. As promptly as practicable thereafter, the Board (with the Requisite Approval) will determine whether
(a) such Bid is a Qualifying Offer for such Research Product, (b) to negotiate the terms
of such Product
Transfer with such Third Party (including, if it is determined that the terms of the Bid is not a Qualifying Offer, to negotiate such
terms so that the Bid is a Qualifying Offer), (c) to accept or reject the Bid of such Third Party and/or (d) to begin a Bidding Process;
provided, that, if, during the [***] following the Company’s receipt of the Unsolicited Bid, Bayer makes a Bid for the same
Research Product that Bayer believes in good faith to be at least as favorable to the Company as such Third Party’s Bid, (i) Bayer
will provide an Unsolicited Bid for such Research Product (which will include the material terms of the Product Transfer for such Research
Product, together with a certification letter signed by an authorized Representative of Bayer that certifies that such Bid is a Qualifying
Offer for such Research Product (a “Bayer Unsolicited Bid Notice”)) to the Company, (ii) following receipt of such
Bayer Unsolicited Bid Notice, Bayer will be considered a Bidding Party, and (iii) the Applicable Directors will have the sole discretion
to (w) negotiate the terms of such Product Transfer with Bayer (including, if it is determined that the terms of the Bid is not a Qualifying
Offer, to negotiate such terms so that the Bid is a Qualifying Offer), (x) accept or reject the Bid of Bayer, (y) begin a Bidding Process
(which will provide Bayer with a Last Topping Right for such Bidding Process so long as Bayer had not provided a Formal Withdrawal with
respect to such Product Transfer, but will otherwise be determined in the sole discretion of the Applicable Directors (including the
Minimum Offer Terms) and the Applicable Directors will be under no obligation to accept any Bid), and/or (z) take no action with respect
to such Bid of Bayer for such Research Product. Notwithstanding anything to the contrary in the Certificate of Incorporation, Bylaws
or Investors’ Rights Agreement, only the approval of the Applicable Directors will be required for the Company to undertake any
such Product Transfer, and if Bayer is a Bidding Party, neither Bayer’s nor the Bidding Party Director’s approval, vote or
consent will be required for any stockholder or Board approval required for such Product Transfer (including the Requisite Approval).
If Bayer submits a Bayer Unsolicited Bid Notice and the applicable Research Product is Transferred in a Product Transfer to Bayer or
one of its Affiliates, such Research Product will count towards reaching the ROFR Product Cap as if it was a ROFR Product. This Section
2.3 will not apply to any Product following the IND Submission for such Product.
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2.4
|
Right of First Offer.
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(a) Unless otherwise
determined by the Board (including the Requisite Approval), within [***] after the Company submits an IND or CTA to the applicable Governmental
Authority for a Product, the Company will provide to Bayer such IND or CTA submission for such Product (including all data, exhibits
and related correspondence with the FDA) (the “IND Submission” for such Product), and if Bayer subsequently delivers
a ROFR Election Notice (and therefore, such Product is a ROFR Product), the Company will promptly provide to Bayer the applicable Minimum
Offer Terms for the Product Transfer for such ROFR Product and the other data and information reasonably necessary to evaluate the advisability
of, and the preparation of, a Qualifying Offer for such Product (such terms, data and information for such ROFR Product, the “Additional
Information” and together with the IND Submission for such Product, the “Data Package”). Following the Company’s
delivery of a Data Package for a ROFR Product to Bayer, Bayer may request in writing that the Company provide specific additional background
information and data (although not including raw data) to further clarify the contents of such Data Package, which information and data
the Company will promptly make available to Bayer to the extent that such request is commercially reasonable and to the extent and in
such form as such information and data are in the Company’s possession and control. The Company and the Company Subsidiaries will
not have any obligation to conduct any additional studies or undertake any further analysis of any data or information in accordance
with the preceding sentence.
(b) During
the period starting on the date of delivery of the Data Package for a ROFR Product and ending on the earlier of (i) [***] following such
delivery date and (ii) [***] following IND Acceptance for such ROFR Product (the “First Offer Period”), Bayer will
have the exclusive right to review the Data Package to make a Bid for such ROFR Product and to submit a Qualifying Offer for such ROFR
Product. To exercise such right for a ROFR Product, Bayer will be required to provide to the Company (prior to the expiration of the
First Offer Period for such ROFR Product) a Bid for such ROFR Product which will include the material terms of the applicable Product
Transfer (a “Bayer Solicited Bid Notice”). The timing of the First Offer Period for a ROFR Product may be delayed
until a mutually agreed, subsequent time period with the written consent of all Parties prior to the start of such First Offer Period.
(i) If
Bayer delivers a Bayer Solicited Bid Notice for such ROFR Product to the Company during the First Offer Period for such ROFR Product,
Bayer will be considered a Bidding Party. Notwithstanding anything to the contrary contained in the Certificate of Incorporation, Bylaws
or Investors’ Rights Agreement, only the approval of the Applicable Directors will be required for the Company to undertake any
Product Transfer for such ROFR Product, and the Bidding Party’s and the Bidding Party Director’s approval, vote or consent
will not be required for any stockholder or Board approval required for such Product Transfer (including the Requisite Approval). Subject
to compliance with the remainder of this Section 2.4(b)(i), the Applicable Directors will determine in good faith whether Bayer’s
Bid in such Bayer Solicited Bid Notice is a Qualifying Offer for such ROFR Product. If there is any dispute with respect to whether Bayer’s
Bid in such Bayer Solicited Bid Notice is a Qualifying Offer for such ROFR Product, such dispute will be escalated in accordance with
the procedures set forth in Exhibit C attached hereto; provided, however, if such dispute is not resolved within
the 30-day period set forth therein, then such dispute will be referred to Baseball Arbitration.
(A) If
such Bid is a Qualifying Offer, then the Applicable Directors may, in their discretion, accept such Bid or negotiate the terms of such
Product Transfer with Bayer. If Bayer and the Applicable Directors are unable to agree to terms of such Product Transfer within ten Business
Days following the Company’s receipt of such Bayer Solicited Bid Notice, then the Company may, at the instruction of the Applicable
Directors, seek an independent valuation of such ROFR Product from a Valuation Firm (a “Third Party Valuation”) to
determine the fair market value of such ROFR Product (assuming the Minimum Offer Terms for such Product Transfer, as adjusted by the
terms in such Qualifying Offer that the Applicable Directors have accepted in principle) (the “FMV”) and the fair
market value of such Qualifying Offer (“QOFMV”). The Valuation Firm will prepare and deliver to the Company a written
report which provides the FMV and QOFMV for such ROFR Product, with reasonable supporting detail (the “FMV Report”),
within [***] of its engagement by the Company for such Third Party Valuation. The FMV Report will be delivered to the Company, Bayer
and the Applicable Directors within [***] Business Days of it being completed. If the FMV is determined to be higher than the QOFMV for
such ROFR Product, Bayer will have a right to provide a revised Bid (which Bid will be binding) to the Company (the “Revised
FMV Bid”) that includes terms that provide for a fair market value of such ROFR Product equal to [***] of the FMV (the “Required
FMV Terms”). Such right to provide a revised Bid is required to be exercised by Bayer by submitting a Revised FMV Bid to the
Company within [***] of delivery of the FMV Report (the “FMV Bid Period”). If there is any dispute with respect to
whether such Revised FMV Bid satisfies such Required FMV Terms, such dispute will be referred to Baseball Arbitration. The Superior Bid
will be: (x) such Qualifying Offer if the Company does not seek a Third Party Valuation or the QOFMV is determined to be higher than
the FMV; (y) the Revised FMV Bid if it satisfies the Required FMV Terms; or (z) any Bid agreed to by Bayer and approved by the Applicable
Directors; provided, however, there will be no Superior Bid if Bayer does not provide a Revised FMV Bid during the FMV
Bid Period or the Revised FMV Bid does not satisfy the Required FMV Terms, and thereafter the Company may take any action with respect
to such ROFR Product free and clear of any Program Rights and Last Topping Rights for such ROFR Product; provided, however,
that Bayer will maintain its Last Topping Right in connection with any subsequent Bidding Process for such Company Product if the terms
and conditions of the Superior Bid (as determined by the Applicable Directors) in such subsequent Bidding Process are not at least as
favorable to the Company as those detailed in the FMV Report. If there is a Superior Bid as determined in accordance with this Section
2.4(b)(i)(A), the Company will be required to accept the Superior Bid as a Winning Bid.
(B) If
such Bid is not a Qualifying Offer, then the Applicable Directors may, in their sole discretion, take any of the following actions
with respect to such ROFR Product: (w) accept or reject such Bid; (x) negotiate the terms of such Product Transfer with Bayer; (y)
begin a Bidding Process as provided for in Section 2.5 (which will provide Bayer with a Last Topping Right for such Bidding
Process so long as Bayer had not provided a Formal Withdrawal with respect to such Product Transfer and such Bid was made by Bayer
in good faith); or (z) have the Company continue to further develop the applicable ROFR Product free and clear of any Program
Rights; provided, however, that Bayer will maintain Last Topping Rights for such ROFR Product if such Bid was made by
Bayer in good faith.
(ii) If Bayer
does not deliver a Bayer Solicited Bid Notice for such ROFR Product to the Company during the First Offer Period or Bayer otherwise provides
written notice to the Company that it does not intend to make a Bid for such ROFR Product, the Company may take any action with respect
to such ROFR Product free and clear of any Program Rights and Last Topping Rights for such ROFR Product.
(c) If Bayer
makes an Unsolicited Bid for any Product prior to the delivery of the Data Package for such Product, except as expressly provided for
in Section 2.3, Bayer will not have any Program Rights for such Product (even if such Product would have otherwise been a ROFR
Product as provided for in Section 2.1(b)). If such Product is Transferred to Bayer or one of its Affiliates, any such Product
will count towards reaching the ROFR Product Cap.
(a) If
a Bidding Process for a Product is to be initiated by the Company as provided for in Section 2.3 or Section 2.4(b)(i)(B),
the Applicable Directors (in consultation with the Chief Executive Officer) will identify the appropriate Third Parties from whom to
solicit Bids, and may engage an investment banker to assist with identifying bidders and the Bidding Process generally, in each case
with the goal of including as many bidders that are reasonably capable of providing Qualifying Offers in the Bidding Process as reasonably
practicable. The Company will take such commercially reasonable efforts to ensure that the Bidding Process is robust and that identified
Third Party bidders participate in such Bidding Process. The Applicable Directors will determine in their reasonable discretion the timing
and process for the solicitation of Bids for the Product from Third Parties (and Bayer, as applicable), which (i) will include providing
the applicable Data Package (including the Minimum Offer Terms for such Product) to the identified Third Party bidders that have expressed
interest in providing a Bid and (ii) may include providing access to specific additional background information and data (although not
including raw data) to further clarify the contents of the Bid Package to the extent provided to Bayer under Section 2.4(a). A
copy of each Qualifying Offer received from any bidder will be promptly delivered to the Applicable Directors upon receipt by the Company.
Upon receipt of all Qualifying Offers or on the expiration of the submission time for the Bidding Process (the “Submission Date”),
the Applicable Directors will evaluate the Qualifying Offers and determine which is the Superior Bid and the Winning Bid, if any.
(b) If no Qualifying
Offers are submitted to the Company and outstanding as of the Submission Date with respect to such Product, the Applicable Directors
will terminate the Bidding Process and the Board will determine appropriate next steps with respect to such Product, which will be to
further research, develop and commercialize the applicable Product (unless otherwise agreed by the Board with the Requisite Approval).
(c) If
more than one Qualifying Offer is submitted to the Company and outstanding as of the Submission Date with respect to such Product (and
one such Qualifying Offer is submitted by Bayer or one of its Affiliates), if Bayer’s Qualifying Offer is not determined to be
the Superior Bid and (A) Bayer has a Last Topping Right with respect to such Product Transfer as provided for in Section 2.3(c)(iii)(y)
or Section 2.4(b)(i)(B), then the Company will provide Bayer the Superior Bid Notice and Bayer may exercise
its Last Topping
Right with respect to such Product Transfer and, if properly exercised, Bayer’s revised Bid (which Bid will be binding), will thereafter
be the Superior Bid (the “LM Superior Bid”), or (B) otherwise (including if Bayer does not properly exercise any applicable
Last Topping Right in the [***] period), Bayer will have no further rights to make a revised Bid; provided, however, that
Bayer will maintain any applicable Last Topping Right with respect to such Product in connection with such Bidding Process if the terms
and conditions of such Product Transfer change in such a manner that such terms and conditions are no longer at least as favorable to
the Company as those detailed in the Superior Bid Notice.
(d) If the
only Qualifying Offer submitted to the Company and outstanding as of the Submission Date with respect to such Product is from Bayer or
one of its Affiliates, then the Company may, at the instruction of the Applicable Directors, seek a Third Party Valuation to determine
the FMV and the QOFMV. The Valuation Firm will prepare and deliver to the Company a FMV Report within [***] of its engagement by the
Company for such Third Party Valuation. The FMV Report will be delivered to the Company, Bayer and the Applicable Directors within [***]
Business Days of it being completed. If the FMV is determined to be higher than the QOFMV for such Product, Bayer will have a right to
provide a Revised FMV Bid that includes terms that provide for the Required FMV Terms. Such right to provide a revised Bid is required
to be exercised by Bayer by submitting a Revised FMV Bid to the Company within the FMV Bid Period. If there is any dispute with respect
to whether such Revised FMV Bid satisfies such Required FMV Terms, such dispute will be referred to Baseball Arbitration. The Superior
Bid will be: (i) such Qualifying Offer if the Company does not seek a Third Party Valuation or the QOFMV is determined to be higher than
the FMV; or (ii) the Revised FMV Bid if it satisfies the Required FMV Terms. Notwithstanding the foregoing, there will be no Superior
Bid if Bayer does not provide a Revised FMV Bid during the FMV Bid Period or the Revised FMV Bid does not satisfy the Required FMV Terms,
in which case the Applicable Directors will terminate the Bidding Process and the Board will determine appropriate next steps with respect
to such Product, which will be to further research, develop and commercialize the applicable Product (unless otherwise agreed by the
Board with the Requisite Approval).
(e) If at least one Qualifying Offer is submitted to the Company and outstanding as of the Submission Date with respect to such Product
(and no such Qualifying Offer is submitted by Bayer or one or one of its Affiliates), Bayer will have no further rights to make a Bid
and no Last Topping Right with respect to such Product Transfer, and the Superior Bid will be determined by the Board (including the Requisite
Approval).
(f) The
Company may accept the Superior Bid in a Bidding Process as the Winning Bid, but acceptance will not be required; provided, however,
that the Company must accept an LM Superior Bid submitted by Bayer or one of its Affiliates or a Superior Bid submitted by Bayer
or one of its Affiliates pursuant to Section 2.5(d). Any acceptance of a Superior Bid hereunder will not be a breach of fiduciary
duties so long as such Superior Bid is a Qualifying Offer (and in no event if the Winning Bid is from Bayer or one of its Affiliates)
and no rejection of a Superior Bid hereunder will be a breach of fiduciary duties if such Superior Bid is not a Qualifying Offer.
(g) Following the acceptance of a Superior Bid (or the LM Superior Bid) as the Winning Bid, the Company will provide written notice
of such Winning Bid to Bayer within two Business Days of acceptance.
2.6 Winning
Bid. The Company will close the Product Transfer (the “Product Closing”) with Bayer or the Third Party providing
the Winning Bid (the “Winning Bidder”) as soon as practicable following the satisfaction of the Antitrust Condition
(if applicable to such Product Transfer) and any other approvals of any Governmental Authority applicable to such Product Transfer. The
Winning Bidder and the Company will enter into a Product Transfer Agreement substantially on the terms as set forth in the
Winning Bid,
which Product Transfer Agreement will also include non-commercial and non-financial terms and conditions typical in the industry for
similar types of Transfer agreements which the Applicable Directors reasonably consider to be appropriate. At the Product Closing, so
long as Bayer is not a party to such transaction, Bayer will use [***] efforts to assist the Company in completing such Product
Transfer, including, subject to Applicable Law and the exercise of fiduciary duties, to cause its designated Directors to approve such
Product Transfer and any related transactions (if such approval is required). In connection with any such Product Transfer, the Company
and Bayer will comply with the covenants set forth in Exhibit B. If the Antitrust Condition is not satisfied, the Board will determine
in its discretion the process for effecting an alternative transaction with respect to the applicable Product Transfer.
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2.7
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Effect of Product Transfer.
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(a) Exclusive
Field. In the event that a Winning Bidder successfully effects a Product Closing for a Product Transfer that provides for an exclusive
right to research, develop and/or commercialize, as applicable, the applicable Product in a particular licensed field (with respect to
such Product, an “Exclusive Field”), such Winning Bidder will, from and after the date of consummation of such Product
Transfer, have such rights for such Product in such Exclusive Field, subject to and in accordance with the terms of such Product Transfer.
2.8 Quorum;
Approvals. Notwithstanding anything to the contrary set forth in the Certificate of Incorporation, Bylaws or Investors’ Rights
Agreement and except as expressly provided for herein or otherwise required by Applicable Law, (a) a majority of the Applicable Directors
will constitute a quorum for the transaction of business of the Board as provided for herein and (b) the Board (and Applicable Directors)
will act by vote (or written consent) of at least a majority of the Applicable Directors then in office on any matter under consideration
by the Board (or Applicable Directors) as provided for herein.
ARTICLE
III TERM;
TERMINATION
3.1 Agreement
Term; Termination. This Agreement is effective as of the Effective Date and will terminate at the earliest to occur of (a) Bayer
and its Affiliates ceasing to hold any Capital Stock in the Company (or a successor thereto), and (b) a Change of Control.
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3.2
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Consequences of Expiration or Termination of the Agreement.
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(a) If
this Agreement terminates in accordance with Section 3.1, the Parties will no longer have any rights hereunder, including the
Program Rights and the Last Topping Rights.
(b) The
following provisions of this Agreement will survive any termination of this Agreement: Section 3.2; Article IV; and Article
V.
ARTICLE IV
CONFIDENTIALITY
4.1 Confidentiality.
All information provided to Bayer under this Agreement will be governed by the confidentiality provisions specified in Exhibit D
attached hereto. For the avoidance of doubt, the terms, status and existence of any Bid or the Bidding Process will be considered Confidential
Information of the Company.
ARTICLE V
GENERAL PROVISIONS
5.1 Notices.
All notices, requests, consents, claims, demands, waivers and other communications hereunder will be in writing and will be deemed to
have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally
recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of
transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours
of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.
Such communications must be sent to the respective parties at the following addresses (or at such other address for a Party as will be
specified in a notice given in accordance with this Section 5.1):
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If to the Company:
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Century Therapeutics, Inc.
3675 Market Street
Philadelphia PA 19104
Attention: Chief Executive Officer
Email: lalo@centurytx.com
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with a copy to:
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Troutman Pepper Hamilton Sanders
LLP
Eighteenth and Arch Streets
3000 Two Logan Square
Philadelphia,
PA 19103
Attention: Rachael M. Bushey, Jennifer L. Porter
Email: rachael.bushey@troutman.com;
jennifer.porter@troutman.com
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If to Bayer:
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Bayer HealthCare LLC
100 Bayer Boulevard
Whippany, NJ 07981
Attention: Juergen Eckhardt; Pamela Sisson
Email: [***]
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with a copy to:
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Orrick, Herrington & Sutcliffe LLP
1000 Marsh
Rd
Menlo Park, CA 94025
Attention: Matthew Gemello
Email: mgemello@orrick.com
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5.2 Successors
and Assigns. Subject to restrictions on Transfers set forth herein, this Agreement will be binding upon and will inure to the benefit
of the Parties and their respective heirs, executors, administrators, successors and assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder will be assigned by a Party without the prior written consent of the other Party; provided,
however, that Bayer may assign this Agreement to any of its Affiliates upon providing prior written notice to the Company (provided,
that Bayer remains primarily liable for all obligations of such Affiliate following such assignment). Subject to the prior sentence,
this Agreement will be binding upon and will inure to the benefit of the Parties and their respective heirs, executors, administrators,
successors and permitted assigns.
5.3 Severability.
If any term or provision of this Agreement is held to be invalid, illegal or unenforceable under Applicable Law in any jurisdiction,
such invalidity, illegality or unenforceability will not affect any other term or provision of this Agreement or invalidate or render
unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid,
illegal or unenforceable, the Parties will negotiate in good faith to modify this Agreement so as to effect
the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
5.4 Fees
and Expenses. Except as otherwise expressly provided for herein, all costs and expenses, including fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with the preparation and execution of this Agreement, or any amendment or
waiver hereof, and the transactions contemplated hereby will be paid by the Party incurring such costs and expenses.
5.5 Governing
Law; Submission to Jurisdiction; Waiver of Jury Trial. All issues and questions concerning the application, construction, validity,
interpretation and enforcement of this Agreement will be governed by and construed in accordance with the internal laws of the State
of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Delaware. Except as expressly
set forth herein, the Parties hereby agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions contemplated hereby, whether in contract, tort or otherwise,
will be brought in the United States District Court for the District of Delaware or in the Court of Chancery of the State of Delaware
(or, if such court lacks subject matter jurisdiction, in the Superior Court of the State of Delaware), so long as one of such courts
will have subject-matter jurisdiction over such suit, action or proceeding, and that any case of action arising out of this Agreement
will be deemed to have arisen from a transaction of business in the State of Delaware. Each of the Parties hereby irrevocably consents
to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such
suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been
brought in an inconvenient form. Service of process, summons, notice or other document by registered mail to the address set forth in
Section 5.1 will be effective service of process for any suit, action or other proceeding brought in any such court. Each Party
hereby acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult
issues and, therefore, each such Party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of
any legal action arising out of or relating to this Agreement or the transactions contemplated hereby.
5.6 Amendment.
No provision of this Agreement may be amended or modified, or compliance otherwise waived, except by a writing executed by the Parties.
5.7 Extension;
Waiver. The failure of any Party to insist upon strict performance of a covenant hereunder or of any obligation hereunder, irrespective
of the length of time for which such failure continues, will not be a waiver of such Party’s right to demand strict compliance
herewith in the future. No consent or waiver, express or implied, to or of any breach or default in the performance of any obligation
hereunder, will constitute a consent or waiver to or of any other breach or default in the performance of the same or any other obligation
hereunder. Any agreement on the party of a Party to any extension or waiver will be valid only if set forth in a written instrument signed
on behalf of the Party against which such waiver or extension is to be enforced. Waiver of any term or condition of this Agreement by
a Party will not be construed as a waiver of any subsequent breach or waiver of the same term or condition by such Party, or a waiver
of any other term or condition of this Agreement by such Party.
5.8 No
Agreement Until Executed. Irrespective of negotiations among the Parties or the exchanging of drafts of this Agreement, this Agreement
will not constitute or be deemed to evidence a contract, agreement, arrangement or understanding among the Parties unless and until this
Agreement is
executed and delivered by the Parties.
5.9 Equitable
Remedies. Each Party acknowledges that a breach or threatened breach by such Party of any of its obligations under this Agreement
would give rise to irreparable harm to the other Parties, for which monetary damages would not be an adequate remedy, and hereby agrees
that in the event of a breach or a threatened breach by such Party of any such obligations, each of the other Parties will, in addition
to any and all other rights and remedies that may be available to them in respect of such breach, be entitled to equitable relief, including
a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent
jurisdiction (without any requirement to post bond).
5.10 Remedies
Cumulative. The rights and remedies under this Agreement are cumulative and are in addition to and not in substitution for any other
rights and remedies available at law or in equity or otherwise.
5.11 Entire Agreement.
(a) This Agreement,
together with all related Exhibits, constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject
matter contained herein and therein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties,
both written and oral, with respect to such subject matter.
(b) In
the event of an inconsistency or conflict between the provisions of this Agreement and any provision of the Certificate of
Incorporation, Bylaws or Investors’ Rights Agreement with respect to the subject matter of this Agreement, the Applicable
Directors will attempt to resolve such conflict in its sole discretion.
5.12 Interpretation.
For purposes of this Agreement: (a) the words “include,” “includes” and “including” will be deemed
to be followed by the words “without limitation”; (b) the word “or” is not exclusive; (c) the words “herein,”
“hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole; and
(d) the words “will” and “shall” are to be interpreted as having the same meaning. The definitions given for
any defined terms in this Agreement will apply equally to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun will include the corresponding masculine, feminine and neuter forms. Unless the context otherwise requires,
references herein: (x) to Articles, Sections and Exhibits mean the Articles and Sections of, and Exhibits attached to, this Agreement;
(y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified
from time to time to the extent permitted by the provisions thereof; and (z) to a statute means such statute as amended from time to
time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement will be construed without
regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument
to be drafted. The Exhibits referred to herein will be construed with, and as an integral part of, this Agreement to the same extent
as if they were set forth verbatim herein. The word “dollar” or symbol “$” refer to the lawful currency of the
United States of America. The headings in this Agreement are inserted for convenience or reference only and are in no way intended to
describe, interpret, define, or limit the scope, extent or intent of this Agreement or any provision of this Agreement in accordance
herewith.
5.13 Counterparts.
This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will be deemed to
be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of Electronic Transmission
will be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
5.14 Dispute
Resolution. Without limitation of the choice of law and jurisdiction of Section 5.5, except as expressly provided for herein
(including disputes to be resolved using Baseball Arbitration), the Parties hereby agree that controversies or claims arising out of
or relating to this Agreement, or the interpretation, performance, breach, termination or validity thereof, will be escalated in accordance
with the escalation procedure set forth in Exhibit C; provided, however, if such dispute is not resolved within
the 30-day period set forth therein, then such dispute will resolved in accordance with Section 5.5.
5.15 Further
Assurances. In connection with this Agreement and the transactions contemplated hereby, each Party hereby agrees to execute and deliver
such additional documents, instruments, conveyances and assurances and to take such further actions as may be required to carry out the
provisions hereof and give effect to the transactions contemplated hereby.
5.16 No
Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties (and their respective heirs, executors, administrators,
successors and assigns) and nothing herein, express or implied, is intended to or will confer upon any other Person, including any creditor
of the Company, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties
have executed this Amended and Restated Option Agreement as of the date first set forth above.
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COMPANY:
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CENTURY THERAPEUTICS, INC.
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Name: Osvaldo Flores, Ph.D.
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Title: President and Chief Executive Officer
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[SIGNATURE PAGE TO AMENDED AND RESTATED OPTION AGREEMENT]
IN WITNESS WHEREOF, the Parties
have executed this Amended and Restated Option Agreement as of the date first set forth above.
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BAYER:
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BAYER HEALTHCARE LLC
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Name: Kelly Gast
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Title: President
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[SIGNATURE PAGE TO AMENDED AND RESTATED OPTION AGREEMENT]
EXHIBIT A
Baseball Arbitration Procedures
[***]
EXHIBIT B
Antitrust Covenants
[***]
EXHIBIT C
Escalation Procedures
[***]
EXHIBIT D
Confidentiality
[***]
Exhibit 10.16
[***] Certain information in this document
has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and the registrant customarily and actually treats as private and confidential.
Execution Version
MCA-001-01
MASTER
COLLABORATION AGREEMENT
THIS MASTER COLLABORATION
AGREEMENT (together with its Exhibit(s), this “Agreement”) is made as of October 21, 2019 (the “Signing
Date”) by and between CENTURY THERAPEUTICS, LLC, having a principal place of business at 3675 Market St., Philadelphia,
PA 19104 USA (“Century”) and FUJIFILM Cellular Dynamics, Inc., having a principal place of business at
525 Science Drive. Madison WI 53711. USA (“FCDI”). Century and FCDI are each referred to as a “Party”
and collectively referred to as the “Parties.”
WHEREAS, on
the thirteenth day of September, 2018, FCDI invested in Century Therapeutics, Inc., an affiliate of Century (“Century
Inc.”) pursuant to that certain Common Stock Purchase Agreement (the “SPA”) by and among Century Inc.,
FCDI and Versant Venture Capital VI, L.P. (“Versant”), dated September 13, 2018;
WHEREAS, pursuant
to Section 2.6 of the SPA and in connection therewith, Century Inc. and FCDI entered into that certain Reprogramming License Agreement
(as defined below) and that that certain Differentiation License Agreement (as defined below);
WHEREAS, pursuant
to the Reprogramming License Agreement, FCDI grants a non-exclusive license to Century Inc. under patent rights related to the
cell reprogramming of human cells to induced pluripotent stem cells (“iPSCs”) pursuant to the terms and conditions
set forth therein;
WHEREAS, pursuant
to the Differentiation License Agreement, FCDI grants an exclusive license to Century Inc. under patent rights and know-how related
to the manufacture of human iPSC (including TiPSC)-derived T cells, NK cells, dendritic cells, and macrophages pursuant to the
terms and conditions set forth therein;
WHEREAS, Century
Inc. has assigned all of its rights and obligations under the Reprogramming License Agreement and the Differentiation License Agreement
to Century;
WHEREAS, Century
and FCDI have agreed to enter into a collaboration agreement under which FCDI may, from time to time, provide certain services
for Century to develop, manufacture and sell T-cell-derived induced pluripotent stem cell(s) (“TiPSC”)
to Century to be used by Century, its Affiliates and its sublicensees to Exploit the Licensed Product (as defined in the Reprogramming
License Agreement) under and subject to the terms and conditions of the Reprogramming License Agreement and the Differentiation
License Agreement, in addition to such other research, development and/or manufacturing services as may be mutually agreed upon
by them hereunder; and
WHEREAS, beginning
on the Effective Date, FCDI has performed certain services and Century has performed certain supporting activities related to the
development and manufacture of TiPSCs, and Century has paid FCDI Two Million Five Hundred Thousand Dollars ($2,500,000) for such
services, as contemplated in the Research Plan (as defined below). This Agreement establishes the general terms and conditions
under which FCDI shall provide Services (as defined below) to Century following the Signing Date and notwithstanding anything to
the contrary herein, such terms and conditions will govern the Services which have been performed and payments which have been
made between the Signing Date and the Effective Date.
THEREFORE,
the Parties hereto agree, that for each set of Services, the following provisions shall govern:
Execution Version
Article 1.
DEFINITIONS
Capitalized terms that are not defined
in this Agreement shall have the same meaning set forth in the Reprogramming License Agreement and/or the Differentiation License
Agreement, as applicable.
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1.1
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“Actual Remuneration Amount” means the cumulative net amount invoiced for a
given twelve (12)-month period during the Term for the Services rendered to Century by FCDI in such 12-month period as further
described in Section 5.2.
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1.2
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“Approved Research Budget” means the written budget for the Research Plan, as
set forth on Exhibit C attached hereto, as may be amended from time to time in accordance with this Agreement.
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1.3
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“Business Day” means a day that is not a Saturday, Sunday or a day on which
banking institutions in Boston, Massachusetts are authorized by law to remain closed.
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1.4
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“Century-Proposed Estimated Research Budget” has the meaning ascribed to it
in Section 2.2(ii)B.
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1.5
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“Century-Proposed Research Plan Modification” has the meaning ascribed to it
in Section 2.2(ii)B.
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1.6
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“cGMP” or “GMP” means Current Good Manufacturing Practice
as defined in (i) the Federal Register volume 66 No 186 and those sections applicable within the FDA Regulations 21 CFR Part 210,
211,600, 601 and 610 and (ii) the rules governing medicinal products in the European Union. Volume 4 - Guidelines for good manufacturing
practices for medicinal products for human and veterinary use. Part II - Basic Requirements for Active Substances used as Starting
Materials and ICHQ7.
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1.7
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“Confidential Information” has the meaning ascribed to it in Section 7.1.
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1.8
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“Contract Year” means each twelve (12) month period commencing on each April
1 during the Term; provided, however, that the first Contract Year will commence on the Effective Date and end on (and include)
March 31, 2020 and the final Contract Year will end on the date of the expiration or termination of this Agreement.
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1.9
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“Control” or “Controlled” means, with respect to any materials,
know-how, patents or other intellectual property rights, the legal authority or right (whether by ownership, license, or otherwise)
of a Party to grant access, a license, or a sublicense of or under such materials, know-how, patents, or other intellectual property
rights to the other Party, or to otherwise disclose proprietary or trade secret information to such other Party, without breaching
the terms of any agreement with a third party, or misappropriating the proprietary or trade secret information of a third party.
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1.10
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“Deliverables” means respectively and collectively:
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(i)
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all information, data, documentation, reports, results, materials and other products conceived
or made by or on behalf of FCDI in the course of the performance of the Services; and
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1.11
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“Differentiation License Agreement” means that certain License Agreement dated
as of September 18, 2018 and pertaining to certain patent rights and know-how related to the manufacture of human iPSC (including
TiPSC)-derived T cells, NK cells, dendritic cells, and macrophages by and between FCDI and Century Inc., as assigned to Century
and as may be amended.
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Execution Version
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1.12
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“Effective Date” means October 1, 2018.
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1.13
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“FCDI Personnel” has the meaning ascribed to it in Article 3.
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1.14
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“FCDI-Proposed Estimated Research Budget” has the meaning ascribed to it in
Section 2.2(ii)A.
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1.15
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“FCDI-Proposed Research Plan Modification” has the meaning ascribed to it in
Section 2.2(ii)A.
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1.16
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“FCDI Technology” has the meaning ascribed to it in Section 6.2(b).
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1.17
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“FCDI’s Fee Structure” has the meaning ascribed to it in Section 2.2(ii)A.
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1.18
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“Materials” means any and all documentation, information and materials, including
biological, chemical or other materials (including samples of such materials) Controlled by Century and to be furnished by Century
to FCDI for its use in the course of performing Services hereunder.
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1.19
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“MTA” means that certain iPS Cell Line Material Transfer Agreement effective
as of February 4, 2019 between FCDI and Century, as amended by that certain First Amendment to iPS Cell Line Material Transfer
Agreement effective as of August 23, 2019.
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1.20
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“Records” has the meaning ascribed to it in Section 4.3.
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1.21
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“Reprogramming License Agreement” means that certain License Agreement dated
as of September 18, 2018 and pertaining to certain patent rights related to the reprogramming of human somatic cells by and between
FCDI and Century Inc., as assigned to Century and as may be amended.
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1.22
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“Research Plan” means the comprehensive research plan, as from time to time
may be amended in accordance herewith, attached as Exhibit A hereto, which is executed by an authorized representative
of each of the Parties and that is incorporated herein by reference upon execution.
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1.23
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“Services” has the meaning ascribed to it in Section 2.1.
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1.24
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“Supporting Activities” has the meaning ascribed to it in Section 2.1.
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1.25
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“Term” has the meaning ascribed to it in Section 9.1. If the initial
Term is extended pursuant to Section 9.2, the extended term shall be deemed the Term.
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Article 2.
PERFORMANCE OF SERVICES
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2.1
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Century and FCDI hereby establish a collaborative relationship under which FCDI shall render certain
services for the development or manufacture of TiPSC and such other iPSC (including TiPSC)-derived cells, (e.g., T cells, NK cells,
dendritic cells and/or macrophages) for each Contract Year as set forth in the Research Plan (the “Services”)
and Century shall provide Materials and perform the activities to be performed by it as set forth in the Research Plan (the “Supporting
Activities”). The Parties hereby agree that “Services” shall include any activities described in the Research
Plan and performed by FCDI between the Signing Date and the Effective Date.
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2.2
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FCDI shall render to Century the Services and Century shall carry out the Supporting Activities,
subject to and in accordance with the Research Plan for which there is an Approved Research Budget in accordance with following:
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(i)
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During the Term, Century may from time to time propose one or more reasonable
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Execution Version
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amendment(s) to the Research Plan (including, as applicable and without limitation, any proposed
amended Services, amended deliverable(s) to be generated from the performance of Services, and/or amended timeline(s) for completion
of the Services to be undertaken to generate deliverable(s) and/or delivery of Deliverables, which timeline(s) shall be reasonable
including based on the nature of the proposed Services and/or Deliverables) by delivering written notice thereof to the other Party
at least sixty (60) days prior to the anticipated effective date of the proposed amendments. In the event that Century delivers such
notice to FCDI, FCDI shall promptly review the same within ten (10) business days and Century and FCDI shall discuss in good faith
the proposed amendment(s) therein and any reasonable objection(s) of FCDI to any such proposed amendment(s) during such sixty (60)
day period. If applicable (i.e., if through such good faith negotiations the Parties agree upon one or more amendment(s) to the
Research Plan that may result in an amendment to the budget), FCDI shall promptly prepare and deliver a budget setting forth the
estimated fees, calculated in accordance with FCDI’s Fee Structure for any proposed amended Services and Deliverables, which
will be subject to Century's review and approval.
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(ii)
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For each Contract Year commencing with the Contract Year beginning on April 1, 2023, FCDI may propose
to amend the Research Plan and/or Budget for the Services pursuant to the following procedures:
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A.
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Not later than the ninetieth (90th) day prior to the commencement of the Contract Year
commencing with the Contract Year beginning on April 1, 2023, FCDI will deliver to Century (A) any reasonable amendment(s) to the
Research Plan (including, as applicable, any proposed amended Services, amended Deliverable(s) to be generated from the performance
of Services, and/or amended timeline(s) for completion of the Services to be undertaken) proposed by FCDI (an “FCDI-Proposed
Research Plan Modification”) and (B) a budget setting forth the estimated fees, calculated in accordance with FCDI’s
fee structure as described in Exhibit B as attached hereto as may be amended in accordance with Section 10.8
(“FCDI’s Fee Structure”), for those Services identified in the FCDI-Proposed Research Plan Modification
as Services to be performed during such then-current Contract Year (an “FCDI-Proposed Estimated Research Budget”).
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B.
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If FCDI delivers an FCDI-Proposed Research Plan Modification to Century or FCDI- Proposed Estimated
Research Budget, then, within thirty (30) days thereof, Century may deliver in writing (A) any reasonable objections or modifications
to the FCDI-Proposed Research Plan Modification (a “Century-Proposed Research Plan Modification”) and (B) any
reasonable proposed modification(s) to the FCDI-Proposed Estimated Research Budget (a “Century-Proposed Estimated Research
Budget Modification”).
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C.
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If Century delivers a Century-Proposed Research Plan Modification and/or a Century-Proposed Estimated
Research Budget Modification to FCDI, then promptly thereafter FCDI shall review the same and Century and FCDI shall discuss in
good faith (A) FCDI-Proposed Research Plan Modification and the Century Proposed Research Plan Modification and/or (B) the FCDI-Proposed
Estimated Research Budget and the Century-Proposed Estimated Research Budget Modification in an effort to reach agreement regarding
the same prior to the commencement of the Contract Year to which the same pertain. Any agreed upon amendment(s) to the Research
Plan and/or Approved Research Budget pursuant to this Section 2.2(ii) shall be mutually agreed and made in writing in accordance
with Section 10.8.
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D.
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In the event that pursuant to such discussions
the Parties fail to agree upon an Approved Research Budget or amendment to Research Plan within the forty five (45) calendar day period
commencing on the date of FCDI’s receipt of a Century-Proposed Research Plan Modification and/or a Century-Proposed Estimated
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Research Budget Modification,
then either Party, upon written notice given to the other Party, may escalate such matter for discussion among each Party's then-current
Chief Executive Officer. Promptly following any such notice being given, each Party's Chief Executive Officer shall discuss the
matter over a period of fifteen (15) Business Days in good faith to determine a Research Plan, as may be modified, and an Approved
Research Budget for such Research Plan for the forthcoming Contract Year that is mutually acceptable to Century and FCDI. In the
event that the Chief Executive Officers are unable to agree upon a mutually acceptable Approved Research Budget within such fifteen
(15) Business Day period, either Party shall have the right to terminate this Agreement upon sixty (60) days’ written notice
given to the other Party (subject to any right or remedy of the non-breaching Party with respect to the terminating Party's breach
of its obligations of good faith under this Section 2.2(ii)(D)).
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E.
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If Century fails to deliver a Century-Proposed Research Plan Modification and/or a Century-Proposed
Estimated Research Budget Modification, as applicable, to FCDI prior to the thirtieth (30th) day following receipt of
a FCDI-Proposed Research Plan Modification and/or FCDI-Proposed Estimated Research Budget, then on such date Century will be deemed
to have approved the FCDI-Proposed Research Plan Modification (notwithstanding anything to the contrary in Section 10.8)
and the FCDI-Proposed Estimated Research Budget.
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(iii)
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The Approved Research Budget for the first Contract Year commencing on the Effective Date and ending
on March 31, 2020. the second Contract Year commencing April 1, 2020 and ending on March 31, 2021 and the third Contract Year commencing
April 1, 2021 and ending on March 31, 2022 is attached as Exhibit C hereto.
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(iv)
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FCDI shall not perform the Services in any Contract Year unless there is an Approved Research Budget
for such Contract Year.
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(v)
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By the forty fifth (45th) day of each calendar quarter of a Contract Year commencing with
the first calendar quarter beginning after the execution and
delivery hereof by the Parties, with respect to the immediately
preceding calendar quarter of a Contract Year (or, in the case of the first report, the period from the Effective Date to
(and inclusive of) the calendar quarter in which occurred the execution and delivery hereof by the Parties), FCDI will
deliver to Century a written report of FCDI’s progress in the performance of the Services in such calendar quarter as
well as the actual remuneration payable to FCDI for the Services performed in such calendar quarter (or, in the case of the
first report, the period from the Effective Date to the first calendar quarter beginning after the execution and delivery
hereof by the Parties) in accordance with Section 5.1 as compared to the applicable Approved Research Budget. In
addition, if FCDI determines that the aggregate fees and other charges payable for the Services yet to be performed will
exceed the corresponding estimated fees and other charges for the Services set forth in the applicable Approved
Research Budget by more than [***], then FCDI shall
give written notice of such determination to Century.
Upon the request of
Century following its receipt of such notice or at any time after the aggregate of the fees and charges invoiced by
FCDI hereunder with respect to an Approved Research
Budget exceed the aggregate of the corresponding estimated fees and other
charges for the Services set forth in the such Approved Research Budget by more than [***], the Parties shall discuss
in good faith potential change(s) to the Research Plan
and/or such Approved Research Budget. Any changes made in accordance
with this Section 2.2(v) to the Research Plan and/or such Approved Research Budget shall require and be made as set
forth in a prior written agreement between the Parties, which may include changes to the fees and the timing of the
deliverables or completion of the Services resulting from the changes to the Research Plan. FCDI shall not suspend or change
any Services under the Research
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Plan for which there is an Approved
Research Budget until an amendment to the Research Plan and such Approved Research Budget is executed by an authorized representative
of each Party.
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(vi)
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For the avoidance of doubt, in the event that Century is delayed in providing Materials or performing
Supporting Activities necessary for FCDI to perform the Services, FCDI shall be permitted to delay the timelines set forth in the
Research Plan for the number of days corresponding to Century's delay.
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2.3
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In the event of any conflict between the provisions of the Research Plan or the Approved Research
Budget and the provisions of this Agreement, such conflict shall be resolved in the following order of precedence (in descending
order), unless the Research Plan or Approved Research Budget explicitly states that the Parties intend for the terms of such Research
Plan or Approved Research Budget to take precedence, in which case such terms will govern with respect to the Research Plan or
Approved Research Budget only:
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(ii)
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the Research Plan attached to this Agreement, as from time to time may be amended in accordance
herewith; and
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(iii)
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the Approved Research Budget.
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All Services
shall be performed in accordance with the terms of this Agreement. FCDI shall perform the Services in compliance with all applicable
law. FCDI shall perform the Services in a timely and professional manner consistent with the quality and degree of care, skill
and judgment that is consistent with the applicable industry standards for similar types of engagements (this sentence being the
“Specified Provision”). To the extent Services consist of cGMP manufacturing services as specified in the Research
Plan. FCDI shall use Commercially Reasonable Best Efforts to perform such Services in compliance with cGMP.
Each Party
shall designate, in a writing delivered to the other Party, one of its employees as “Alliance Manager,” to serve as
the primary point of contact on behalf of such Party for communications between the Parties with respect to the Services.
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2.4
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FCDI may use a third party subcontractor or an Affiliate for the performance of certain part of
the Services upon prior written agreement of Century; provided that (a) FCDI shall notify Century of the name of the proposed subcontractor
or Affiliate and identify the specific Services to be performed by the subcontractor; (b) FCDI shall enter into a written agreement
with such subcontractor or Affiliate that protects Century's rights and interests to at least the same degree as provided in Articles
4, 6 and 7; (c) the subcontractor or Affiliate shall perform those subcontracted Services in a manner consistent
with the terms and conditions of this Agreement, and (d) FCDI remains responsible for the performance of the subcontractor or Affiliate.
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Article 3
REPRESENTATIONS AND WARRANTIES
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3.1.
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Representations and Warranties by FCDI. FCDI represents and warrants, as of the Effective
Date, that:
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(i)
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Organization of FCDI. FCDI is and shall remain a corporation duly organized and validly
existing under the laws of its jurisdiction of organization;
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(ii)
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Enforceability of this Agreement. The execution and delivery of this Agreement has
been authorized by all requisite corporate action. When executed and delivered by both Parties, this Agreement is and will remain
a valid and binding obligation of FCDI, enforceable in accordance with its terms, subject to laws of general application relating
to bankruptcy, insolvency and the relief of debtors;
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(iii)
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Absence of Other Contractual Restrictions. FCDI is under no contractual or other
obligation or restriction that conflicts with FCDI's execution or performance of this Agreement. FCDI will not enter into any agreement,
either written or oral, that would conflict with FCDI's responsibilities or obligations under this Agreement;
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(iv)
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Qualifications of FCDI Personnel. FCDI has, and will engage, employees, subcontractors
and/or consultants (“FCDI Personnel”) with the proper skill, training and experience to provide the Services.
FCDI will be solely responsible for paying FCDI Personnel and providing any employee benefits that they are owed. Before providing
Services, all FCDI Personnel must have agreed in writing to (a) confidentiality obligations at least as restrictive as the confidentiality
obligations of this Agreement, and (b) effectively vest in FCDI any and all rights that such FCDI Personnel might otherwise have
in the results of their work and any intellectual property rights that arise out of such FCDI Personnel's work and are required
to be assigned to Century hereunder; and
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(v)
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Absence of Debarment. Neither FCDI nor any of the FCDI Personnel performing Services
under this Agreement have been debarred, and to the best of FCDI's knowledge, are not subject to pending proceedings seeking the
debarment, by the United States Food and Drug Administration (“FDA”) or any other governmental authority from working
in or providing services to any pharmaceutical or biotechnology company under the Generic Drug Enforcement Act of 1992. FCDI will,
promptly after it acquires knowledge of the same, notify Century if FCDI has knowledge of any such proceeding having been commenced
or threatened in written notice given to FCDI to be taken against it or any of the FCDI Personnel.
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3.2.
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Representations and Warranties by Century. Century represents and warrants:
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(i)
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Organization of Century. Century is and will remain a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of organization; and
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(ii)
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Enforceability of this Agreement. The execution and delivery of this Agreement has
been authorized by all requisite corporate action. When executed and delivered by both Parties, this Agreement is and will remain
a valid and binding obligation of Century, enforceable in accordance with its terms, subject to laws of general application relating
to bankruptcy, insolvency and the relief of debtors;
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(iii)
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Absence of Other Contractual Restrictions. Century is under no contractual or other
obligation or restriction that conflicts with Century's execution or performance of this Agreement. Century will not enter into
any agreement, either written or oral, that would conflict with Century’s responsibilities or obligations under this Agreement
without FCDI's prior written consent, which shall not be unreasonably withheld, conditioned or delayed; and
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(iv)
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Materials. Century has the lawful right, and all consents, licenses and permissions
from all third parties (including informed donor consent and institutional or ethical review board approval, as applicable) necessary
to transfer all Materials furnished hereunder to FCDI and for FCDI to use the same in the performance of the Services in compliance
with this Agreement and the Research Plan governing the Services in question and to grant the license granted in Section 6.1.
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3.3.
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Delivery of Materials. Century warrants that it will use Commercially Reasonable
Best Efforts to provide Materials and perform the Supporting Activities.
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3.4.
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Deliverables. FCDI warrants
that it will perform the Services in accordance with the Research Plan and this Agreement and will use Commercially Reasonable Best Efforts
to
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perform the Services in accordance
with cGMP to the extent the Services include cGMP manufacturing as specified in the Research Plan and generate Deliverables that
conform to the specifications therefor in the Research Plan. In the event of a breach of the warranty set forth in this Section
3.3, FCDI shall promptly re-perform the nonconforming Services at no additional charge to Century (provided that Century will
provide FCDI with such additional Materials sufficient to permit such re performance by FCDI, as applicable).
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3.5.
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No Other Representations or Warranties. THE REPRESENTATIONS AND WARRANTIES SET FORTH
IN THIS ARTICLE 3 ARE EXCLUSIVE, AND EXCEPT FOR SUCH EXPRESS WARRANTIES SET FORTH IN THIS ARTICLE 3, NEITHER PARTY
MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY. FITNESS
FOR A PARTICULAR PURPOSE OR USE, NONINFRINGEMENT, AND NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS. NO AFFIRMATION
OF A PARTY BY WORDS OR ACTION, OTHER THAN AS SET FORTH HEREIN, SHALL CONSTITUTE A WARRANTY.
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Article 4.
INSPECTIONS; RECORDS
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4.1
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Facility Visit. During the Term, Century’s representatives may visit each applicable
FCDI facility at which the Services have been performed or are being performed with reasonable frequency during normal business
hours to observe the progress of the Services. Century shall provide no less than fifteen (15) Business Days' prior written notice
of its intention to visit the FCDI facility. Century shall at all times comply with all safety and emergency and third party visitor
procedures adopted by FCDI in its facility. Century 's access during such visit(s) shall be limited to areas concerned with the
Services and shall not include restricted areas where work of a proprietary nature is being conducted or where access is not permitted
for security reasons unless access to such areas are necessary for Century to audit FCDI's compliance with this Agreement. Century
agrees that all confidential and proprietary information of the applicable FCDI facility obtained or observed by Century during
such visit shall be treated as Confidential Information subject to the restrictions on use and disclosure set forth in Section
7.
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4.2
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Inspections by Regulatory Authorities. FCDI shall notify Century as soon as reasonably
practicable of, but in any event to the extent possible prior to, any inspection or anticipated inspection of its facility conducted
by any regulatory authority, including, without limitation, the FDA or the Japanese Ministry of Health, Labor and Welfare (JMHLW),
that is directly related to the Services. FCDI shall promptly provide copies of all reports, citation, violations, warnings, and
notices of deficiency received by FCDI in connection with any such inspection that is directly related to the Services and, if
time permits, will provide its proposed response to such reports, citation, violations, warnings and notices to Century for Century's
review and input prior to FCDI's submission of such response. FCDI will consider in good faith any comments and suggestions provided
by Century with respect to such proposed response. The obligations set forth in this Section 4.2 shall survive termination
of this Agreement for five (5) years following expiration or termination thereof.
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4.3
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Records; Records Storage. FCDI shall maintain all written (in any form of media) materials,
data and documentation generated by or on behalf of FCDI or obtained front Century in the course of providing Services hereunder,
including all such computerized records and files (collectively the “Records”) in a secure area protected by
FCDI's commercially reasonable abilities from fire, theft and destruction. For the avoidance of doubt, “Records” exclude
any and all data and documentation (a) generated by FCDI prior to the commencement date of the Service without the aid, application
or use of Century's Confidential Information or (b) to the extent (i) such data or documentation constitutes or incorporates the
Licensed Patent Rights, Know-How or the Licensed Technology, as to which Century shall have solely the rights (if any) granted
in the Reprogramming License
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Agreement and the Differentiation
License Agreement, or (ii) pertaining to FCDI Technology (as defined below) and not specific to the Services performed for Century.
Records shall be “Works Made for Hire” and shall remain the exclusive property of Century.
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4.4
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Record Retention. Upon written instruction of Century, all Records shall, at Century's
option either be (a) delivered to Century or to its designee in such form as is then currently in the possession of FCDI, at Century’s
cost and expense, (b) retained by FCDI for the later of (i) expiry of a period of five (5) years from the expiration or termination
of this Agreement, or (ii) expiry of such period as otherwise required by applicable law or regulation, or (c) disposed of, at
the direction and written request of Century, unless such Records are otherwise required to be stored or maintained by FCDI as
a matter of law or regulation and provided, however, that, notwithstanding anything to the contrary herein, FCDI will not be required
to deliver to Century, or erase, electronic copies of Records that were stored on FCDI’s backup, disaster recovery or business
continuity systems in the ordinary course of FCDI’s business (so long as access to such electronic copies is restricted to
the archival purpose contemplated below in this Section 4.4 including to maintain or recover a backup copy thereof). In
each case, all Records retained by FCDI shall remain subject to the terms of confidentiality and non-use set forth herein. In no
event shall FCDI dispose of any such Records without first giving Century thirty (30) days’ prior written notice of its intent
to do so. In addition and notwithstanding anything to the contrary herein, FCDI may retain all copies of any and all laboratory
notebooks documenting any of the Services, and any and all other Records as are reasonably necessary for regulatory or insurance
purposes, subject to FCDI’s obligation of confidentiality, and may retain a single archival copy of those Records constituting
or containing Century’s Confidential Information that FCDI may use solely for the purpose of determining FCDI’s obligations
hereunder.
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Article 5.
COMPENSATION
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5.1
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Compensation. As full consideration for the Services, Century shall pay FCDI remuneration
determined in accordance with the Approved Research Budget and FCDI’s Fee Structure for the Services set forth in the Research
Plan performed by FCDI. FCDI shall issue an invoice to Century monthly for the fees and other charges determined in accordance
with FCDI’s Fee Structure for all Services rendered and out-of-pocket costs or expenses incurred during the preceding month.
No later than the last day of each calendar month of a Contract Year, FCDI will issue an invoice or a credit invoice, as applicable,
based on the actual remuneration payable by Century to FCDI with respect to the preceding calendar month of a Contract Year. For
the avoidance of doubt, should Century prepay the fees and/or other charges payable by it to FCDI hereunder (including pursuant
to Section 5.3), the applicable invoice issued by FCDI to Century shall properly reflect a credit for such prepayment. Century
may dispute in good faith any amounts invoiced by FCDI hereunder by giving, within thirty (30) days after Century’s receipt of the invoice,
written notice to FCDI of such disputed amount(s) and in reasonable detail the basis herein why Century disputes such amount(s).
If no notice of dispute is so given by the Century to FCDI with respect to an amount invoiced by FCDI hereunder, then for all purposes
such amount is deemed to be undisputed. Century shall make payment of all undisputed payments within thirty (30) days after the date of Century's receipt of the invoice to the designated
bank account of FCDI as specified in the invoice. If Century gives written notice of its dispute of any amount(s) invoiced by FCDI
hereunder, then Century and FCDI shall cooperate with each other in good faith to as promptly as practicable resolve such dispute.
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5.2
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Minimum Requirements. For each of the first three (3) consecutive twelve (12) month
periods beginning on the Effective Date, the Actual Remuneration Amount for all Services in such 12-month period shall be no less
than two million five hundred thousand U.S. dollar ($2,500,000). The Parties agree that as of the Signing Date, Century has paid
the Actual Remuneration Amount for the first twelve-month period following the Effective Date. For the avoidance of doubt, the
Actual Remuneration Amount shall include any and all amount(s) invoiced by FCDI that are disputed by Century in good faith as provided
in Section 5.1;
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provided, however, that, if
any amount invoiced as the Actual Remuneration Amount for any of the first three such 12-month periods is disputed by Century but
resolved to be not payable by it to FCDI, then FCDI, as it may elect, shall pay, promptly after such resolution, to Century and/or
credit against the next amount invoiced by FCDI to Century hereunder the aggregate of such amount. In the event that the Actual
Remuneration Amount of all Services falls short of $2,500,000 in any such 12-month period, Century shall pay FCDI an amount equal
to the extent of the shortfall within sixty (60) days of the end of such 12-month period. For clarity, such amount payable in respect
of any such 12-month period shall be calculated by deducting the total Actual Remuneration Amount for such 12-month period from
$2,500,000.
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5.3
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Reprogramming License Payments Credited. Notwithstanding anything to the contrary
in this Section 5, any payments made by Century pursuant to Section 3.5(b) of the Reprogramming License Agreement
shall be fully creditable against the foregoing fees and charges, including, for the avoidance of doubt and without limitation,
against any shortfall amount due during the first three (3) consecutive twelve (12) month periods beginning on the Effective Date.
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5.4
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Late Payments. If any undisputed payment to be made under this Agreement is not received
by FCDI within thirty (30) days after becoming due, Century shall pay to FCDI interest on the overdue payment from the date such
payment was due to the date of actual payment at a rate of [***] per month, or if lower, the maximum amount permitted under applicable
law. In addition, if Century fails to pay any undisputed amount payable under this Agreement within thirty (30) days after becoming
due, FCDI may suspend, without any breach hereof or liability to Century therefor, its performance of any of the Services until
payment of the overdue amount payable is received by FCDI.
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Article 6.
PROPRIETARY RIGHTS; DELIVERABLES
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(a)
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Except as set forth in Section 6.1(b), Century is and will be the sole and exclusive owner
of all right, title and interest in and to all Materials, including all intellectual property rights therein. Century hereby grants
to FCDI, during the Term, a royalty-free, non-transferable, non-sublicensable (except to permitted subcontractors in accordance
with Section 2.4), non-exclusive right and license to use the Materials to the extent necessary or useful to perform the Services. FCDI shall use the Materials solely to perform the Services and for no other purpose. Century shall provide, prior to delivery of Materials, FCDI with safety data sheets for all Materials (“SDSs”) or, if SDSs are not available, written notice of any biohazardous or
toxic exposure risk(s) associated with handling any Materials that are known to Century so that FCDI can determine the biological
safety classification of such Materials. FCDI understands that the Materials may have unpredictable and unknown biological and/or
chemical properties, that they should be used with caution, and that they are not to be used for testing in or treatment of humans or animals. FCDI shall not sell, transfer, disclose, reverse engineer or otherwise provide access to the Materials, any method or process relating thereto that is provided by Century
or developed by FCDI through use of the Materials, or any material that could not have been made without access to the Materials, to any person or entity without the prior written consent
of Century.
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(b)
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Notwithstanding anything to the contrary herein, FCDI shall remain the sole and exclusive owner
of all right, title and interest in and to the Licensed Patent Rights and the Licensed Technology including those pertaining to
or embodied or incorporated in any Materials as to which Century shall have solely the rights granted in the Reprogramming License
Agreement and the Differentiation License Agreement.
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(a)
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Except as set forth in Section 6.2(b)
or Section 6.2(c), Century is and will be the sole and
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exclusive owner of all right, title and interest in and to the Deliverables, including all
intellectual property rights therein. Any Deliverables produced by FCDI in the course of providing Services pursuant to this
Agreement shall be promptly and fully disclosed to Century in accordance with the terms of this Agreement. Except as set forth in Section
6.2(b) or Section 6.2(c), FCDI hereby assigns to Century all of its right, title and interest in and to all Deliverables,
including all intellectual property rights therein. FCDI acknowledges and agrees that each of Licensed Patent Rights (as defined in
the Reprogramming License Agreement) and Licensed Technology (as defined in the Differentiation License Agreement) includes FCDI
Technology to the extent described in the definition of each such former term. Century hereby grants to FCDI, during the Term, a
fully paid-up royalty-free, non-transferable, non-sublicensable (except to permitted subcontractors in accordance with Section
2.4), non-exclusive right and license to practice any and all intellectual property rights in the Deliverables that are solely
and exclusively owned by Century in accordance herewith to the extent necessary or useful to perform the Services. [***].
Notwithstanding anything to the contrary herein, (i) any and all Reprogrammed iPS Cells and pluripotent Reprogrammed iPS Cell
Derivative Materials that are or were obtained, created, or derived from Reprogrammed iPS Cells that were transferred by FCDI to
Century pursuant to the MTA shall be deemed to be Deliverables transferred by FCDI to Century hereunder and (ii) any and all
Deliverables that are Reprogrammed iPS Cells or pluripotent Reprogrammed iPS Cell Derivative Materials that are transferred by FCDI
to Century hereunder, then furnished by Century to FCDI for its use in the course of performing Services, and then further
transferred by FCDI to Century hereunder shall at all times remain and be Deliverables subject to this Section 6.2 and not be
Materials subject to Section 6.1. For the avoidance of doubt, pluripotent Reprogrammed iPS Cell Derivative Materials include
genetically-engineered Reprogrammed iPS Cells.
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(b)
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Notwithstanding anything to the contrary herein:
(i) FCDI shall remain the sole and exclusive owner of all right, title and interest in and to any and all Deliverables that are Reprogrammed
iPS Cells or pluripotent Reprogrammed iPS Cell Derivative Materials and Century's rights with respect to any such Deliverables shall
be limited to the use thereof in accordance with and subject to the Reprogramming License Agreement and the Differentiation License Agreement,
and Century's rights with respect to all Deliverables that are non-pluripotent Reprogrammed iPS Cell Derivative Materials shall be subject
to the Reprogramming License Agreement and the Differentiation License Agreement and Section 6.2(c); (ii) FCDI shall remain the
sole and exclusive owner of all right, title and interest in and to the Licensed Patent Rights and the Licensed Technology and its retained
rights pursuant to Section 2.6(a) of the Differentiation License Agreement including those pertaining to or embodied or incorporated
in any Deliverables as to which Century shall have solely the rights granted in the Reprogramming License Agreement and the Differentiation
License Agreement; (iii) FCDI shall remain the sole and exclusive owner of all right, title and interest in and to any and all products,
materials, tools, Know-How, and intellectual property rights therein and Patent Rights and other similar rights (e.g., copyright registrations)
with respect thereto, (A) that are made, conceived, reduced to practice or otherwise discovered firstly by its employees, consultants
or other contractors, or agents outside of the course of the performance of the Services and without use of, reference to or incorporation
of Century's Confidential Information, or (B) that are improvements, variations, modifications or enhancements of anything described
in this sentence that are first made, conceived, reduced to practice or otherwise discovered by, or on behalf of, FCDI after the Effective
Date in the course of FCDI's performance of the Services (other than as
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explicitly set forth in an SOW) and that do not use or incorporate any of Century's Confidential
Information and that are useful for, and to be practiced in, the development, manufacture or commercialization of iPSCs (including
TiPSC) (derived by any reprogramming method) or any one or more iPSC derived cell(s) other than solely iPSC (including TiPSC)
derived T cells, NK cells, dendritic cells, or macrophages, or (C) for the avoidance of doubt, that are third party intellectual
property rights in licensed or otherwise acquired by FCDI independent of this Agreement (“FCDI
Technology”) [***]. For such purpose, “Relevant Century Activities” means Century’s
Board of Directors-approved and budgeted (with appropriate resources therefor available to Century or planned to be acquired by it)
ongoing or anticipated activities and strategies, which in the case of anticipated activities and strategies are to be carried out
within the succeeding eighteen (18) month period, as of the time that FCDI would request any consent from Century pursuant to the
first proviso in the immediately preceding sentence. For the avoidance of doubt, FCDI shall remain the sole and exclusive owner of
all right, title and interest in any and all products, materials, tools, Know-How, and any and all improvements, variations,
modifications or enhancements of any of the foregoing, that are made, conceived, reduced to practice or otherwise discovered firstly
by its employees, consultants or other contractors, or agents outside of the course of the performance of the Services (and
accordingly are not funded in whole or in part by Century) and without use of, reference to or incorporation of Century's
Confidential Information, and any and all intellectual property rights therein and Patent Rights and other similar rights (e.g.,
copyright registrations) with respect thereto. FCDI hereby grants, in addition to the rights thereto granted under the Reprogramming
License Agreement and/or Differentiation License Agreement (i.e., to the extent a license under the FCDI Technology to do (I) and
(II) is not already granted thereunder), to Century a non-exclusive, perpetual, irrevocable, fully paid- up, royalty-free,
sublicensable (through multiple tiers), worldwide license under all FCDI Technology described in subclause (iii)(B) of the preceding
sentence pertaining to or embodied within the Deliverables, (I) to fully exploit any product or service based on, embodying,
incorporating, or derived from the Deliverables that are owned by Century, and (II) to exercise any and all other present or future
rights in the Deliverables for any and all purposes (excluding, for the avoidance of doubt, any rights under the Licensed Patent
Rights, the Licensed Know-How or FCDI Technology as to which Century shall have solely the rights granted under the Reprogramming
License Agreement and/or Differentiation License Agreement or otherwise expressly granted herein) or to fully Exploit the Licensed
Products and any product or service described in either of the immediately preceding clauses (I) and (II) of this sentence.
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(c)
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Century shall: (i) use all Deliverables that
are owned by FCDI in accordance with Section 6.2(b)(i) (i.e., Reprogrammed iPS Cells or pluripotent Reprogrammed iPS Cell
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Derivative Materials) solely (A) to perform the activities to be performed by it as set forth in the
Research Plan, and/or (B) otherwise in internal research to develop Licensed Products in the Field in accordance with and subject to
this Agreement and the Reprogramming License Agreement and the Differentiation License Agreement. In order to effect the permitted
use in Section 6.2(c)(i)(A) (i.e., to the extent a license under such intellectual property rights to perform such activities
is not already granted under the Reprogramming License Agreement and/or Differentiation License Agreement), FCDI hereby grants to
Century during the Term a fully paid-up, royalty-free, sublicensable, non-exclusive right and license to practice any and all
intellectual property rights in such Deliverables that are owned by FCDI to the extent necessary or useful to perform the activities
to be performed by Century as set forth in the Research Plan. Century shall not: (I) use any such Deliverables to make Reprogrammed
iPS Cells or pluripotent Reprogrammed iPS Cell Derivative Materials (except as expressly permitted in this Agreement), have made,
offer to sell, or sell any such Deliverables; (II) use any such Deliverables in the manufacture of any products; (III) transfer any
such Deliverables to any third party without FCDI’s express prior written consent; (IV) use any such Deliverables in any
services for a third party, including sponsored research with a third party without FCDI’s express prior written consent; (V)
reverse engineer any such Deliverables (which shall not include full characterization as contemplated in the immediately following
clause (VI) of this sentence); (VI) perform any whole genome sequencing of any such Deliverables without FCDI’s express prior
written consent, which shall not be unreasonably withheld, conditioned or delayed; and (ii) not (A) use any Deliverables directly or
indirectly derived or made in humans, in clinical trials, for diagnostic purposes involving human subjects, or for any therapeutic
use; or (B) attempt in any way to determine the identity of the donor(s) of the biological materials from which Deliverables
directly or indirectly are derived or were made; and no rights to do any of the foregoing are implied by the transfer of the
Deliverables under the MTA or hereunder. Century shall use the Deliverables in accordance with all applicable laws and regulations
and any applicable institutional review board approved protocol. Notwithstanding anything to the contrary in this Section, Century
may use (x) those Deliverables that are Reprogrammed iPS Cells or are pluripotent Reprogrammed iPS Cell Derivative Materials
selected by Century as the [***] and the [***] (or such other combination of an aggregate of [***] as may be mutually agreed in
writing by the Parties) to be used for the Exploitation of Licensed Products as contemplated in the Research Plan, which, for the
avoidance of doubt, in no event will include the research grade TiPSC Line (as defined in the MTA) (collectively, the
“Selected Reprogrammed iPS Cell Lines”) and (y) Deliverables that are directly or indirectly derived or made from
the Selected Reprogrammed iPS Cell Lines to Exploit Licensed Products in the Field in accordance with and subject to this Agreement
and the Reprogramming License Agreement and the Differentiation License Agreement. At any time after the third Contract Year when
there is no Approved Research Budget in effect (and there is no ongoing discussions between the Parties or dispute resolution
seeking a determination that there be an Approved Research Budget), FCDI may give Century written notice requiring Century, at
FCDI’s election, (X) to return or destroy all Deliverables that are Reprogrammed iPS Cells or are pluripotent Reprogrammed iPS
Cell Derivative Materials other than the Selected Reprogrammed Lines and pluripotent Reprogrammed iPS Cell Derivative Materials
derived from the Selected Reprogrammed Lines, and destroy all Deliverables that are nonpluripotent Reprogrammed iPS Cell Derivative
Materials other than nonpluripotent Reprogrammed iPS Cell Derivative Materials derived from the Selected Reprogrammed Lines or (Y)
to destroy all Deliverables that are Reprogrammed iPS Cells or are Reprogrammed iPS Cell Derivative Materials other than the
Selected Reprogrammed Lines and Reprogrammed iPS Cell Derivative Materials derived from the Selected Reprogrammed Lines.
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(d)
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Upon termination of the Reprogramming License Agreement (whether in its entirety or on a
country-by-country basis as may be applicable) prior to the expiration of the last to expire of the Licensed Patent Rights
(as defined in the Reprogramming License Agreement), Century (i) subject to Section 9.7(a) of the Reprogramming License
Agreement, shall cease all activities involving the use of any Deliverables that are Reprogrammed iPS Cells or are
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Reprogrammed iPS Cell Derivative Materials in any country as to which the Reprogramming License
Agreement has been so terminated in the case where such termination is not of such license in its entirety, (ii) subject to Section
9.7(a) of the Reprogramming License Agreement, shall destroy any such unused or remaining Deliverables in the case where such
termination is of the license in its entirety and (iii) shall certify in writing to FCDI as to such cessation of activities on a
country-by-country basis or destruction of such Deliverables, as applicable. For clarity, as used herein, Reprogrammed iPS Cells and
Reprogrammed iPS Cell Derivative Materials include the “Materials” and “Derivatives,” in each case as
defined in the MTA.
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6.3
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Work at Third Party Facilities. Except as otherwise permitted under this
Agreement, FCDI shall not transfer Materials or Deliverables or use any third-party facilities or intellectual
property in performing the Services without Century's prior written consent.
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Article 7.
CONFIDENTIAL INFORMATION
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7.1
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Confidential Information.
Each Party agrees that all materials, documents and information disclosed or made available during the Term by or on behalf of
one Party (“Disclosing Party”) to the other Party (“Receiving Party”) pursuant
to this Agreement shall be deemed as confidential regardless of whether such information is marked, designated or notified as
confidential. (“Confidential Information”). All Deliverables and Records developed by FCDI in the course
of the performance of its Services pursuant to this Agreement, shall be deemed as Confidential Information of Century. Notwithstanding
the foregoing, Deliverables of which FCDI is the sole and exclusive owner in accordance with Section 6.2(b), other than
Deliverables that are tangible property described in solely clause (i) thereof, shall be deemed as Confidential Information of
FCDI except that Deliverables of which FCDI is the sole and exclusive owner in accordance with Section 6.2(b)(iii)(B) shall
be deemed as Confidential Information of Century. For the avoidance of doubt, FCDI’s accessing of (e.g., opening or reading
a file containing) any Century Confidential Information itself will not be deemed to constitute FCDI’s use, reference to,
or incorporation or application of such Century Confidential Information into any product, material, tool, Know-How, or intellectual
property right, Patent Right or other similar right (e.g., copyright registration) described in Section 6.2(b)(iii) or the aiding of FCDI by such Century Confidential Information, and there shall be no presumption or
inference of any such use or incorporation by FCDI of, or the aid or application to or by FCDI of, any such Century Confidential
Information by reason of solely any such access thereto by FCDI.
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7.2
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Non-Disclosure. During the Term
and for [***] after the expiration of the Term or earlier termination of this Agreement, the Receiving Party agrees (a) to maintain
the Confidential Information in strict confidence and in a manner consistent with the way in which it maintains the confidentiality of
its own proprietary information (but in no event shall be the Receiving Party use less than a reasonable degree of care to maintain the
confidentiality of the Disclosing Party's Confidential Information); (b) not to disclose, or give access to, the Confidential Information,
other than to its Affiliates and its and their respective directors, officers, employees, consultants, contractors, subcontractors and
legal advisors, and/or ethics committees who: (i) need to know such Confidential Information for the Receiving Party's exercise of its
rights or performance of its obligations under and in accordance with this Agreement; (ii) have been informed of the confidential nature
of the Confidential Information and the Receiving Party's obligations under this Article 7; and (iii) are obligated by written
confidentiality and restricted use obligations protective of the Confidential Information pursuant to terms substantially similar to
those set forth in this Article 7 (such Persons to which disclosure of Confidential Information is permitted, the “Permitted
Representatives”); (c) to be responsible to the Disclosing Party for any breach of this Agreement or confidential obligations
by any of its Permitted Representatives; and (d) safeguard the Confidential Information from unauthorized use, access or disclosure using
at least the degree of care it uses to protect its sensitive information and in no event less than a reasonable degree of care. Century
acknowledges and agrees that, notwithstanding anything to the contrary herein, the
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accessing or use of equipment that contains a record of Confidential Information of Century for the
maintenance or other servicing of such equipment or the performance of work other than the Services by FCDI employees, consultants,
contractors, and/or subcontractors who have been informed of the confidential nature of such Confidential Information and FCDI's
obligations under this Article 7 and who are obligated by written confidentiality and restricted use obligations protective
of such Confidential Information pursuant to terms substantially similar to those set forth in this Article 7 shall not be
considered unauthorized use, access or disclosure of such Confidential Information hereunder. Each of Century and FCDI shall be
responsible for any breach of confidentiality or non-use by any of its employees, consultants, contractors, and/or subcontractors
who have access to the other Party's Confidential Information pursuant to this Section 7.2.
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7.3
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Exclusion. Confidential Information does not include information that the Receiving
Party is able to demonstrate (i) was rightfully in its possession prior to receipt from the Disclosing Party or any of its Affiliates,
as evidenced by prior written records, (ii) is now, or hereafter becomes, part of the public domain through no act or failure to
act on the part of the Receiving Party or its Permitted Representatives, (iii) becomes known to the Receiving Party through disclosure by a third party
lawfully having possession of such information and lawfully empowered to disclose such information, or (iv) was independently developed
by or on behalf of the Receiving Party without reference to or the aid, application, or use of the Disclosing Party's Confidential
Information, as evidenced by its contemporaneous written records.
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7.4
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Exception. If the Receiving Party becomes legally compelled to disclose any Confidential
Information of the Disclosing Party under applicable law, rule, regulation, order, decree or subpoena, the Receiving Party shall
(a) to the extent as practical, provide prompt written notice of such requirement to the Disclosing Party and cooperate with the
Disclosing Party so that the Disclosing Party may seek, at its sole cost and expense, a protective order or other remedy; (b) disclose
only the portion of Confidential Information that it is legally required to furnish: and (c) make all reasonable efforts to ensure
that such disclosed Confidential Information shall be maintained as confidential.
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7.5
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Confidentiality Obligation upon Termination. Upon expiration or termination of this
Agreement for any reason each Party shall (i) return to the other Party all documents and tangible materials (and any copies) containing
or comprising the other Party’s Confidential Information, (ii) permanently erase all of the other Party’s Confidential
Information horn its computer systems and (iii) certify in writing to the other Party that it has complied with the requirements
of this clause; provided, however, that Century may retain copies of any Confidential Information of FCDI incorporated in the Deliverables
or to the extent necessary to allow it to make full use of the Services and any Deliverables. Notwithstanding anything to the contrary
herein, a Party will not be required to return to the other Party or permanently erase electronic copies of the other Party's Confidential
Information that were stored on such Party's backup, disaster recovery or business continuity systems in the ordinary course of
such Party's business (so long as access to such electronic copies is restricted to the archival purpose contemplated below in
this Section 7.5 including to maintain or recover a backup copy thereof and such Confidential Information remains subject
to the obligations of confidentiality stated herein) and a Party may retain a single copy of the other Party's Confidential Information
to be used solely for the purpose of determining such Party's obligations hereunder, provided that such Confidential Information
remains subject to the obligations of confidentiality stated herein.
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Article 8.
INDEMNIFICATION, LIMITED PRODUCT WARRANTY; DISCLAIMER
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8.1
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Indemnification by FCDI. FCDI
shall defend, indemnify and hold harmless Century and its Affiliates and its and their respective employees, directors, independent contractors
and agents (“Century Indemnitees”) against and from any Losses arising out of or directly relating to any claim, demand,
action, suit or proceeding (including any investigation)
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brought by a third party including any Regulatory Authority or other governmental
agency or other entity (a “Claim”) against any of such Century Indemnitees arising out of or alleging any of the
following: (a) FCDI's breach of this Agreement; or (b) FCDI’s recklessness or willful misconduct in its performance of its
obligations pursuant to this Agreement including its performance of cell reprogramming Services pursuant hereto; provided, however,
that this Section 8.1 shall not apply to the extent Century is obligated to indemnify FCDI pursuant to Section 8.2 of
this Agreement. For purposes hereof, “Losses” means collectively, all costs and expenses (including reasonable
attorneys’ fees and disbursements) incurred in connection with the investigation or defense of any Claim and all judgments,
amounts paid in settlement, damages, losses and other liabilities arising out of any such Claim.
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8.2
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Indemnification by Century. Century shall defend, indemnify and hold harmless FCDI
its Affiliates and its and their respective employees, directors, independent contractors and agents (the “FCDI Indemnitees”, and together with the Century Indemnitees, the “Indemnitees”)
against and from any and all Losses arising out of or directly relating to any Claims against any of such FCDI Indemnitees arising
out of or alleging any of the following: (a) Century's use of the Deliverables and/or Century’s Exploitation of Licensed
Products developed, made or commercialized using any of the Deliverables or any product or service based on, embodying, incorporating,
or derived from the Deliverables that are owned by Century; (b) Century’s recklessness or willful misconduct in connection
with this Agreement; or (c) Century’s breach of this Agreement other than Section 3.3, the terms of which exclusively shall
govern any breach thereof; provided, however, that this Section 8.2 shall not apply to the extent FCDI is obligated to indemnify
Century pursuant to Section 8.1 of this Agreement.
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8.3
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Indemnification Procedures.
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(a)
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A FCDI Indemnitee or Century Indemnitee entitled to indemnification
under this Article 8 (an “Indemnified Party”) shall give prompt written notification to the Party from
whom indemnification is sought (the “Indemnifying Party”) of a Claim, accompanied by copies any and all related
court papers, or any written communication it receives threatening a Claim (in any event within sufficient time so as not to prejudice
the defense of such Claim); provided that the Indemnified Party’s failure or delay in providing such notice shall not diminish
the Indemnifying Party's obligation to indemnify (except that the Indemnifying Party shall not be liable for any Losses that are
costs or expenses incurred by the Indemnified Party during the period in which the Indemnified Party failed to provide such notice)
unless and only to the extent that the Indemnifying Party's defense of the Claim is actually prejudiced thereby.
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(b)
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The Indemnifying Party shall be given the opportunity at all times to control the defense or
settlement of the Claim with counsel of its choosing. The Indemnified Party shall reasonably cooperate with the Indemnifying
Party at the Indemnifying Party's expense. The Indemnifying Party shall not settle any Claim that includes an admission of
liability or wrongdoing (including any improper act or omission such as gross negligence) by the Indemnified Party, that
provides for any injunctive or other relief besides any payment of monies paid in full by the Indemnified Party or that does
not include as an unconditional term a release of the Indemnified Party from all Losses with respect to the Claim, without
such Party's prior written consent. The Indemnified Party has the right to retain its own counsel at its expense with
respect to the Claim to represent the Indemnified Party’s interests and the Indemnifying Party shall reasonably
co-operate with such counsel (subject always to the first sentence of this Section 8.3(b)). Such notice shall be
accompanied by, and thereafter such Indemnified Party shall deliver to the Indemnifying Party promptly following
such Indemnified Party 's receipt thereof, copies of all notices and documents (including court papers) received by such
Indemnified Party relating to such Claim.
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(c)
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If the Indemnifying Party refuses to defend and indemnify for a Claim within the time frame
for response established in the Claim or by the decision-making authority, the Indemnified
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Party has the right to proceed with the Claim in its discretion on its own behalf. In
such case, if the Indemnified Party subsequently successfully enforces these indemnity provisions through agreement or legal action,
then (i) the Indemnifying Party shall reimburse the Indemnified Party for all reasonable expenses and costs in enforcing these
indemnity obligations and of defending or settling the Claim, (ii) shall be bound by any action taken up to the point of successful
enforcement of the indemnity obligations (including any judgment or settlement of the Claim if concluded prior to such time) and
(iii) shall indemnify the Indemnified Party for all damages.
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8.4
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Limitation of Liability. EXCEPT FOR A PARTY'S (A) RECKLESSNESS OR WILLFUL MISCONDUCT,
(B) BREACH OF THE CONFIDENTIALITY OBLIGATIONS SET FORTH IN SECTION 7 OF THIS AGREEMENT OR (C) INDEMNIFICATION OBLIGATIONS SET
FORTH IN SECTION 8.1 OR 8.2, UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE ENTITLED FOR, ANY INCIDENTAL, INDIRECT,
CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS LOST SAVINGS, LOSS OF USE OR
INTERRUPTION OF BUSINESS, HOWEVER CAUSED) ARISING IN CONNECTION WITH THIS AGREEMENT (WHETHER ARISING IN CONTRACT, TORT (INCLUDING
NEGLIGENCE), BREACH OF WARRANTY, STRICT LIABILITY OR OTHERWISE), EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, AND EACH PARTY'S AGGREGATE LIABILITY UNDER THIS AGREEMENT SHALL BE LIMITED TO THE AGGREGATE OF ALL AMOUNTS PAID AND PAYABLE
TO FCDI BY CENTURY UNDER THIS AGREEMENT DURING THE TWELVE MONTHS PRECEDING THE CLAIM (THE “CAP”). NOTWITHSTANDING
ANYTHING TO THE CONTRARY HEREIN, FOR PURPOSES OF DETERMINING WHETHER FCDI'S LIABILITY BASED ON THE SPECIFIED PROVISION, WHETHER
ARISING IN CONTRACT PURSUANT TO SECTION 2.3 OR SECTION 3.4 OR OTHERWISE, SHALL BE LIMITED PURSUANT TO THE CAP, THE
IMMEDIATELY PRECDING PROVISION SHALL BE MODIFIED AND APPLIED WITH RESPECT TO ANY CLAIM AND ANY SUCH LIABILITY BASED ON THE SPECIFIED
PROVISION WITH [***] INSERTED IMMEDIATELY BEFORE “THE AGGREGATE OF ALL AMOUNTS PAID AND PAYABLE TO FCDI BY CENTURY UNDER THIS
AGREEMENT DURING THE TWELVE MONTHS PRECEDING THE CLAIM.”
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Article 9.
EXPIRATION AND TERMINATION
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9.1
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Expiration. This Agreement shall commence on the Signing Date and shall be valid
and in force for as long as the Reprogramming License Agreement is in full force and effect (the “Term”) unless
earlier terminated in accordance with Section 9.2 below.
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(a)
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Termination for Breach. Either Party (the “Terminating
Party”) may terminate this Agreement in the event of a material breach of this Agreement by the other Party (the
“Breaching Party”) if the Breaching Party does not cure such breach to the satisfaction of the Terminating
Party within thirty (30) days of the Breaching Party's receipt of written notice of the breach. Termination shall occur
upon the Terminating Party's further written notice if the breach is not cured.
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(b)
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Termination for Convenience. Following the third anniversary of the Effective
Date, Century shall have the right to terminate this Agreement upon sixty (60) days' written notice given to FCDI for
any reason.
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9.3
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Effect of Termination or Expiration.
Upon termination or expiration of this Agreement and subject to Section 9.4, neither Century nor FCDI shall have any further
obligations under this Agreement, except that (a) FCDI shall deliver to Century any Materials in its possession
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or control and all Deliverables developed through termination or expiration, including any
works-in-process, (b) Century shall pay FCDI any undisputed monies due and owing FCDI for Services actually performed and all
authorized out-of-pocket costs and expenses actually incurred, up to the time of termination or expiration, (c) the exercise of the
right to terminate shall not preclude claims for damages in the event of a breach of this Agreement, (d) FCDI shall immediately
return the Materials to Century, (e) in the case of termination by Century pursuant to Section 9.2(b), the net amount of
[***] less the aggregate of the Actual Remuneration Amounts theretofore paid by Century to FCDI (if a positive value) shall be
immediately due and payable by Century to FCDI and (f) in the case of termination by either party pursuant to Section
2.2(ii)D, the net amount of [***] less the aggregate of the Actual Remuneration Amounts theretofore paid by Century to FCDI (if
a positive value) shall be immediately due and payable by Century to FCDI.
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9.4
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Survival of Certain Terms. The Parties acknowledge that some obligations in
this Agreement shall survive in accordance with the express terms hereof the expiration or any termination of this
Agreement, particularly certain obligations contained in Article 3, Article 4 (but in the case of Section
4.1 only the last sentence thereof), Articles 6 through 8, Sections 9.3 and 9.4 and Article
10, and any other sections that include proprietary rights, confidential information, indemnification obligations.
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Article 10.
MISCELLANEOUS
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10.1
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Independent Contractor. All Services shall be rendered by FCDI as an independent
contractor and this Agreement does not create a partnership, joint venture or agency relationship between Century and FCDI. Neither
FCDI nor any of its directors, officers, employees or agents shall in any way represent itself to be a partner, joint venturer,
agent or officer with or of Century.
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10.2
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Taxes. FCDI shall pay all required taxes on FCDI’s income from Century under
this Agreement. Without prejudice to the generality of the foregoing, all payments due under this Agreement shall be made without
deduction for taxes, assessments, or other charges of any kind which may be imposed on FCDI with respect to any amounts payable
to FCDI pursuant to this Agreement. All such taxes, assessments, or other charges shall be assumed by Century or its Sublicensee(s).
If any deduction or withholding is required by law, Century shall pay to FCDI such amount as shall, after the deduction or withholding
has been made, leave FCDI with the same amount as it would have been entitled to receive without such deduction or withholding.
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10.3
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Force Majeure. Neither Party will be responsible for delays resulting from causes
beyond the reasonable control of such Party, including fire, explosion, flood, war, strike, or riot, provided that the nonperforming Party uses commercially reasonable efforts for a company of its size and resources to avoid
or remove such causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever such causes
are removed.
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10.4
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Publicity. Except as expressly permitted in the Reprogramming License Agreement, Century and its Affiliates shall not use the name of FCDI in any other form of publicity or logo without the prior written approval
of the entity or person whose name is being used. Notwithstanding the foregoing:
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A.
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FCDI shall have the right to disclose to existing and potential customers the fact that FCDI has
entered into this Agreement with Century;
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B.
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Century shall have the right to disclose
the fact that Century has entered into this Agreement with FCDI and the terms and conditions of this Agreement to (i) existing and potential
investors, lenders, sublicensees,
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licensees, licensors, or collaborators, and (ii) acquirers or merger partners that
have entered into a letter of intent or are actively negotiating a definitive acquisition or merger agreement with Century, in each
case on a need to know basis and provided, that, prior to disclosure of any of the terms and conditions hereof to any such Third
Party, such Third Party is obligated by written or professional ethical obligations of confidentiality and non-use substantially as
restrictive as the provisions of Article 7 hereof and that Century will be responsible for any breach of such obligations by
any such Third Party; and
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C.
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Either Party may disclose the name or logo of the other Party where required, as reasonably determined
by the legal counsel of the disclosing Party, by applicable law, by applicable stock exchange regulation or by order or other ruling
of a competent court or other governmental authority, although, to the extent practicable, the other Party shall be given at least
three (3) business days advance written notice of any such legally required disclosure to comment and the disclosing Party shall
reasonably consider such comments provided by such other Party on the proposed disclosure.
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10.5
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Notices. All notices, consents or approvals required or permitted hereunder
must be written and sent to a Party at its address as set forth on page one of this Agreement and in accordance of this Section
10.5 or to such other address of a Party designated for such purpose by written notice given to the other Party in
accordance with this Section 10.5. All notices must be given: (a) by personal delivery, with receipt acknowledged; (b)
by facsimile followed by hard copy delivered by the methods under (c) or (d); (c) by prepaid certified or
registered mail, return receipt requested; or (d) by prepaid recognized next business day delivery service. Notices
shall be effective upon receipt or as stated in the notice.
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10.6
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Assignment. This Agreement, and the rights and obligations hereunder, may not be
assigned or transferred by either Party without the prior written consent of the other Party. Either Party may, however, assign
this Agreement, in whole or in part, to an Affiliate, or in connection with a merger, consolidation, or a sale or transfer of all or substantially all of the assets to which this Agreement
relates. Any assignment or transfer in circumvention of the foregoing shall be null and void.
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10.7
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Entire Agreement. This Agreement (together with the
applicable Exhibit(s)) and the Reprogramming License Agreement and the Differentiation License Agreement constitute the
entire agreement of the Parties with regard to its subject matter, and supersedes all previous written or oral
representations, agreements and understandings between Century and FCDI. For the avoidance of doubt, nothing herein nor any
modification or the expiration or termination hereof is intended to or shall modify or otherwise affect either the
Reprogramming License Agreement and the Differentiation License Agreement except that (a) Section 5.2 and Section
5.3 hereof modify in part Section 3.5(b) of the Reprogramming License Agreement, (b) the provisions of Section
6.2(b) and Section 6.2(c) hereof regarding FCDI’s ownership of certain Deliverables and the unauthorized
uses and activities with respect to Deliverables described therein affect the licenses and other rights granted to Century
under the Reprogramming License Agreement and/or the Differentiation License Agreement, and (c) the additional
licenses granted to Century by FCDI in Sections 6.2(b) and 6.2(c) supplement and thereby affect the licenses
and other rights granted to Century under the Reprogramming License Agreement and/or the Differentiation License
Agreement.
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10.8
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No Modification. The provisions of this Agreement may be changed
only by a writing signed by authorized representatives of both Parties.
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10.9
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Severability; Reformation. Each provision in this Agreement
is independent and severable
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from the others, and no provision shall be rendered unenforceable as a result of any other
provision(s) being held to be invalid or unenforceable in whole or in part. If any provision of this Agreement is invalid,
unenforceable or too broad, that provision shall be appropriately limited and reformed to the maximum extent permitted by applicable
law.
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10.10
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Governing Law and Jurisdiction. This Agreement shall be construed and
interpreted, and its performance shall be, governed by the laws of the State of Wisconsin, without giving effect to the
doctrine of conflict of laws.
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10.11
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Waiver. No waiver of any term, provision or condition of this Agreement (whether
by conduct or otherwise) in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any
such term, provision or condition of this Agreement.
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10.12
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Counterparts and Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same
instrument. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable
document format” (“.pdf”) form, or by any other electronic means intended to preserve the originals
graphic and pictorial appearance of a document, shall have the same effect as physical delivery of the paper document bearing
the original signatures, and shall be deemed original signatures by both Parties.
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10.13
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Headings; Use of Certain Words. This Agreement contains headings only for convenience and the headings do not constitute or form a part of this Agreement, and should not be used in the construction
of this Agreement. As used herein, the words “include” or “including” shall be construed as
incorporating, also, “but not limited to” or “without limitation;” words of any gender include each
other gender, and words using the singular or plural number also include the plural or singular number, respectively.
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10.14
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Dispute Resolution.
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(a)
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If any dispute arises out of or relates to this Agreement, the Parties agree to first seek to resolve
such dispute by referring such dispute to the respective Chief Executive Officers of each Party for resolution. Such referral shall
take place within thirty (30) days after a written request by either Party to the other Party that resolution by the Chief Executive Officers be attempted. If, within sixty
(60) days following the dispute being referred to the Chief Executive Officers of the Parties, the Chief Executive Officers of
the Parties have not resolved the dispute, and a Party wishes to pursue the matter, such Party may initiate binding arbitration
in accordance with Section 10.14.
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(b)
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Any dispute arising out of or relating to this Agreement that has not been resolved pursuant to
Section 10.14(a) shall be exclusively and finally settled, in Tokyo in the event Century is the claimant requesting arbitration
and in New York in the event FCDI is the claimant requesting arbitration, under the Rules of Arbitration of the International Chamber
of Commerce. The arbitral tribunal shall consist of three arbitrators, one selected by the claimant in the request for arbitration,
the second selected by the respondent within thirty (30) days of receipt of the request for arbitration, and the third, who shall
act as presiding arbitrator, selected by the two-party appointed arbitrators within thirty (30) days of the selection of the second
arbitrator. If any arbitrators are not selected within these time periods, the International Court of Arbitration shall, upon the
request of any Party, make the selection(s).
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(c)
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Nothing in this Section 10.14 shall be construed as limiting in any way the right of a Party
to seek a preliminary injunction or other provisional relief with respect to any actual or threatened breach of this Agreement
or to bring an action in aid of arbitration. Should any Party seek an injunction or other equitable relief, or bring an action
in aid of arbitration, then for purposes of determining whether to grant such injunction or other
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Execution Version
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equitable relief, or whether to issue any order in aid of arbitration, the dispute underlying the
request for such injunction or other equitable relief, or action in aid of arbitration, may be heard by the court in which such
action or proceeding is brought.
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IN WITNESS WHEREOF, the Parties have executed
this Agreement as of the date first set forth above.
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CENTURY THERAPEUTICS, LLC
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FUJIFILM CELLULAR DYNAMICS, INC.
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By:
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/s/ Osvaldo Flores
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By:
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/s/ Takeshi Yamamato
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Name:
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Osvaldo (Lalo) Flores, PhD
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Name:
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Takeshi Yamamato
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Title:
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Chief Executive Officer
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Title:
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President & CEO
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Execution Version
EXHIBIT A Research Plan
[***]
Execution Version
EXHIBIT B COMPENSATION; FEE STRUCTURE
[***]
Execution Version
EXHIBIT C
APPROVED RESEARCH BUDGET
(for the first three (3) Contract Years)
[***]
Exhibit 10.17
AMENDMENT NO. 1
TO
MASTER COLLABORATION AGREEMENT
THIS AMENDMENT NO. 1 TO MASTER COLLABORATION AGREEMENT
(this “Amendment No. 1”) is made as of July 17, 2020 (“Amendment No. 1 Signing Date”) by
and between CENTURY THERAPEUTICS, LLC, having a principal place of business at 3675 Market St., Philadelphia, PA 19104
USA (“Century”) and FUJIFILM Cellular Dynamics, Inc., having a principal place of business at 525 Science
Drive, Madison WI 53711, USA (“FCDI”). Century and FCDI are each referred to as a “Party”
and collectively referred to as the “Parties.”
WHEREAS, Century
and FCDI are parties to a certain Master Collaboration Agreement having a Signing Date of October 21, 2019 (the or this “Agreement”);
WHEREAS, FCDI
has certain Reprogrammed iPS Cells that Century desires be made available to Eurofins Lancaster Laboratories, Inc. (“Century’s
CRO”), which is a party to a certain Quality Agreement with Century having an Effective Date of May 21, 2019, as hereafter
may be amended (the “Quality Agreement”), for Century’s CRO’s use in certain training as described
below in this Amendment No. 1;
WHEREAS, FCDI
is willing to transfer such Reprogrammed iPS Cells to Century for such purpose subject to and upon the terms and conditions set
forth in this Amendment No. 1; and
WHEREAS, Century and FCDI desire to amend the Agreement
as set forth therein.
THEREFORE, the Parties agree as follows:
Article 1. AMENDMENTS
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1.1
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Amendment of Article 1. Article 1 of the
Agreement hereby is amended by inserting at the end of such article the following:
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““FCDI Training Samples”
means samples of one or more Reprogrammed iPS cell lines provided by FCDI to Century as contemplated in Section 6.4, including
any progeny (i.e., an unmodified descendant) propagated therefrom by Century or Century’s CRO.”
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1.2
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Amendment of Agreement including Article 6.
Article 6 of the Agreement hereby is amended by inserting at the end of such article the following:
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“6.4
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FCDI Training
Samples. FCDI shall transfer FCDI Training Samples in the quantities set forth in Exhibit E attached hereto (the
“Training Samples Work Plan”) to Century subject to and upon the terms and conditions set forth in the Training Samples
Work Plan and in this Section 6.4. Century hereby acknowledges that the FCDI Training Samples are transferred to Century “AS IS”
and, accordingly, for purposes of Section 3.5 of the Agreement, without any of the representations and warranties set forth in Article
3 being applicable with respect thereto. FCDI shall remain the sole and exclusive owner of all right, title
and interest in and to any and all FCDI Training Samples and all Reprogrammed iPS Cell Derivative Materials therefrom. Century
has a limited right to transfer the FCDI Training Samples to Century’s CRO for its use solely in the performance of the Training
Samples Work Plan, subject to and upon the terms and conditions set forth in this Section 6.4 and
in the Training Samples Work Plan. Century shall cause Century’s CRO to, and Century’s CRO shall, (i) use the FCDI
Training Samples solely in the performance of the Training Samples Work Plan and, accordingly, without limitation to the foregoing clause
(i) but by way of further explication, (ii) be subject to the restrictions, and have the obligations of Century,
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set forth in the third and fourth
sentences of Section 6.2(c) of this Agreement with respect to the FCDI Training Samples but (A) with all references
therein to “Deliverables” instead being to “all FCDI Training Samples and all Reprogrammed iPS Cell
Derivative Materials therefrom” and (B) with the parenthetical in clause (I) of such third sentence replaced with
“(except for the propagation of FCDI Training Samples as expressly permitted in the
Training Samples Work Plan)”. Century shall have the same responsibility for the acts and omissions of
Century’s CRO with respect to this Section 6.4, the FCDI Training Materials, and the Training Samples Work Plan
as if those acts and omissions were directly those of Century (being subject to all provisions in this Section 6.4 and
the Training Samples Work Plan applicable to Century’s CRO). Subject to the foregoing, FCDI hereby consents to (i) as
contemplated in clause (III) of the third sentence of Section 6.2(c), the transfer by Century of FCDI Training Samples
to Century’s CRO and (ii) if applicable as contemplated in clause (IV) of the third sentence of Section
6.2(c), to the use by Century’s CRO of the FCDI Training Materials to perform, as services for Century, the
activities expressly permitted in the Training Samples Work Plan.”
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1.3
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Amendment of Agreement. The Agreement is
hereby amended by making the Training Samples Work Plan a part thereof.
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Article 2. MISCELLANEOUS
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2.1
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Capitalized Terms. Capitalized terms used,
but not otherwise defined herein, shall have the meanings assigned to them in the Agreement.
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2.2
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No Other Amendments. Except as expressly
set forth in this Amendment No. 1, all of the terms and conditions of the Agreement shall remain unchanged and in full force and
effect.
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2.3
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Additional Understanding. Century and FCDI
further agree as set forth in the Addendum attached hereto subject to WARF’s agreement thereto.
Century and FCDI shall execute and deliver such Addendum simultaneously with the execution
and delivery hereof, and FCDI shall submit such partially executed Addendum to WARF for the purpose of obtaining its agreement
thereto.
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2.4
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Counterparts and Signatures. This Amendment
No. 1 may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall
be deemed to be one and the same instrument. Signatures to this Amendment No. 1 transmitted by facsimile transmission, by electronic
mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve
the originals graphic and pictorial appearance of a document, shall have the same effect as physical delivery of the paper document
bearing the original signatures, and shall be deemed original signatures by both Parties.
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IN WITNESS WHEREOF, the Parties have executed
this Amendment No. 1 as of the date first set forth above.
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CENTURY THERAPEUTICS,
LLC
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FUJIFILM CELLULAR DYNAMICS,
INC.
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By:
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/s/
Janelle Anderson
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By:
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/s/
Nicholas Manusos
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Name:
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Janelle Anderson, PhD
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Name:
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Nicholas Manusos
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Title:
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Chief Strategy Officer
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Title:
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COO
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Confidential
EXHIBIT E
TRAINING SAMPLES WORK PLAN
[***]
Confidential
Exhibit 10.18
[***] Certain information in this document
has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and the registrant customarily and actually treats as private and confidential.
Confidential
Execution Version
AMENDMENT
NO. 2
to
MASTER COLLABORATION AGREEMENT
This Amendment No. 2
to Master Collaboration Agreement (the “Amendment No. 2”) is made and effective as of March 23, 2021 (the “Amendment
No. 2 Effective Date”) between Century Therapeutics, Inc. (f/k/a Century Therapeutics, LLC), a Delaware corporation (“Century”)
having a principal place of business at 3675 Market Street, Philadelphia, PA 19104 USA, and FUJIFILM Cellular Dynamics, Inc., a
Wisconsin corporation (“FCDI”) having an address at 525 Science Drive, Madison, WI 53711 USA, and amends the
Master Collaboration Agreement entered into between Century and CDI, signed as of October 21, 2019 and as amended by that certain
Amendment No. 1 to Master Collaboration Agreement, dated as of July 17, 2020 (the “Collaboration Agreement”).
All capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Collaboration Agreement.
RECITALS
WHEREAS, on October 21,
2019, Century and FCDI entered into the Collaboration Agreement; and
WHEREAS, Century and
FCDI desire that the Collaboration Agreement be amended as set forth herein.
THEREFORE, in consideration
of the mutual covenants and conditions set forth in this Amendment No. 2, it is agreed as follows:
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1.
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Amendments to the Collaboration Agreement.
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1.1. Article 1 of the Collaboration Agreement shall be amended to add the following definitions, in appropriate alphabetical
and numerical order, and the section numbers of Article 1 of the Collaboration Agreement and all cross references thereto in the
Collaboration are hereby updated to reflect the addition of such defined terms:
““Century
Engineered Cells” means iPSCs (including TiPSCs), Reprogrammed iPS Cells and Reprogrammed iPS Cell Derivative Materials
that have been genetically modified or otherwise modified by Century.”
““FCDI
Regulatory Documentation” means (i) all applications, registrations, licenses, authorizations and approvals (including all
Regulatory Approvals, if any), all correspondence submitted to or received from Regulatory Authorities (including minutes and official
contact reports relating to any communications with any Regulatory Authority) and all supporting documents and all clinical studies and
tests, in each case to the extent relating to (a) any Reprogrammed iPS Cells (including TiPSCs) manufactured by FCDI, (b) the manufacture
by FCDI of any such Reprogrammed iPS Cells (wherein such manufacture includes all activities performed by or on behalf FCDI through (inclusive
of) cryopreservation of such Reprogrammed iPS Cells) and/or (c) the reprogramming plasmids used by FCDI in any such manufacture and (ii)
all data contained in any of the foregoing in clause (i), including all INDs, Regulatory Approvals, regulatory drug lists, advertising
and promotion documents, manufacturing data, drug master files,
clinical data, adverse
event files and complaint files; and in each case of (i) and (ii), to the extent owned and controlled by FCDI.”
““Quality
Agreement” means that certain Quality Agreement between FCDI and Century, which has a signing date of June 29, 2020,
as hereafter may be amended as set forth in a writing signed by an authorized representative of each of FCDI and Century.”
““Regulatory
Documentation” means all applications, registrations, licenses, authorizations and approvals (including all Regulatory
Approvals), all correspondence submitted to or received from Regulatory Authorities (including minutes and official contact reports
relating to any communications with any Regulatory Authority) and all supporting documents and all clinical studies and tests,
relating to the Licensed Products and all data contained in any of the foregoing, including all INDs, Regulatory Approvals, regulatory
drug lists, advertising and promotion documents, manufacturing data, drug master files, clinical data, adverse event files and
complaint files, but excluding all FCDI Regulatory Documentation.”
1.2. Article 4 of the Collaboration Agreement shall be amended (i) by replacing the heading “INSPECTIONS; RECORDS”
with “INSPECTIONS; RECORDS; REGULATORY RELATED MATTERS”, (ii) by deleting Sections 4.1 and 4.2 in their entirety, (iii)
by re-designating Sections 4.3 and 4.4 as Sections 4.2 and 4.3, respectively, and (iv) to include a new Section 4.1 and Section
4.4 as follows:
“4.1 Right of Reference.
(a) Century
hereby grants, in addition to the rights thereto granted under the Reprogramming License Agreement and/or Differentiation License
Agreement (i.e., to the extent a license under Century’s Regulatory Documentation is not already granted thereunder), to
FCDI a non-exclusive, perpetual, irrevocable, fully paid-up, royalty-free, sublicensable (through multiple tiers), license and
right of reference, with the right to grant sublicenses through multiple tiers and further rights of reference under any Regulatory
Documentation Owned or Controlled by Century in connection with obtaining Regulatory Approval for Licensed Products within the
Field, outside the Territory, for manufacturing and process development activities in respect of Licensed Products within the Field
outside the Territory, and for manufacturing and process development activities outside of the Field for cells other than human
iPSC (including TiPSC)-derived T cells, NK cells, macrophages and dendritic cells.
(b) FCDI
hereby grants, in addition to the rights thereto granted under the Reprogramming License Agreement and/or Differentiation License
Agreement, to Century a non-exclusive, perpetual, irrevocable, fully paid-up, royalty-free, sublicensable (through multiple tiers),
license and right of reference, with the right to grant sublicenses through multiple tiers and further rights of reference under
any master file included in the FCDI Regulatory Documentation in connection with obtaining Regulatory Approval for Licensed Products
within the Field within the Territory.
(c) FCDI
hereby grants, in addition to the rights thereto granted under the Reprogramming License Agreement and/or Differentiation License
Agreement (i.e., to the extent a license under FCDI’s Regulatory Documentation is not already granted thereunder), to Century
a non-exclusive, perpetual, irrevocable, fully paid-up, royalty-free, sublicensable (through multiple tiers), license and right
of
reference, with the right to grant
sublicenses through multiple tiers and further rights of reference under any Regulatory Documentation Owned or Controlled by FCDI in
connection with obtaining Regulatory Approval for Licensed Products within the Field within the Territory, and for manufacturing and
process development activities in respect of Licensed Products within the Field within the Territory.
(d) The
provisions of this Section 4.1 shall survive the expiration or termination of this Agreement, the Reprogramming License
Agreement and/or Differentiation License Agreement.
“4.4. Regulatory
Related Matters. The provisions of Section 8 of the Quality Agreement and Section 2.0 of the Table set forth in the Quality
Agreement shall apply to this Agreement, mutatis mutandis. To the extent the Quality Agreement expires or is terminated
prior to the expiration or earlier termination of this Agreement, such provisions of the Quality Agreement will survive such expiration
or termination for purposes of this Article 4, and be incorporated herein by reference.”
1.3.
Section 6.2(a) of the Collaboration Agreement shall be amended and restated as follows:
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“(a)
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Except as set forth in Section
6.2(b) or Section 6.2(c), Century is and will be the sole and exclusive owner of all right, title and interest in and to the Deliverables
(excluding Century Engineered Cells that are pluripotent), including all intellectual property rights therein. Any Deliverables produced
by FCDI in the course of providing Services pursuant to this Agreement shall be promptly and fully disclosed to Century in accordance
with the terms of this Agreement. Except as set forth in Section 6.2(b) or Section 6.2(c), FCDI hereby assigns to Century all
of its right, title and interest in and to all Deliverables (excluding pluripotent Century Engineered Cells), including all intellectual
property rights therein. FCDI acknowledges and agrees that each of the Licensed Patent Rights (as defined in the Reprogramming License
Agreement) and the Licensed Technology (as defined in the Differentiation License Agreement) includes FCDI Technology to the extent described
in the definition of each such former term. Century hereby grants to FCDI, during the Term, a fully paid-up, royalty-free, non-transferable,
non-sublicensable (except to permitted subcontractors in accordance with Section 2.4), non-exclusive right and license to practice
any and all intellectual property rights in the Deliverables that are solely and exclusively owned by Century in accordance herewith
to the extent necessary or useful to perform the Services. Notwithstanding anything to the contrary herein, (i) any and all Reprogrammed
iPS Cells and pluripotent Reprogrammed iPS Cell Derivative Materials (A) that are or were obtained, created, or derived from Reprogrammed
iPS Cells that were transferred by FCDI to Century pursuant to the MTA, or (B) that otherwise were transferred by FCDI to Century prior
to the Amendment No. 2 Effective Date and that are identified on Schedule 6.2(a) attached hereto, or (C) that are transferred
by FCDI to Century hereunder after the Amendment No. 2 Effective Date other than as contemplated in the Research Plan (as in effect at
the time of any such transfer) and that are identified on a written addendum to Schedule 6.2(a) attached hereto agreed upon by
the Parties (which agreement may be via email), which addendum by such agreement will become a part of Schedule 6.2(a))(“Additional
R&D Cells”) and all pluripotent Century Engineered Cells derived therefrom that are not described in the immediately following
clause (ii) shall be deemed to be Deliverables transferred by FCDI to Century hereunder, and (ii) any and all
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Deliverables
that are Reprogrammed iPS Cells or pluripotent Reprogrammed iPS Cell Derivative Materials that are transferred by FCDI to Century
hereunder, then furnished by Century to FCDI for its use in the course of performing Services, and then further transferred by
FCDI to Century hereunder shall at all times remain and be Deliverables subject to this Section 6.2 and not be Materials
subject to Section 6.1. For the avoidance of doubt, pluripotent Reprogrammed iPS Cell Derivative Materials include pluripotent
Century Engineered Cells.”
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1.4.
Section 6.2(b) of the Collaboration Agreement shall be amended and restated as follows:
“(b) Notwithstanding anything
to the contrary herein:
(i) except
as expressly otherwise provided in Section 6.2(c) with respect to the Selected Cell Lines (as defined below in Section
6.2(c)), FCDI shall remain the sole and exclusive owner of all right, title and interest in and to any and all Deliverables
that are Reprogrammed iPS Cells or pluripotent Reprogrammed iPS Cell Derivative Materials (including, for the avoidance of doubt,
any pluripotent Century Engineered Cells) and Century’s rights with respect to any such Deliverables shall be limited to
the use thereof in accordance with and subject to the Reprogramming License Agreement and the Differentiation License Agreement;
(ii) FCDI shall
remain the sole and exclusive owner of all right, title and interest in and to the Licensed Patent Rights and the Licensed Technology
and its retained rights pursuant to Section 2.6(a) of the Differentiation License Agreement including those pertaining to or embodied
or incorporated in any Deliverables as to which Century shall have solely the rights granted in the Reprogramming License Agreement
and the Differentiation License Agreement;
(iii) FCDI shall
remain the sole and exclusive owner of all right, title and interest in and to any and all products, materials, tools, Know-How,
and intellectual property rights therein and Patent Rights and other similar rights (e.g., copyright registrations) with respect
thereto, that are:
(A) made,
conceived, reduced to practice or otherwise discovered firstly by its employees, consultants or other contractors, or agents outside of the course of the performance of the Services and without
use of, reference to or incorporation
of Century’s Confidential Information,
(B) improvements,
variations, modifications or enhancements of anything described in this sentence that are first made, conceived, reduced to practice
or otherwise discovered by, or on behalf of, FCDI after the Effective Date in the
course of FCDI’s performance of the Services (other than as explicitly set forth in an SOW) and that do not use or incorporate
any of Century’s Confidential Information and that are useful for, and to be practiced in, the development, manufacture or
commercialization of iPSCs (including TiPSC) (derived by any reprogramming method) or any one or more iPSC derived cell(s) other
than solely iPSC (including TiPSC)-derived T cells, NK cells, dendritic cells, or macrophages; or
(C) third
party intellectual property rights in licensed or otherwise acquired by FCDI independent of this Agreement (“FCDI Technology”);
[***].
For the avoidance of doubt, FCDI shall
remain the sole and exclusive owner of all right, title and interest in any and all products, materials, tools, Know-How, and any and
all improvements, variations, modifications or enhancements of any of the foregoing, that are made, conceived, reduced to practice or
otherwise discovered firstly by its employees, consultants or other contractors, or agents outside of the course of the performance of
the Services (and accordingly are not funded in whole or in part by Century) and without use of, reference to or incorporation of Century’s
Confidential Information, and any and all intellectual property rights therein and Patent Rights and other similar rights (e.g., copyright
registrations) with respect thereto. FCDI hereby grants, in addition to the rights thereto granted under the Reprogramming License Agreement
and/or Differentiation License Agreement (i.e., to the extent a license under the FCDI Technology to do (I) and (II) below is not already
granted thereunder), to Century a non-exclusive, perpetual, irrevocable, fully paid-up. royalty-free, sublicensable (through multiple
tiers), worldwide license under all FCDI Technology described in Section 6.2(b)(iii)(B) pertaining to or embodied within the Deliverables,
(I) to fully exploit any product or service based on, embodying, incorporating, or derived from the Deliverables that are owned by Century,
and (II) to exercise any and all other present or future rights in the Deliverables for any and all purposes (excluding, for the avoidance
of doubt, any rights under the Licensed Patent Rights, the Licensed Know-How or FCDI Technology as to which Century shall have
solely the rights granted under the Reprogramming
License Agreement and/or Differentiation License Agreement or otherwise expressly granted herein) or to fully Exploit the Licensed Products
and any product or service described in either of the immediately preceding clauses (I) and (II) of this sentence.
As used in this Section 6.2(b),
“Relevant Century Activities” means Century’s Board of Directors-approved and budgeted (with appropriate
resources therefor available to Century or planned to be acquired by it) ongoing or anticipated activities and strategies, which
in the case of anticipated activities and strategies are to be carried out within the succeeding eighteen (18) month period, as
of the time that FCDI would request any consent from Century pursuant to the first proviso in the first sentence of this Section
6.2(b).”
1.5. Section 6.2(c) of the Collaboration Agreement shall be amended and restated as follows:
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“(c)
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Century shall: (i) use all Deliverables that are owned by FCDI in accordance with Section 6.2(b)(i)
(i.e., Reprogrammed iPS Cells or pluripotent Reprogrammed iPS Cell Derivative Materials, which include, for the avoidance of
doubt, pluripotent Century Engineered Cells) solely (A) to perform the activities to be performed by it as set forth in the Research
Plan, and/or (B) otherwise in internal research to develop Licensed Products in the Field, and (C) solely in the case of the Selected
Cell Lines (as defined below), to otherwise Exploit Licensed Products, in accordance with and/or subject to this Agreement, the
Reprogramming License Agreement, the Differentiation License Agreement and/or the Manufacturing and Supply Agreement (from and
after the time when the same hereafter becomes effective between Century and FCDI), as applicable. In order to effect the permitted
use in Section 6.2(c)(i)(A) (i.e., to the extent a license under such intellectual property rights to perform such activities
is not already granted under the Reprogramming License Agreement and/or Differentiation License Agreement), FCDI hereby grants
to Century during the Term a fully paid-up, royalty-free, sublicensable, non-exclusive right and license to practice any and all
intellectual property rights in such Deliverables that are owned by FCDI to the extent necessary or useful to perform the activities
to be performed by Century as set forth in the Research Plan.
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Notwithstanding anything to the
contrary in this Agreement, Century shall not: (i) use any such Deliverables to make Reprogrammed iPS Cells or pluripotent Reprogrammed iPS Cell Derivative Materials (except
as expressly permitted in this Agreement and/or the Reprogramming License Agreement), have made, offer to sell, or sell any such
Deliverables; (ii) use any such Deliverables in the manufacture of any products (except Selected Cell Lines to manufacture Licensed
Products as expressly described in clause (i)(C) of the first sentence of this Section 6.2(c)); (iii) transfer any such Deliverables except Selected Cell Lines solely for Exploitation as expressly described
in clause (i)(C) of the first sentence of this Section 6.2(c)to any third party without FCDI’s express prior written
consent; (iv) use any such Deliverables in any services for a third party, including sponsored research with a third party, without
FCDI’s express prior written consent; (v) reverse engineer any such Deliverables (which shall not include full characterization
as contemplated in the immediately following clause (vi) of this sentence); (vi) perform any whole genome sequencing (“WGS”)
of any such Deliverables other than subject to and in accordance with compliance with the provision of the immediately following
paragraph; and (vii) (A) use any such
Deliverables in humans, in
clinical trials, for diagnostic purposes involving human subjects, or for any therapeutic use; or (B) attempt in any way to
determine the identity of the donor(s) of the biological materials from which Deliverables directly or indirectly are derived or
were made; (viii) use (A) any Reprogrammed iPS Cells that are identified on Schedule 6.2(a) as iPSCs of either the R&D
HDWCB or R&D bank type (under Section 1, Reprogrammed iPS Cells, of such Schedule 6.2(a)) or any Additional R&D Cells
that are Reprogrammed iPS Cells, or (B) any pluripotent or non-pluripotent Reprogrammed iPS Cell Derivative Materials that are
obtained, created, or derived from any such Reprogrammed iPS Cells (including, for the avoidance of doubt, Century Engineered Cells)
other than solely in internal research performed by Century at its facility, which internal research excludes, use to develop any
product(s) (i.e., for purposes of this Section 6.2(c), use in any of the steps of manufacture of a product); (ix) use (A) any
Reprogrammed iPS Cells that are identified on Schedule 6.2(a) as TiPSCs (under Section 2, Reprogrammed iPS Cells and
Reprogrammed iPS Cell Derivative Materials, of such Schedule 6.2(a)) or (B) any pluripotent or non-pluripotent Reprogrammed
iPS Cell Derivative Materials that are obtained, created, or derived from such Reprogrammed iPS Cells (including, for the avoidance
of doubt, Century Engineered Cells) other than solely in internal research performed by Century at its facility and solely
consisting of research use of such TiPSCs to practice, using Century’s (or a third party’s) feeder-free differentiation
protocol, differentiation of TiPSCs into gamma delta T cells in order to gain expertise and technical competence in performing such
differentiation as well as insights into the efficiency of such differentiation (and to get a read on functional activity of cells
resulting from such research), which internal research excludes, use to develop any product(s); (vii) use any Reprogrammed iPS Cell
Derivative Materials that are identified on Schedule 6.2(a) as either [***] or [***] (under Section 2, Reprogrammed iPS
Cells and Reprogrammed iPS Cell Derivative Materials, of such Schedule 6.2(a)) other than solely in internal research
performed by Century at its facility, which internal research excludes use to develop any product(s); and (x) any use(s) of
Additional R&D Cells that are expressly prohibited in the addendum to Schedule 6.2(a) whereby such Reprogrammed iPS Cells
or Reprogrammed iPS Cell Derivative Materials, as applicable, become Additional R&D Cells hereunder. No rights to take any
action or undertake any activities prohibited by any provision of this Section 6.2(c) are conveyed or shall be implied by the
transfer of the Deliverables under the MTA or hereunder (or a transfer thereof deemed made hereunder). Century shall use the
Deliverables in accordance with all applicable laws and regulations and any applicable institutional review board approved
protocol.
All WGS will be performed by
solely Century at its facility or on behalf of Century by an Approved CRO (as defined below in this paragraph) at the Approved
CRO’s facility and will be solely [***]. For such purposes, “Approved CRO” means a third-party contract
research organization (“CRO”) who has been expressly approved in writing by FCDI prior to the transfer to such
CRO of any Deliverables on which such CRO would perform WGS and for whose acts or omissions, with respect to any and all Deliverables
transferred to such CRO and any and all data resulting from any WGS performed by such CRO, Century is responsible as though such
acts and omissions were those of Century itself. FCDI’s approval of any CRO proposed by Century
to be an Approved CRO will not be unreasonably
withheld, conditioned or delayed and may be provided via email. All data resulting from such WGS of any and all Deliverables other than
Selected Cells Lines are Confidential Information of FCDI owned by it, and Century may use such data solely as a baseline or control
for comparison of engineered vs parental lines and will not disclose any such data to any other person (other than FCDI) without FCDI’s
express prior written consent thereto. All data resulting from such WGS of any and all Deliverables that are Selected Cells Lines are
Confidential Information of Century owned by it subject to FCDI’s right to use such data in its internal research but not to disclose
any such data to any third party. Promptly after Century (or its Approved CRO, as applicable) has performed WGS or analyzed raw data
resulting from WGS, Century will disclose to FCDI all raw data resulting from such WGS or all analyzed data resulting from such analysis,
as applicable.
Notwithstanding anything to the
contrary in this Section 6.2(c), Century may possess and use (x) those Deliverables that are Reprogrammed iPS Cells or are
pluripotent Reprogrammed iPS Cell Derivative Materials, or Century Engineered Cells, that are directly or indirectly derived or made
from cells selected by Century from the clones that are identified on Schedule 6.2(c) attached hereto, as set forth in a
written notice thereof given by Century to FCDI prior [***] as the [***] as may be mutually agreed in writing by the
Parties) to be used for the Exploitation of Licensed Products as contemplated in the Research Plan (collectively, the
“Selected Cell Lines”) and (y) Deliverables or Century Engineered Cells, as applicable, that are directly or
indirectly derived or made from the Selected Cell Lines to Exploit Licensed Products in the Field in accordance with and subject to
this Agreement, the Reprogramming License Agreement and the Differentiation License Agreement. Title with respect to such Selected
Cell Line and all Deliverables or Century Engineered Cells, as applicable, that are directly or indirectly derived or made from the
Selected Cell Lines passes to Century upon Century’s giving of written notice of its selection of a Selected Cell Line to FCDI
in accordance with this paragraph for use, further transfer, and other exploitation thereof, subject to the terms and conditions of
the Reprogramming License Agreement and WARF License Agreement and under the Licensed Patent Rights to Exploit the Licensed Products
within the Field in the Territory. Notwithstanding any term or implication herein to the contrary and for the sake of clarity, the
foregoing excludes any license or right under the Licensed Patent Rights (i) to manufacture, have manufactured, sell, have sold,
offer for sale or have offered for sale any product or service to any Third Party in furtherance of any research or development of a
Licensed Product other than a Licensed Product that is being researched, developed or Commercialized by or on behalf of Century or
its Affiliates or Sublicensees, or (ii) to grant any sublicense to any Third Party to manufacture, have manufactured, sell, have
sold, offer for sale or have offered for sale any product or service to any other Third Party in furtherance of any research or
development of a Licensed Product other than a Licensed Product that is being researched, developed or commercialized by or on
behalf of Century or its Affiliates or Sublicensees. For clarity, the foregoing shall not be deemed to transfer title of
Reprogrammed iPS Cells or pluripotent Reprogrammed iPS Cell Derivative Materials that are Controlled by FCDI (in each case, as
defined in the Reprogramming License Agreement) that have not been genetically modified or otherwise modified by Century or on
Century’s request or
direction
pursuant to any Work Order. Capitalized terms used but not defined in this paragraph have the meanings assigned to them in the Reprogramming
License Agreement.
At any time after the third Contract
Year when there is no Approved Research Budget in effect (and there is no ongoing discussions between the Parties or dispute resolution
seeking a determination that there be an Approved Research Budget), FCDI may give Century written notice requiring Century, at
FCDI’s election, (X) to return or destroy all Deliverables that are Reprogrammed iPS Cells or are pluripotent Reprogrammed iPS Cell Derivative Materials
and all Century Engineered Cells) other than the Selected Cell Lines and pluripotent Reprogrammed iPS Cell Derivative Materials
(including, for the avoidance of doubt, Century Engineered Cells) derived from the Selected Cell Lines, and destroy all Deliverables
that are non-pluripotent Reprogrammed iPS Cell Derivative Materials other than non-pluripotent Reprogrammed iPS Cell Derivative
Materials (including, for the avoidance of doubt, Century Engineered Cells) derived from the Selected Cell Lines or (Y) to destroy
all Deliverables that are Reprogrammed iPS Cells or are Reprogrammed iPS Cell Derivative Materials and all Century Engineered Cells
other than the Selected Cell Lines, Reprogrammed iPS Cell Derivative Materials derived from the Selected Cell Lines and Century
Engineered Cells derived from the Selected Cell Lines; provided, however, that, no later than January 31, 2022, Century shall complete
the destruction contemplated in clause (Y) of the immediately preceding provision and destroy all other Reprogrammed iPS Cells
and Reprogrammed iPS Cell Derivative Materials and all other Century Engineered Cells except that Century may continue to possess
and use solely [1] Reprogrammed iPS Cells, and pluripotent Reprogrammed iPS Cell Derivative Materials that were genome edited or
engineered by Century in accordance with this Agreement, the Reprogramming License Agreement and the Differentiation License Agreement,
and [2] non-pluripotent Reprogrammed iPS Cell Derivative Materials derived therefrom, in the case of each of [1] and [2] solely in
internal research to develop Licensed Products in the Field in accordance with and subject to this Agreement and the Reprogramming
License Agreement and the Differentiation License Agreement. If so requested by FCDI in writing in accordance with this Agreement,
Century will confirm the destruction of any Deliverables as required pursuant to this Section 6.2(c) in a writing delivered
to FCDI.”
1.6.
Article 7 of the Collaboration Agreement shall be amended (i) by re-designating Section 7.5 as Section 7.8, and (ii) to
include a new Section 7.5, Section 7.6, and Section 7.7 as follows:
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“7.5.
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Publication. Each Party shall submit any proposed scientific publication containing
Confidential Information of the other Party relating to its development and/or Exploitation activities relating to the Services
or Licensed Products at least seven (7) days in advance of submission of an abstract of a proposed publication, if any, and again
at least seven (7) days in advance of submission of the scientific publication, to allow such other Party to review such planned
public disclosure. The reviewing Party will promptly review such publication and make any objections that it may have to the publication
of the Confidential Information contained therein. The reviewing Party may, at its option, delay any such proposed publication
or presentation for an additional sixty (60) day period, in order to file any patent applications on the inventions disclosed therein.
Should the reviewing
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Party make an objection to the publication of the Confidential Information or require its modification, then
the Parties will discuss the merits of publishing and any such modifications; provided, however, that in any case, no publication
of Confidential Information of the other Party shall take place under this Section without the other Party’s prior written
approval thereof or unless the obligations of confidentiality as to such Confidential Information shall be waived or disclosure
of Confidential Information of the other Party is otherwise authorized under this Article 7. For purposes of this Section 7.5 and
notwithstanding anything to the contrary herein, Confidential Information of FCDI shall include, without limitation, information
and data regarding and relating to the genotypic characteristics of, the phenotypic characteristics of, and the functionality of
the Deliverables other than Deliverables that are Selected Cell Lines or are derived from Selected Cell Lines.”
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“7.6.
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Publication of Clinical Trial Results. Each Party mutually supports a policy to register
and report results of clinical trials and agrees that this Agreement is subject to such policy. Each Party agrees that it will
permit the party conducting or sponsoring a clinical trial with respect to any Licensed Product and the Affiliates of such conducting
or sponsoring party (the “Clinical Trial Sponsor”) to register and publish the data in accordance with such
policy. The other Party further agrees to provide the Clinical Trial Sponsor such reasonable assistance as such Party may require
in connection with fulfilling the requirements to register and report results of any such clinical trial. Notwithstanding anything
to the contrary in this Agreement, the Clinical Trial Sponsor’s compliance with the terms of this policy will not result
in a breach of any provision of this Agreement, including without limitation, the obligations of confidentiality and non-use.”
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“7.7.
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Public Announcement. Neither Party shall originate any publicity, news release or
public announcements, written or oral, whether to the public or press, stockholders or otherwise, relating to this Agreement, including
its existence, the subject matter to which it relates, performance under it or any of its terms, to any amendment hereto or performances
hereunder without the prior written consent of the other Party, save only such announcements that are required by law to be made
or that are otherwise expressly agreed to in writing in advance by the Parties. Such announcements shall be brief and factual.
If a Party decides to make an announcement required by law, it shall give the other Party at least five (5) Business Days advance
notice, where possible, of the text of the announcement so that the other Party shall have an opportunity to comment upon the announcement.
To the extent that the receiving Party reasonably requests the deletion of any information in the materials, the disclosing Party
shall delete such information unless, in the opinion of the disclosing Party’s legal counsel, such Confidential Information
is legally required to be fully disclosed.”
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1.7.
The Collaboration Agreement shall be amended to include a new Schedule 6.2(a) in the form attached hereto as Exhibit A.
1.8.
The Collaboration Agreement shall be amended to include a new Schedule 6.2(c) in the form attached hereto as Exhibit B.
2.1.
Effect of this Amendment No. 2. This Amendment No. 2 amends the terms of the Collaboration Agreement and is deemed
incorporated into, and governed by all other terms of, the Collaboration Agreement. To the extent that the Collaboration Agreement
is explicitly amended by this Amendment No. 2, the terms of this Amendment No. 2 will control where the terms of the Collaboration
Agreement are contrary to or conflict with the terms of this Amendment No. 2. All other terms and conditions of the Collaboration
Agreement not explicitly amended by this Amendment No. 2 shall remain in full force and effect. The Collaboration Agreement shall,
together with this Amendment No. 2, be read and construed as a single instrument.
2.2.
Counterparts. This Amendment No. 2 may be signed in any number of counterparts, including facsimile copies thereof
or electronic scan copies thereof delivered by electronic mail, each of which shall be deemed an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
[remainder of page intentionally left
blank]
IN WITNESS WHEREOF,
the Parties have executed this Amendment No. 2 as of the Amendment No. 2 Effective Date.
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CENTURY THERAPEUTICS, INC.
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By:
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/s/ Osvaldo Flores
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Name: Osvaldo Flores, Ph.D.
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Title: President and Chief Executive Officer
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FUJIFILM CELLULAR DYNAMICS, INC.
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By:
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/s/ Takeshi Yamamoto
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Name: Takeshi Yamamoto
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Title: President and CEO
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[Signature
page to Amendment No. 2 to Master Collaboration Agreement]
EXHIBIT A
Schedule 6.2(a)
Certain Reprogrammed iPS Cells and Reprogrammed
iPS Cell Derivative Materials
[***]
EXHIBIT B
Schedule 6.2(c)
Clones eligible to be Selected Cell Lines
[***]
Exhibit 10.19
Execution
Version
AMENDMENT
NO. 3
TO
MASTER COLLABORATION AGREEMENT
THIS
AMENDMENT NO. 3 TO MASTER COLLABORATION AGREEMENT (this “Amendment No. 3”) is made as of 29th March,
2021 (the “Amendment No. 3 Signing Date”) by and between CENTURY THERAPEUTICS, INC. (f/k/a Century Therapeutics,
LLC) having a principal place of business at 3675 Market St., Philadelphia, PA 19104 USA (“Century”) and FUJIFILM Cellular Dynamics,
Inc., having a principal place of business at 525 Science Drive, Madison WI 53711, USA (“FCDI”). Century
and FCDI are each referred to as a “Party” and collectively referred to as the “Parties.”
WHEREAS,
Century and FCDI are parties to a certain Master Collaboration Agreement having a Signing Date of October 21, 2019, as amended by Amendment No. 1 having an Amendment No. 1 Signing Date of June 24, 2020 and Amendment No. 2 having an Amendment Effective Date of
March 23, 2021 (the or this “Agreement”);
WHEREAS,
Century and FCDI desire to confirm their understanding to remove certain
Services and/or Supporting Activities from the Research Plan and make related adjustments to the
Research Budget effective as of August 1, 2020;
WHEREAS,
Century and FCDI desire to add certain Services and/or Supporting Activities to the Research Plan and make related
adjustments to the Research Budget; Notwithstanding anything to the contrary herein, the terms and conditions of the
Agreement, as amended hereby, will govern the Services and Supporting Activities which have been performed and payments
which have been made therefor between August 1, 2020 (the “Amendment No. 3 Effective Date”) and the
Amendment No. 3 Signing Date.
WHEREAS,
Century and FCDI desire to amend the Agreement as set forth herein.
THEREFORE,
the Parties agree as follows:
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1.1.
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Amendment
of Research Plan. The Research Plan as attached to the Agreement for the period
commencing on the Amendment No. 3 Effective Date and ending June 30, 2023 hereby is amended
to be the Research Plan as attached as Exhibit A-1 to this Amendment No. 3. The
Parties acknowledge and agree that the Approved Research Plan as attached as Exhibit
A-1 to this Amendment No. 3 reflects the Parties’ agreement, with respect to
the Services and Supporting Activities not yet performed as of the Amendment No. 3 Effective
Date, (a) to amend to the Research Plan as originally attached to the Agreement (i) to
delete T Cell Objectives 2a.5, 2b, 3, 4c.4, 4c.5, 4d, 5, 6 and 7 in their entirety from
the Research Plan and (b) that the Services and Supporting Activities with respect to
all other Objectives in the Research Plan as originally attached to the Agreement were
either completed or initiated but not completed. References in the Research Plan as attached
as Exhibit A-1 to this Amendment No. 3 to “CTx” shall mean Century.
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1.2.
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Amendment
of Approved Research Budget. The Approved Research Budget as attached to the
Agreement for the period commencing August 1, 2020 hereby is amended to be the Approved
Research Budget as attached as Exhibit C-1 to this Amendment No. 3.
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2.1.
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Capitalized
Terms. Capitalized terms used, but not otherwise defined herein, shall have the
meanings assigned to them in the Agreement.
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Execution
Version
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2.2.
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No
Other Amendments. Except as expressly set forth in this Amendment No. 3, all
of the terms and conditions of the Agreement shall remain unchanged and in full force
and effect.
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2.3.
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Counterparts
and Signatures. This Amendment No. 3 may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which together shall be deemed
to be one and the same instrument. Signatures to this Amendment No. 3 transmitted by
facsimile transmission, by electronic mail in “portable document format”
(“.pdf”) form, or by any other electronic means intended to preserve the
originals graphic and pictorial appearance of a document, shall have the same effect
as physical delivery of the paper document bearing the original signatures, and shall
be deemed original signatures by both Parties.
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[remainder
of page intentionally left blank]
Execution
Version
IN
WITNESS WHEREOF, the Parties have executed this Amendment No. 3 as of the Amendment No. 3 Signing Date.
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CENTURY THERAPEUTICS, INC.
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FUJIFILM CELLULAR DYNAMICS, INC.
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By:
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/s/ Osvaldo
Flores
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By:
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/s/ Takeshi
Yamamoto
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Name:
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Osvaldo
Flores, Ph.D.
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Name:
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Takeshi
Yamamoto
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Title:
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President
and CEO
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Title:
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President
and Chief Executive Officer
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[Signature
page to Amendment No. 3 to Master Collaboration Agreement]
Exhibit
A 1 Research Plan
[***]
Exhibit
C-1 Approved Research Budget
[***]
Exhibit 10.20
CONFIDENTIAL
2 July 2019
Wisconsin Alumni Research Foundation
Attn: Andy DeTienne
614 Walnut Street
Madison, Wisconsin 53726
RE: Letter Agreement
Regarding WARF/CDI License Agreement and CDI/Century Sublicense Agreement
Pursuant to its sublicensing rights under that
certain License Agreement by and between Wisconsin Alumni Research Foundation (“WARF”) and FUJIFILM Cellular Dynamics,
Inc. (formerly known as Cellular Dynamics International, Inc.) (“CDI”), WARF Agreement No. 11-00206, dated effective
as of June 6, 2012, as amended (the “License Agreement”), CDI sublicensed certain rights to Century Therapeutics,
LLC (“Century”) under the Licensed Patents as set forth in a sublicense agreement between CDI and Century, as may
be amended or restated in the future by CDI and Century (the “Sublicense Agreement”). This letter agreement (this
“Letter Agreement”) confirms the understanding between CDI, Century and WARF with respect to the License Agreement
and Sublicense Agreement, notwithstanding any terms to the contrary in the License Agreement or Sublicense Agreement. Capitalized terms
not otherwise defined herein shall have the meanings ascribed to such terms in the License Agreement. CDI, Century and WARF are sometimes
referred to herein individually as a “Party” and collectively as the “Parties.”
1. Century’s
Right to Sublicense. Century shall
have the right to grant non-exclusive further sublicenses (through multiple tiers) (each a
“Sub-Sublicense”) of the rights and licenses to the Licensed Patents granted to Century
under the Sublicense Agreement to third parties (without any
limitations on Geography or on therapeutic indication, except as otherwise provided in the Sublicense Agreement), with prior
written notice to WARF but otherwise in accordance with Section 2B(iii) (but excluding subclauses
(a) and (b)) of the License Agreement and not
exceeding the scope of rights (e.g., the Licensed Field and Licensed Territory) granted to
CDI under the License Agreement. The Sub-Sublicenses shall be
consistent with the terms of the License Agreement and this Letter
Agreement to the extent applicable to Sub-Sublicenses of the Licensed Patents under the License Agreement.
Century shall remain responsible for the activities of any of
its sub-sublicensees as if the activities were directly those of Century;
any act or omission of Century’s sub-sublicensee shall be considered a breach of Century, provided, however, that Century shall
have ninety (90) days following receipt of notice of such act or omission to cure such breach and, if Century cures such breach during
the cure period, WARF and CDI agree that the Sublicense Agreement and License Agreement shall remain in effect following such cure. A
termination by Century of a Sub-Sublicense shall be deemed a cure by Century of a breach by such
sub-sublicensee
thereunder, provided that following such termination, Century is not in breach of the Sublicense Agreement.
2. Century’s
Right to Transfer or Assign. Century shall have the right to assign all of its rights and obligations under the Sublicense Agreement,
provided that Century is not in material breach of the Sublicense Agreement, to an Affiliate (so long as it remains an “Affiliate”
of Century) or to a third party successor with all or substantially all the business or assets to which the Sublicense Agreement relates
(whether by merger, consolidation, stock sale, asset sale or otherwise), provided: (i) Century will notify WARF and CDI in writing within
thirty (30) days following such assignment, including the identity of such assignee, (ii) the assignee of Sublicense Agreement agrees
in writing to be bound by all of its terms and conditions (as well as Century’s obligations under this Letter Agreement) and to
be responsible for all past and future obligations and liabilities thereunder, and (iii) if the assignee is an Affiliate, Century shall
remain jointly liable for the performance of such Affiliate under this Agreement. Upon such transfer or assignment to an Affiliate, Century
hereby guarantees the performance of its Affiliate (for such time as it remains an “Affiliate” of Century) of all obligations
under the Sublicense Agreement and this Letter Agreement. Century’s right to assign its rights and obligations under the Sublicense
Agreement shall otherwise be in accordance with the terms and conditions of the License Agreement applicable to sublicenses, as amended
by this Letter Agreement.
3. Acknowledgment
Side Letter. With respect to the Acknowledgement Side Letter in Appendix F of the License Agreement, (a) neither Century nor sub-sublicensees
of Century shall be required to name WARF as a third-party beneficiary to the applicable Sub-Sublicense; (b) in accordance with Paragraph
1 of this Letter Agreement, the Sub-Sublicense shall be further sublicensable provided that each tiered Sub-Sublicense will otherwise
be subject to the terms and conditions of Section 2B(iii) (but excluding subclauses (a) and (b)) of the License Agreement, as amended
by this Letter Agreement (including without limitation, each tiered sub-sublicensee will be required to sign the Acknowledgement Side
Letter the terms of which in each instance shall be subject to the terms of this Letter Agreement); (c) in accordance with Section 2B(iii)(b)-(c)
of the License Agreement and the terms of this Letter Agreement, the Sub-Sublicense may be assigned or transferred to a successor of
any sub-sublicensee in connection with the merger, consolidation, reorganization or sale of all or substantially all of its assets or
that portion of this business to which the Sub-Sublicense relates; and (d) Century shall not have the right to receive from its sublicensees
anything of value in lieu of cash payments in consideration for the applicable Sub-Sublicense, without the express prior written consent
of WARF and CDI (which consent shall not be unreasonably withheld so long as Century provides a written notice to WARF and CDI (with
notice by email being acceptable) that provides the identity of the proposed sub-sublicensee, a summary of the terms of the proposed
Sub-Sublicense, and the non-cash consideration together with a reasonable estimate of its fair market value), provided that if
either WARF or CDI fails to provide Century with written consent within fifteen (15) calendar days of the date of the notice from
Century, WARF and CDI shall be deemed to have given express prior written consent for the purposes of this clause (d).
4. Survival
of Sublicense Agreement and Sub-Sublicenses. Upon termination of the License Agreement by WARF for any reason (other than a reason
caused by an act or omission of Century), the Sublicense Agreement shall have the following survival rights: (i) the Sublicense
Agreement will survive as a
direct license from WARF for a period of one hundred twenty (120) days after termination of the License Agreement (provided that no obligations
will be imposed on WARF greater than those of the License Agreement) and WARF does hereby grant to Century a direct license on the terms
and conditions set forth in the License Agreement, as amended by this Letter Agreement, for such one hundred twenty (120) day period
(the “Extension Period”); and (ii) during the Extension Period, WARF and Century will cooperate in good faith to draft
and enter into an amended and restated direct license agreement between them having terms substantially similar to those of the Sublicense
Agreement (e.g., scope of licensed rights under the Licensed Patents) but revised to fairly include customary terms reflecting that the
agreement is between WARF (a non-profit university patent management organization) and Century, rather than between Century and CDI (a
for-profit company) (but, for the avoidance of doubt, not equity rights in Century or any Affiliate thereof). If WARF and Century have
not executed such a direct license agreement between them during the initial Extension Period, the Extension Period shall extend, at
Century’s sole discretion upon notice to WARF, for an additional one hundred twenty (120) days and thereafter, the Parties may
mutually agree in good faith to extend the Extension Period for additional one hundred twenty (120) days periods, provided that the Parties
are continuing to negotiate in good faith an amended and restated direct license agreement. Any Sub-Sublicenses will survive termination
of the License Agreement to the same extent as the rights of Century survive in accordance with and subject to the foregoing.
5. WARF’S
Right to Developments. Notwithstanding anything in Section 2.E(ii) of the License Agreement, WARF hereby agrees that Section 2.E(ii)
of the License Agreement shall not apply to Century and the sub-sublicensees of Century with respect to any Developments developed or
created by Century or Century’s sub-sublicensees.
6. Selling
Price. In lieu of paying “earned royalties” calculated as a percentage of the “Selling Price” of Licensed
Products under the Sublicense Agreement, Century and its Affiliates and sub-sublicensees of Century will pay to CDI “earned royalties”
calculated as a percentage of Net Sales of Licensed Products sold by Century, and its Affiliates and sub-sublicensees. “Net
Sales” shall mean the gross amount invoiced by Century and any of its Affiliates and such sub-sublicensees for sales of Licensed
Product(s), less the following, but only insofar as these items are commercially reasonable under the circumstances, documented in writing,
pertain specifically to Century’s sale of the Licensed Products, were actually included and accounted for in the gross revenue,
and were not given in exchange for anything of value (such as data, in-kind consideration, or commitments to purchase other products
or services) :
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a.
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sales
taxes, excise taxes, use taxes, VAT and duties paid in relation to Licensed Product(s) and
any other equivalent governmental charges imposed upon the importation, use or sale of Licensed
Product(s) (including the annual fees due under Section 9008 of the United States Patient
Protection and Affordable Care Act of 2010 (Pub. L., No. 111-48)) (excluding taxes when assessed
on income derived from sales):
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b.
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reasonable
credits, repayments and allowances (actually allowed or paid) for defective or returned Licensed
Product(s), including allowances for damaged, rejected, recalled or returned Licensed Product(s);
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c.
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governmental
and other rebates, refunds, and chargebacks (or equivalents thereof) granted to managed health
care organizations, pharmacy benefit managers (or equivalents thereof), federal, state, provincial,
local and other governments, their agencies and purchasers and reimbursers or to trade customers,
in each case with respect to such Licensed Product(s);
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d.
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trade,
cash, prompt payment or quantity discounts, actually allowed and taken directly by a third
party, and mandated discounts;
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e.
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freight
or other transportation charges, reasonable shipping insurance charges, and customs duties;
and
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f.
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allowances
for bad debt and uncollectible accounts (provided that Century has undertaken commercially
reasonable efforts to obtain each such debt and amount).
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For the avoidance of doubt, sales,
transfers or disposition of Licensed Product(s) between any of Century, an Affiliate or a sub-sublicensee for subsequent resale by the
transferee shall not be considered Net Sales hereunder provided that the subsequent resale is accounted for as Net Sales. Notwithstanding
anything to the contrary herein, the supply or other transfer or disposition of Licensed Product(s) without charge, or at or below cost
(i) for use in studies for regulatory approval of the Licensed Products; (ii) for use in any tests or studies for the Licensed Products
that are reasonably necessary to comply with any applicable law, regulation or request by a regulatory or governmental authority; or
(iii) for use in compassionate use, named patient, indigent access, patient assistance, or similar reduced pricing programs, shall be
excluded from the computation of Net Sales. Further for the avoidance of doubt, each reference in the Sublicense Agreement to “Selling
Price” instead shall be deemed to refer to “Net Sales” as defined herein.
7. Royalty.
With respect to Licensed Products sold by Century and its Affiliates and sub-sublicensees of Century, the royalty obligations set forth
in Section 4.B(i) and 4C(i) of the License Agreement (as amended by this Letter Agreement and as applicable under the Sublicense Agreement)
shall continue on a country-by-country basis as to each Licensed Product sold in such country until the date as of which the last to
expire Licensed Patent that covers such Licensed Product in such country and in the country in which the Product was manufactured (if
different than the country in which the Product was sold) has expired or terminated. Except as amended by this Letter Agreement, the
terms and conditions set forth in the License Agreement and the Sublicense Agreement for royalty obligations applicable to sublicensees
shall otherwise apply to Century, its Affiliates, and sub-sublicensees.
8. Additional
Royalty Terms. The terms of CDI’s royalty payments set forth in Sections 4.B(ii) and 4.B(iii) of the License Agreement shall
apply under the Sublicense Agreement
mutatis mutandis to
Century and sub-sublicensees of Century (and the Sublicense Agreement is hereby amended accordingly). However, for clarity, (a) any royalty
owed to WARF by CDI under Section 4C(i) due to sales by Century shall not be reduced under Section 4B(ii) on account of a separate license
from CDI to Century as contemplated in clause (b) of this provision or on account of a separate license from Century or CDI to such sub-sublicensee
as contemplated in clause (c) of this provision, and (b) Century may not reduce any royalty owed to CDI under the Sublicense Agreement
on account of a separate license from CDI to Century and (c) a sub-sub licensee may not reduce any royalty owed to Century under any
Sub-Sublicense on account of a separate license from Century or CDI to such sub-sublicensee.
9. Indemnification.
Century’s obligations to WARF, the Morgridge Institute for Research, the WiCell Research Institute and the University of Wisconsin
under Section 8.1 of the Sublicense Agreement shall only apply with respect to liabilities, demands, damages, settlements, suits, claims,
proceedings, costs and expenses (including reasonable out-of-pocket legal expenses and reasonable attorneys’ fees), in each case,
arising out of or relating to claims brought by third parties.
10. Assignment.
Neither this Letter Agreement nor any interest herein may be assigned, in whole or in part, by a Party without the prior written consent
of the other Parties. Notwithstanding the foregoing, a party may assign its rights and obligations under this Letter Agreement to any
of its Affiliates or to any successor in connection with the merger, consolidation, reorganization or sale of substantially all of its
assets or that portion of its business to which this Letter Agreement relates, provided that (i) the assigning party will notify
the other parties in writing within thirty (30) days following such assignment, including the identity of such assignee, (ii) the assignee
of agrees in writing to be bound by the terms and conditions hereof and to be responsible for all past and future obligations and liabilities
hereunder, and (iii) if the assignee is an Affiliate, the assigning party shall remain jointly liable for the performance of such Affiliate
under this Letter Agreement. Upon such assignment to an Affiliate, the assigning party hereby guarantees the performance of its Affiliate
(for such time as it remains an “Affiliate” of the assigning party) of all obligations to the other Party under the Sublicense
Agreement and this Letter Agreement. Any assignment in circumvention of the foregoing shall be void. Subject to the foregoing, this Letter
Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns.
11. Notices.
Any notice or request required or permitted to be given under or in connection with this Letter Agreement shall specifically refer to
this Letter Agreement, and shall be deemed to have been sufficiently given if in writing and personally delivered or sent by certified
mail (return receipt requested), facsimile transmission (receipt verified), or overnight express courier service (signature required),
prepaid, to the Party for which such notice is intended, at the address set forth for such Party below:
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If to CDI:
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FUJIFILM Cellular Dynamics, Inc.
525 Science Dr., Ste. 200
Madison, Wisconsin 53711
Attention: Chief Technology Officer
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With a copy to:
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FUJIFILM Cellular Dynamics, Inc.
525 Science Dr., Ste. 200
Madison, Wisconsin 53711
Attention: General Counsel
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If to Century:
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Century Therapeutics, LLC
54 West 21st St., Ste. 408
New York, NY 10010
Attention: Chief Executive Officer
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If to WARF:
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Wisconsin Alumni Research Foundation
614 Walnut Street
Madison, Wisconsin 53726
Attention: Contracts Manager
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or to such other address for such Party as it
shall have specified by like notice to the other Party, provided that notices of a change of address shall be effective only upon actual
receipt thereof. All notices under this Letter Agreement shall be deemed effective upon receipt.
12. No
Waiver of Rights. No failure or delay on the part of a Party in the exercise of any power or right under this Letter Agreement shall
operate as a waiver thereof. No single or partial exercise of any right or power under this Letter Agreement shall operate as a waiver
of such right or of any other right or power. The waiver by a Party of a breach of any provision of this Letter Agreement shall not operate
or be construed as a waiver of any other or subsequent breach under this Letter Agreement.
13. Severability.
In case any one or more of the provisions contained in this Letter Agreement shall, for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability, shall not affect any other provision of this Letter Agreement,
and the Parties shall negotiate in good faith to modify this Letter Agreement to preserve (to the extent possible) their original intent.
14. Amendments.
No amendment or modification of or supplement to the terms of this Letter Agreement shall be binding on a Party unless reduced to writing
and signed by both Parties.
15. Entire
Agreement. This Letter Agreement sets forth the entire agreement among the Parties as to the subject matter hereof and supersedes
all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, between the Parties
as to the subject matter hereof. In the event of any conflict between this Letter Agreement and the License
Agreement or the Sublicense
Agreement, this Letter Agreement will control. This Letter Agreement and any dispute regarding the performance or breach hereof will
be governed, interpreted and construed in accordance with the laws of the State of Wisconsin, and the patent law of the United States,
without respect to its conflict of laws rules.
16. Survival.
The rights and obligations of the Parties under this Letter Agreement shall continue until the expiration or the earlier termination
of the Sublicense Agreement or Sub-Sublicense, as applicable.
17. Counterparts.
This Letter Agreement, or any part thereof requiring signing by the Parties, may be executed in separate counterparts, each of which
shall be an original as against any Party whose signature appears thereon but all of which together shall constitute one and the same
instrument. A facsimile or PDF transmission of the signed Letter Agreement, and those parts thereof requiring signing by the Parties,
shall be legal and binding on the Parties. The Parties agree this Agreement may be electronically signed and that the electronic signatures
appearing on this Agreement are the same as handwritten signatures for the purposes of validity, enforceability and admissibility.
[END OF PAGE. SIGNATURE PAGE FOLLOWS]
This Letter Agreement is
signed below by authorized representatives of CDI, Century and WARF respectively indicating the Parties’ acceptance of the terms
and conditions of this Letter Agreement.
FUJIFILM CELLULAR DYNAMICS, INC.
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By:
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/s/ Nicholas Manusos
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(Signature)
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Name:
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Nick Manusos
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Title:
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COO
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CENTURY THERAPEUTICS, LLC
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By:
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/s/ Osvaldo Flores
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(Signature)
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Name:
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Osvaldo Flores
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Title:
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Chief Executive Officer
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WISCONSIN ALUMNI RESEARCH FOUNDATION
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By:
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/s/ Leigh Cagan
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(Signature)
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Name:
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Leigh Cagan
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Title:
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Chief Technology Commercialization Officer
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Exhibit 10.21
[***]
Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information
is not material and the registrant customarily and actually treats as private and confidential.
LICENSE
AGREEMENT
This
License Agreement (including any exhibits attached hereto, this “Agreement”) is made and is effective this
18th day of September, 2018 (the “Effective Date”) between Century Therapeutics, Inc., a Delaware corporation
(“Century”) having an address at 52 West 21st Street, Suite 408, New York, NY 10010 USA and FUJIFILM Cellular
Dynamics Inc., a Wisconsin corporation (“CDI”) having an address at 525 Science Drive Madison, WI 53711 USA.
Century and CDI are each referred to as a “Party” and collectively referred to as the “Parties.”
Recitals
WHEREAS,
Century is a biotechnology company interested in development and commercialization of cancer immunotherapy products based on T
cells, NK cells, dendritic cells, and macrophages derived from human iPSC (including TiPSC) exclusively manufactured by CDI;
WHEREAS,
CDI possesses and controls certain patent rights and know-how related to (i) human iPSC exclusively manufactured by CDI (including
TiPSC)-derived T cells, NK cells, dendritic cells, and macrophages and (ii) Licensed Products (as defined below) exclusively manufactured
by CDI, subject to the terms of Section 3.7 below;
WHEREAS,
Century wishes to obtain, and CDI wishes to grant to Century, an exclusive, non-transferable license under the Licensed Technology
(as defined below) for the research, development and commercialization of the Licensed Products (as defined below) in the Territory
(as defined below) within the Field (as defined below), with the right to grant sublicenses (through multiple tiers), in all cases
subject to the terms and conditions of this Agreement;
WHEREAS,
CDI wishes to obtain, and Century wishes to grant to CDI, (i) an exclusive, non-transferable license under the Century Licensed
Technology (as defined below) for the research, development and commercialization of the Licensed Products outside the Territory
within the Field, with the right to grant sublicenses (through multiple tiers), in all cases subject to the terms and conditions
of this Agreement and (ii) a non-exclusive, non-transferable, worldwide sublicense under the Century Licensed Technology for the
manufacture of the Licensed Products within the Field, with the right to grant sublicenses (through multiple tiers), in all cases
subject to the terms and conditions of this Agreement;
NOW
THEREFORE, CDI and Century, intending to be legally bound, agree as follows:
ARTICLE
1
Definitions
1.1
“Abandoned Indication” has the meaning set forth in Section 9.6.
1.2 “Affiliate”
means, with respect to a Party, any Person that controls, is controlled by, or is under common control with such Party. For purposes
of this Section 1.2, “control” shall refer to (a) in the case of a Person that is a corporate entity, direct or indirect
ownership of more
than fifty percent (50%) of the stock or shares having the right
to vote for the election of directors of such Person and (b) in the case of a Person that is not a corporate entity, the possession,
directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
1.3
“Bankruptcy Code” has the meaning set forth in Section 2.9(a).
1.4
“BLA” means a Biologics License Application as defined in the United States Federal Food, Drug, and Cosmetic
Act and the regulations promulgated thereunder (21 C.F.R. §§ 314 et seq).
1.5
“Business Days” means a day that is not a Saturday, Sunday or a day on which banking institutions in Boston,
Massachusetts or Wisconsin are authorized by Law to remain closed.
1.6
“Calendar Year” means each successive period of twelve (12) months commencing on January 1 and ending on December
31; provided, however, that the first Calendar Year hereunder shall commence on the Effective Date and the final Calendar
Year hereunder shall end on the effective date of termination or expiration of this Agreement.
1.7
“Century Know-How” means all Know-How owned or Controlled by Century or its Affiliates, subject to Section
10.3, (other than the Licensed Know-How) during the Term that is reasonably necessary to Exploit a Licensed Product.
1.8
“Century Licensed Technology” means Century Patent Rights and Century Know-How. For clarity, Century Licensed
Technology includes (a) Improvements of the Licensed Technology owned or Controlled by Century or its Affiliates, (b) technologies
of gene editing, targets & binders and switches and any other technologies that are reasonably necessary to Exploit a Licensed
Product and owned or Controlled by Century or its Affiliates, and (c) Know-How or Patent Rights owned or Controlled by Century
that otherwise cover a Licensed Product.
1.9
“Century Patent Rights” means all Patent Rights owned or Controlled by Century or its Affiliates, subject to
Section 10.3, during the Term (other than the Licensed Patent Rights) that are reasonably necessary to Exploit a Licensed
Product.
1.10
“cGMP” means current good manufacturing practices as required by the FDA under provisions of 21 C.F.R. Parts
210 and 211 and all applicable FDA rules, regulations, orders and guidances, or as otherwise required by applicable Laws.
1.11
“Commercialize” means to engage in any and all activities directed to transporting, storing, marketing, detailing,
promoting, distributing, importing, exporting, using, offering to sell or selling a product.
1.12
“Commercially Reasonable Best Efforts” means efforts consistent with the efforts and resources as commonly used by
a pharmaceutical or biotechnology company, as applicable, of comparable size and resources of such Party for a product at a similar stage
of
research,
development or commercialization having similar product characteristics at a similar stage in its development or product life,
taking into account relevant factors including patent coverage, relative safety and efficacy, product profile, the competitiveness
of the marketplace, the proprietary position of such product, the regulatory structure involved, the market potential of such
product and other relevant factors, including comparative technical, legal, scientific, medical and/or economic factors, all as
measured by the facts and circumstances in effect at the time when the relevant activities are conducted.
1.13
“Confidential Information” means any confidential or proprietary information furnished by one Party (or its
Affiliate) to the other Party (or its Affiliate) in connection with this Agreement, whether during the Term or prior to the execution
hereof as expressly specified below, provided that such information is (a) specifically designated as confidential at the time
of disclosure or confirmed as confidential within ten (10) days of disclosure or (b) reasonably identifiable by an individual
familiar with the industry as confidential or proprietary. Without limiting the generality of the foregoing, Confidential Information
includes:
(a)
non-public information disclosed by Century to CDI in reports submitted by Century to CDI pursuant to Section 3.5;
(b)
non-public information disclosed by Century to CDI relating to patent application prosecution files for the Licensed Patent Rights;
(c)
any information that constitutes “Confidential Information” under that certain Mutual Non-disclosure Agreement, dated
February 14, 2018, by and between CDI, Fujifilm and Versant Venture Management, LLC (“Versant”) (which for
purposes of this Agreement, any “Confidential Information” of Versant shall be considered the Confidential Information
of Century hereunder); and
(d)
the terms of this Agreement.
1.14
“Controlled” means, with respect to Patent Rights or Know-How as such relates to a Party, that such Party owns
or has a license or sublicense to such Patent Rights or Know-How and has the legal right to grant a license or sublicense, including
having received any necessary Third Party consents, to such Patent Rights or Know-How to the other Party as provided for in this
Agreement, or has the ability to assign its right, title and interest in and to such Patent Rights or Know-How to the other Party,
without violating the terms of any agreement or other arrangement with any Third Party. Notwithstanding the foregoing, with respect
to any Patent Right or Know-How acquired or in-licensed for which a Party would be required to make payments to any Third Party
in connection with the license or access granted to the other Party under this Agreement, such Patent Right or Know-How will only
be treated as “Controlled” by the licensing Party pursuant to the terms of Section 2.3.
1.15
“Development” and “Developments” means (i) Derivative Materials; (ii) any inventions, discoveries
or developments, whether patentable, that are conceived of, reduced to practice, discovered, tested or developed through the use of the
inventions of WARF Patent Rights, Reprogrammed iPS Cells or Derivative Materials; and (iii) any compositions, products or
other
materials in which the Reprogrammed iPS Cells or Derivative Materials were used in any way in their discovery or testing.
1.16
“European Union” or “E.U.” means the economic, scientific, and political organization of
member states known as the European Union, as its membership may be altered from time to time, and any successor thereto, and
includes, for purposes of this Agreement, Great Britain (whether Great Britain is a member of the E.U. or not).
1.17
“Exploit” or “Exploitation” means, with respect to a particular Licensed Product, to use,
have used, manufacture, have manufactured, sell, have sold, offer for sale, have offered for sale, import, have imported, export
and have exported, including to research, develop, commercialize or otherwise exploit such Licensed Product.
1.18
“FDA” means the United States Food and Drug Administration and any successor agency thereto.
1.19
“Field” means any cancer immunotherapy use.
1.20
“Fujifilm” means Fujifilm Corporation.
1.21
“ICC” has the meaning set forth in Section 10.11(b).
1.22
“Improvements” means any Intellectual Property that is an improvement to then- existing Licensed Technology
and is developed by either Party or Third Parties acting on their behalf while performing activities under this Agreement, and
all intellectual property rights (including Patent Rights) thereto.
1.23
“IND” means an investigational new drug application with the FDA, or the equivalent application in any foreign
jurisdiction filed with another Regulatory Authority.
1.24
“Indemnified Party” shall have the meaning set forth in Section 8.3.
1.25
“Indemnifying Party” shall have the meaning set forth in Section 8.3.
1.26
“Intellectual Property” means ideas, concepts, discoveries, inventions, developments, Know-How, trade secrets,
techniques, methodologies, modifications, innovations, improvements, writings, documentation, electronic code, data and rights
(whether or not protectable under state, federal or foreign patent, trademark, copyright or similar laws) or the like, whether
or not written or otherwise fixed in any form or medium, regardless of the media on which contained and whether or not patentable
or copyrightable.
1.27
“Know-How” means any and all commercial, technical, regulatory, scientific and other know-how and information, knowledge,
technology, materials (including biological and chemical materials), methods, processes, practices, standard operating procedures, formulae,
instructions, skills, techniques, procedures, assay protocols, experiences, ideas, technical assistance, designs, drawings, assembly
procedures, specifications, regulatory filings, data and results (including biological, chemical, pharmacological, toxicological, pharmaceutical,
physical and analytical, pre-clinical, clinical, safety, regulatory, manufacturing and quality control data
and
know-how, including study designs and protocols), whether or not confidential, proprietary or patentable, in written, electronic
or any other form.
1.28
“Law” means all laws, statutes, rules, codes, regulations, orders, judgments or ordinances applicable to a
Party, this Agreement or the activities contemplated hereunder.
1.29
“Licensed Know-How” means all Know-How that is Owned or Controlled by CDI as of the Effective Date or during
the Term that is reasonably necessary to Exploit a Licensed Product, including, without limitation, any Know-How set forth on
Exhibit A. For clarity, Licensed Know-How shall not include any Know-How related to the reprogramming of human somatic cells to
iPSCs.
1.30
“Licensed Patent Rights” means the Patent Rights Owned or Controlled by CDI as of the Effective Date or during
the Term that are reasonably necessary to Exploit a Licensed Product, including, without limitation, any Patent Rights listed
on Exhibit B. For clarity, Licensed Patent Rights shall not include any Patent Rights that are licensed to Century by CDI pursuant
to the Reprogramming License.
1.31
“Licensed Product” means cancer immunotherapy products (for the treatment of cancer in humans) consisting of
cells that are or are modifications of T cells, NK cells, dendritic cells, and macrophages derived from human iPSC (including
TiPSC) exclusively manufactured by CDI. For the sake of clarity, such “modifications” exclude materials or substances
extracted, isolated from, or secreted by, such modified or unmodified cells.
1.32
“Licensed Technology” means Licensed Patent Rights and Licensed Know-How. For clarity, Licensed Technology
includes Improvements of the Century Technology Owned or Controlled by CDI.
1.33 “Non-Supply Event” means CDI or its Affiliate (i) does not supply at least [***] of the Licensed Products ordered
by Century, its Affiliates and Sublicensees in accordance with the Supply Agreement and the finalized Development Plan or (ii)
provides Century with written notice of its election not to manufacture or have manufactured the Licensed Products.
1.34
“Owned” means, with respect to Patent Rights or Know-How that a Person owns, solely or jointly, in each case
with the ability to grant a right, license, or access to such material, information or Intellectual Property right to another
Person on the terms and conditions set forth herein, without violating the terms of any agreement or other arrangement with any
of such Person’s Affiliates and/or Third Party(ies). “Ownership” has the correlative meaning.
1.35
“Patent Rights” means with respect to any patents or patent applications, (a) such patents or patent applications;
(b) patents issuing from such patent applications; (c) substitutions, divisionals, renewals, continuations or continuations-in-part (only
to the extent of claims that are entitled to the priority date of the parent application); (d) patents of addition, restorations, extensions,
supplementary protection certificates, registration or confirmation patents, patents resulting from post-grant proceedings, re-issues
and re-examinations; (e) other patents or patent applications claiming and entitled to claim priority to (i) such patents and patent
applications specified in (a), (b), (c) or (d) or (ii) any patent or patent application from which such patents and
patent applications specified in (a), (b), (c) or (d) claims and is entitled to claim priority; (f) all rights of priority attendant
to such listed in (a) through (e); and (g) in each case of such patents and patent applications described in (a) through (e),
including all counterparts and foreign equivalents thereof filed in any country, territory or jurisdiction in the world.
1.36
“Person” means any natural person or any corporation, company, partnership, joint venture, firm or other entity,
including a Party, or any government or agency or political subdivision thereof.
1.37
“Phase 1 Clinical Trial” means, as to a specific Licensed Product, a human clinical trial of a product in any
country designed to satisfy the requirements of 21 C.F.R. §312.21(a) as amended from time to time, and intended to determine
metabolism and pharmacologic actions of a drug in humans, the side effects associated with increasing doses and, if possible,
to gain early evidence of efficacy, or any comparable trial under applicable Laws in the United States or the corresponding regulation
in jurisdictions other than the United States.
1.38
“Phase 2 Clinical Trial” means a clinical study of an investigational product in subjects with the primary
objective of characterizing its activity in a specific disease state as well as generating more detailed safety, tolerability,
pharmacokinetics, pharmacodynamics, and dose finding information as described in 21 C.F.R. 312.21(b) as amended from time to time,
or any comparable trial under applicable Laws in a country other than the United States including a human clinical trial that
is also designed to satisfy the requirements of 21 C.F.R. 312.21(a) or corresponding foreign regulations and is subsequently optimized
or expanded to satisfy the requirements of 21 C.F.R. 312.21(b) (or corresponding foreign regulations).
1.39
“Prosecuting Party” has the meaning set forth in Section 5.2(d).
1.40
“Prosecution and Maintenance” or “Prosecute and Maintain” means, with respect to the applicable
Patent Rights, the preparation, filing, prosecution and maintenance of such Patent Rights, as well as re-examinations, reissues,
appeals, and requests for patent term adjustments and patent term extensions with respect to such Patent Rights, together with
the initiation or defense of interferences, the initiation or defense of oppositions, post grant review, and other similar proceedings
with respect to the particular Patent Rights, and any appeals therefrom. For clarification, “Prosecution and Maintenance”
or “Prosecute and Maintain” shall not include any other enforcement actions taken with respect to Patent Rights.
1.41
“Regulatory Approval” means, with respect to a country or territory, the approvals (including any applicable
governmental price and reimbursement approvals), licenses, registrations or authorizations of Regulatory Authorities necessary
for the commercialization of a pharmaceutical product in such country or territory, including, as applicable, approval of an BLA
or comparable filing in the United States or approval of a comparable filing in any other country or jurisdiction.
1.42
“Regulatory Authority” means a federal, national, multinational, state, provincial or local regulatory agency,
department, bureau or other governmental entity with authority over the testing, manufacture, use, storage, import, promotion,
marketing or sale of a product in the applicable country.
1.43
“Regulatory Documentation” shall mean all applications, registrations, licenses, authorizations and approvals
(including all Regulatory Approvals), all correspondence submitted to or received from Regulatory Authorities (including minutes
and official contact reports relating to any communications with any Regulatory Authority) and all supporting documents and all
clinical studies and tests, relating to the Licensed Products and all data contained in any of the foregoing, including all INDs,
Regulatory Approvals, regulatory drug lists, advertising and promotion documents, manufacturing data, drug master files, clinical
data, adverse event files and complaint files.
1.44
“Reprogramming License” means that certain agreement entered into between the Parties under which CDI grants
a non-exclusive license to Century under patent rights in relation to reprogramming technology under the terms and conditions
therein, as may be amended.
1.45
“SEC Filing” has the meaning set forth in Section 6.4(d).
1.46
“Sublicensee” has the meaning set forth in Section 2.5.
1.47
“Sublicensee Technology” has the meaning set forth in Section 2.5(e).
1.48
“Supply Agreement” has the meaning set forth in Section 3.7(a).
1.49
“Term” means the term of this Agreement as provided in Section 9.1.
1.50
“Territory” means worldwide, excluding Japan and any country(ies) eliminated from the Territory pursuant to
Section 9.4.
1.51
“Third Party” means any Person other than a Party. For avoidance of doubt, Third Party will include each Party’s
Affiliate in this Agreement.
1.52
“Third Party Licenses” has the meaning set forth in Section 2.3.
1.53
“United States” or “U.S.” means the United States of America and its territories and possessions
(including the District of Columbia and Puerto Rico).
1.54
“WARF” means Wisconsin Alumni Research Foundation.
1.55
“WARF License” means the License Agreement, dated as of June 6, 2012, between WARF and CDI, as amended.
1.56
“WARF Patent Rights” means the Patent Rights that are licensed to CDI by WARF under the WARF License.
ARTICLE
2
License Grants; Technology Transfer
2.1
License Grants to Century. Subject to the terms and conditions of this Agreement, CDI hereby grants to Century the following
licenses:
(a)
an exclusive, non-transferable (except in accordance with Section 10.3), fully paid-up, sublicensable (with the ability
to sublicense through multiple tiers) license under the Licensed Technology to Exploit the Licensed Products within the Field
in the Territory. Notwithstanding any term or implication herein to the contrary and for the sake of clarity, the foregoing license
excludes any license or right under the Licensed Patent Rights (i) to manufacture, have manufactured, sell, have sold, offer for
sale or have offered for sale any product or service to any third party in furtherance of any research or development of a Licensed
Product other than a Licensed Product that that is being researched, developed or commercialized by or on behalf of Century or
its Affiliates or Sublicensees, or (ii) to grant any sublicense to any Third Party to manufacture, have manufactured, sell, have
sold, offer for sale or have offered for sale any product or service to any other Third Party in furtherance of any research or
development of a Licensed Product other than a Licensed Product that that is being researched, developed or commercialized by
or on behalf of Century or its Affiliates or Sublicensees; and
(b) an exclusive, non-transferable (except in accordance with Section 10.3), fully paid-up, license and right of reference,
with the right to grant sublicenses through multiple tiers and further rights of reference, under any Regulatory Documentation
Owned and Controlled by CDI at any time during the Term so long as CDI Owns or Controls such Regulatory Documentation, to Exploit
the Licensed Products within the Field in the Territory.
2.2
License Grants to CDI. Subject to the terms and conditions of this Agreement, Century (on behalf of itself and its Affiliates)
hereby grants to CDI the following licenses:
(a)
an exclusive (except with respect to Century pursuant to Section 2.6(b) hereof), non-transferable (except in accordance
with Section 10.3), fully paid-up, sublicensable (with the ability to sublicense through multiple tiers) license under
the Century Licensed Technology, to Exploit the Licensed Products in the Field outside the Territory or within the Territory for
the Abandoned Indication;
(b) an exclusive, non-transferable (except in accordance with Section 10.3), fully paid-up license and right of reference,
with the right to grant sublicenses through multiple tiers and further rights of reference, under the Regulatory Documentation
Controlled by Century or its Affiliates at any time during the Term to Exploit the Licensed Products in the Field outside the
Territory or within the Territory for the Abandoned Indication; and
(c) a fully paid-up, non-exclusive, non-transferable (except in accordance with Section 10.3), sublicensable (with the ability
to sublicense through multiple tiers) worldwide license under the Century Licensed Technology, to manufacture the Licensed Products
in the Field.
2.3
Third Party Licenses. The Parties acknowledge that each Party (a) as of the Effective Date may control Patent Rights or other
Intellectual Property pursuant to an in-license from a Third Party and/or (b) may obtain licenses after the Effective Date to Patent
Rights or
other
Intellectual Property of a Third Party, in each case, in order to Exploit the Licensed Products in the Field, with respect to Century,
including but not limited to, licenses under technology of gene editing technology, targets and binders and switches, and which licenses
include payments to such Third Party licensor for the rights to such Patent Rights or other Intellectual Property (each a “Third
Party License”). In the event that either Party enters into a Third Party License at any time following the Effective Date
or considers that a Third Party License that it entered into prior to the Effective Date is reasonably necessary to Exploit the Licensed
Products in the Field, such Party (the “Executing Party”) will provide the other Party (the “Electing Party”)
prompt written notice of such Third Party License. Following receipt of such notice, but in no event later than six (6) months thereafter,
the Electing Party may elect, by providing written notice, to receive a license to Exploit the Licensed Products using such Third Party
License in the Territory in the case of Century or outside of the Territory in the case of CDI. In the event the Electing Party elects
to receive a license from the Executing Party to such Third Party License, then, prior to including the Patent Rights and Intellectual
Property under such Third Party License hereunder, the Parties will agree on an equitable apportionment of any upfront or contingent
payments paid by the Executing Party to the Third Party licensor to reflect the fair value attributable to the use of such Patent Rights
and other Intellectual Property for the Exploitation of the Licensed Products in each Party’s territory. The Electing Party shall
pay the Executing Party such apportioned amount within thirty (30) days of including such Patent Rights and Intellectual Property under
such Third Party License hereunder, provided, however in the event CDI is the Electing Party the Parties shall negotiate and agree on
the apportioned amount after CDI notifies Century in writing in accordance with Section 2.4 of its election to Exploit in the
Field outside the Territory the Licensed Products that has met its primary endpoint(s) in a Phase 2 Clinical Trial. In addition, the
Electing Party shall be responsible for any amounts, including any royalties, milestone payments or license fees, that become due during
the Term as a result of the Electing Party’s Exploitation of the Licensed Products in its territory. Notwithstanding the foregoing,
in no event will the Electing Party pay to or owe the Executing Party any markup or other amount in excess of the amount due to the Third
Party by the Executing Party. Upon the Parties’ mutual agreement of such terms, such Patent Right or other Intellectual Property
will be treated as “Controlled” by the Executing Party hereunder to the extent, and only to the extent that and for so long
as, the Electing Party agrees and does pay to the Executing Party in accordance hereunder all such applicable payments to such Third
Party licensor arising out of the grant and exercise of the license to the Electing Party hereunder.
2.4
Option to Exploit Proof-of-Concept Licensed Product Outside the Territory. During the Term, Century may provide CDI with
written notice that a particular Licensed Product that Century is Exploiting in the Field in the Territory has met its primary
endpoint(s) in a Phase 2 Clinical Trial. Following receipt of such notice, but in no event later than [***] thereafter,
CDI may elect to Exploit such Licensed Product in the Field outside of the Territory by providing Century with written notice
thereof. If CDI elects to Exploit such Licensed Product within the Field outside the Territory, the Parties shall negotiate in
good faith the terms of such Exploitation of such Licensed Product within the Field outside the Territory or within the Territory
for any Abandoned Indication, including the grant by Century to CDI of any licenses to any Patent Rights or Know-How owned or
Controlled by Century or its Affiliates that cover such Licensed Product and are not otherwise licensed to CDI hereunder and any
financial terms and payments owed to Century or its Affiliates for CDI’s use of such Patent Rights or Know-How. Upon the
Parties’ mutual agreement of such terms, the Parties shall amend the
applicable terms of this Agreement as necessary to
permit CDI to Exploit such Licensed Product within the Field outside the Territory or within the Territory for any Abandoned Indication.
If CDI does not elect to Exploit such Licensed Product in the Field outside the Territory within such [***] period, Century
shall have the right to Exploit such Licensed Product within the Field outside of the Territory and the Parties shall amend the
applicable terms of this Agreement as necessary to permit Century to Exploit such Licensed Product within the Field outside of
the Territory; provided however, if Century discontinue the Exploitation of WARF Patent Rights and/or Developments, Century shall
grant, and shall require its Sublicensee(s) to grant sublicenses, to practice and use of said Developments for commercial purpose.
2.5
Sublicensing
(a)
Each Party shall have the right to grant sublicenses under the licenses granted to it, with respect to Century under Section
2.1, and with respect to CDI under Section 2.2, in each case, to Third Parties (each, a “Sublicensee”)
through multiple tiers; provided that any such sublicense granted to a Third Party shall be pursuant to a written agreement
and each sublicense shall be subject to all relevant restrictions and limitations set forth in this Agreement. Each Party shall
be responsible for each of its Sublicensees complying with all obligations of such Party under this Agreement that are applicable
to sublicenses and any breach by a Sublicensee under any such sublicense shall be deemed to be a breach of such Party under this
Agreement. Each Party shall notify the other Party in writing of the identity of Sublicensees without delay.
(b) If this Agreement is terminated for any reason other than by a Party pursuant to Section 9.6, then, at the option of any
Sublicensee of a terminating Party not in default of the applicable sublicense (or any provision of this Agreement applicable
to such Sublicensee), a terminating Party shall use Commercially Best Efforts to execute a possible direct license arrangement
with such Sublicensee under, and subject to the terms and conditions of, this Agreement.
(c)
Century shall use Commercially Reasonable Best Efforts to include in any sublicense by Century or any Affiliate of Century to
a Third Party (or any further sublicenses by the applicable Sublicensee) of any rights granted by CDI under Section 2.1 that
the Sublicensee will grant to Century licenses to any Sublicensee Technology and licenses and rights of reference under any Regulatory
Documentation on terms that are substantially similar to the licenses granted by CDI to Century in Section 2.1 (but with
respect to outside the Territory) (replacing all references to the “Territory” under Section 2.1 with “outside
the Territory”), which license must be fully sublicensable to CDI (through multiple tiers) pursuant to the terms and conditions
of this Agreement. In such event, such Sublicensee Technology will be deemed Century Licensed Technology hereunder and included
within the licenses granted to CDI hereunder. Notwithstanding any provision to the contrary, in the event Century obtains from
the Sublicensee (a) licenses to any and all Sublicensee Technology and (b) licenses and rights of reference under any Regulatory
Documentation Owned or Controlled by Sublicensees (and its Affiliates), to Exploit the Licensed Products in the Field, Century
shall ensure to make such licenses and rights sublicensable to CDI (through multiple tiers) to Exploit the Licensed Products in
the Field outside the Territory.
(d) CDI shall use Commercially Reasonable Best Efforts to include in any sublicense by CDI to a Third Party (or any further sublicenses
by the applicable Sublicensee) of any rights granted by Century under Section 2.2 that the Sublicensee will grant to CDI
licenses to any Sublicensee Technology and licenses and rights of reference under any Regulatory Documentation on terms that are
substantially similar to the licenses granted by Century to CDI in Section 2.2 (but with respect to the Territory) (replacing
all references to the “outside the Territory” with “Territory”), which license must be fully sublicensable
to Century (through multiple tiers) pursuant to the terms and conditions of this Agreement. In such event, such Sublicensee Technology
will be deemed Licensed Technology hereunder and included within the licenses granted to Century hereunder. Notwithstanding any
provision to the contrary, in the event CDI will obtain from the Sublicensee (a) licenses to any and all Sublicensee Technology
and (b) licenses and rights of reference under any Regulatory Documentation Owned or Controlled by Sublicensees (and its Affiliates),
to Exploit the Licensed Products in the Field, CDI shall ensure to make such licenses and rights sublicensable to Century (through
multiple tiers) to Exploit the Licensed Products in the Field in the Territory.
(e)
For purposes of Sections 2.5(c) and 2.5(d), “Sublicensee Technology” means any and all Know-How
and Patent Rights that such Sublicensee (and its Affiliates) controls by way of developing, generating, or inventing during the
term of the applicable sublicense agreement in the course of activities for the Exploitation of the Licensed Products or otherwise
in the exercise of the sublicensed rights thereunder and that are necessary or useful for the Exploitation of the Licensed Products
in the Field. For the avoidance of doubt Sublicensee Technology includes Patent Rights that will be issued based on Know-How that
is acquired by Sublicensee (and its Affiliates) by way of developing, generating, or inventing during the term of the applicable
sublicense agreement in the course of activities for the Exploitation of the Licensed Products or otherwise in the exercise of
the sublicensed rights during the term of the applicable sublicense agreement.
2.6
Retained Rights.
(a)
For the avoidance of doubt, CDI retains the right to use and practice the Licensed Technology (i) to Exploit the Licensed Products
in the Field outside the Territory, (ii) to Exploit the Licensed Products outside the Field and (iii) to manufacture and have
manufactured the Licensed Products in the Field anywhere in the world.
(b) Notwithstanding the rights granted to CDI in Section 2.2, Century shall retain, and have the right to sublicense (through
multiple tiers) to Century’s Affiliates and Third Parties, the right to conduct or have conducted clinical trials of Licensed
Products in the Territory for the purposes of Exploitation of Licensed Products within the Field in the Territory. CDI shall work
in good faith to discuss Century’s request concerning the development plan outside the Territory for the Licensed Products
in the Territory.
2.7
Technical Support. Each Party shall, or shall cause its Affiliates to, use Commercially Reasonable Best Efforts to provide the
other Party (including such other Party’s Affiliates) with the necessary technical support and transfer of Century Know How or
Licensed Know-How or Regulatory Documentation where necessary to allow such Party to Exploit the Licensed Products in the Field in its
respective territory pursuant to this Agreement. Further, CDI
expressly agrees that Century
shall have the right to reference any drug master files (or equivalent information as required by a Regulatory Authority)
maintained, or that at any time during the Term become maintained, by CDI in the ordinary course of business relating to the
Licensed Technology insofar as such information is necessary in connection with obtaining any Regulatory Approval for
Licensed Products in the Field in the Territory. Century expressly agrees that CDI shall have the right to reference any drug
master files (or equivalent information as required by a Regulatory Authority) maintained, or that at any time during the
Term become maintained, by Century and its Affiliates and their respective Sublicensees in the ordinary course of business
relating to the Century Licensed Technology insofar as such information is necessary in connection with obtaining any
Regulatory Approval for Licensed Products in the Field outside the Territory.
2.8
No Implied License. Except as explicitly set forth in this Agreement, neither Party shall acquire any license, intellectual
property interest or other rights, by implication or otherwise, in any Know-How or under any Patent Rights Owned or Controlled
by the other Party or its Affiliates.
2.9
Section 365(n) of the Bankruptcy Code.
(a)
All rights and licenses granted under or pursuant to any section of this Agreement are and will otherwise be deemed to be for
purposes of Section 365(n) of the United States Bankruptcy Code (Title 11, U.S. Code), as amended or any comparable Law outside
the United States (the “Bankruptcy Code”), licenses of rights to “intellectual property” as defined
in Section 101 (35A) of the Bankruptcy Code. Each licensing Party agrees that a licensed Party, as licensee of such rights under
this Agreement, will retain and may fully exercise all of its rights and elections under the Bankruptcy Code or any other provisions
of Law outside the United States that provide similar protection for “intellectual property.” Any agreement supplemental
hereto will be deemed to be “agreements supplementary to” this Agreement for purposes of Section 365(n) of the Bankruptcy
Code.
(b) In the event that, as a result of bankruptcy, insolvency, or other similar proceeding by or against a licensing Party excluding
any rehabilitation or reorganization proceedings or other similar proceedings by or against a licensing Party, a licensed Party
is unable to obtain or retain the licenses set forth in Section 2.1 or Section 2.2 of this Agreement, as the case
may be under Section 365(n) of the Bankruptcy Code or provisions of the applicable federal, state or foreign law analogous to
Section 365(n) of the Bankruptcy Code, the licensed Party shall have a right to purchase the licensing Party’s right, title
and interest in and to Licensed Technology or Century Licensed Technology, as the case may be, at fair market value, provided
that the licensed Party gives the licensing Party written notice of such intention no later than four (4) weeks after the licensed
Party becomes aware of the commencement of such bankruptcy proceeding. The fair market value of the Licensed Technology or Century
Licensed Technology, as the case may be shall be determined by an assessment made by a mutually agreed upon third party, or, if
the Parties do not agree within thirty (30) days of the licensed Party’s written notice, a third party reasonably selected
by the licensed Party with a background in conducting such assessments subject to the proceedings by or against a licensing Party.
The costs of any such assessment shall be borne equally by the Parties.
ARTICLE
3
Development, Commercialization and Manufacture
3.1
General. Century shall be solely responsible for developing, preparing any and all regulatory filings for, obtaining Regulatory
Approval of, and commercializing Licensed Products in the Field and in the Territory, in its sole discretion.
3.2
Diligence.
(a) Century shall use Commercially Reasonable Best Efforts, or shall cause one or more of its Affiliates and Sublicensees to use Commercially
Reasonable Best Efforts, to [***]. Without limiting
the foregoing, Century shall use Commercially Reasonable Best Efforts to develop, seek Regulatory Approval of and commercialize
at least one (1) Licensed Product in the Territory and for the Field.
(b) In the event CDI notifies Century of its election to Exploit the Licensed Product in the Field outside of the Territory in accordance
with Section 2.4, CDI shall use Commercially Reasonable Best Efforts to develop, seek Regulatory Approval of and commercialize [***].
(c) Upon receipt by either Party of a bona fide term sheet from a Third Party for a license or a collaborative development program
with respect to a Licensed Product in a particular indication in the Field in such Party’s respective territory, if such
Party is not then Exploiting the Licensed Product in such indication, then such Party agrees to either (i) enter into good faith
negotiations with such Third Party with respect to sublicense under Section 2.5 or with respect to collaborative development
program with CDI or (ii) initiate an internal program for the Licensed Product in the particular indication in the Field in such
Party’s territory.
3.3
Development Plan. Within ninety (90) days following the Series A financing of Century, Century shall create a first draft of a
development plan (including a manufacturing plan and a collaboration program ) for the Licensed Products (each, a “Development
Plan”) that describes, on a Calendar Year basis, (a) the proposed overall development program and objectives for Licensed Products
in the Territory and for the Field; (b) the anticipated timelines for such development activities; (c) the materials to be transferred
by the Parties for the performance of the development program; (d) the respective roles and responsibilities of each Party in connection
with such activities. CDI and its Affiliates shall be given reasonably adequate time to review and comment upon the Development Plan
before such Development Plan is finalized and for clarity, any final Development Plan shall include a manufacturing plan and a collaboration
program for the Licensed Products in sufficient detail to enable the Parties to discuss contract manufacturing and development arrangements
as soon as practicable following
the Effective Date. Century shall consider in good faith any comments to the Development Plan received
by CDI or its Affiliates. Notwithstanding anything to the contrary herein, Century shall have the final decision-making
authority with respect to the Development Plan and the performance of any activities therein; provided that, Century
will communicate to CDI any material amendments to the Development Plan and upon CDI’s request, Century will provide to
CDI the rationale for such amendments.
3.4
JSC. The Parties shall establish a joint steering committee (the “Joint Steering Committee” or “JSC”),
that shall be purely advisory and shall be comprised of equal number of representatives of each Party. The JSC shall (a) discuss
the allocation of responsibilities for activities within the Development Plan (including collaboration program) and the design
and coordination of such activities; (b) discuss any potential TiPSC Lines that may come into existence during the Term; and (c)
encourage and facilitate cooperation and communication between the Parties with respect to the Development Plan. The JSC shall
be held at least twice in a Calendar Year.
3.5
Progress Reports. Century shall provide, within sixty (60) days after the end of each Calendar Year, a status progress
report to CDI that summarizes the status of Century’s research, development and Commercialization efforts and activities
with respect to Licensed Products during such Calendar Year.
3.6
Compliance. Each Party shall, and shall ensure that its Affiliates and Sublicensees, and its and their subcontractors,
conduct all development, manufacture and Commercialization of Licensed Products in compliance with all applicable Laws.
3.7
Manufacturing.
(a)
Subject to this Section 3.7(a), during the Term, CDI (and its Affiliates) shall have the exclusive right to manufacture and
supply human iPSC (including TiPSC) and the Licensed Products to Century, its Affiliates and Sublicensees for [***] beginning on the
Effective Date. If at any time following [***] of the Effective Date, Century wishes to have a Third Party manufacture
human iPSC (including TiPSC), Century shall discuss with CDI in good faith the possibility of using such Third Party to manufacture
human iPSC (including TiPSC), provided that Century shall have the sole discretion to determine whether to use CDI or such Third
Party for such manufacture of iPSC (including TiPSC). In the event that Century elects to use a Third Party manufacturer, CDI hereby
agrees to amend the terms of this Agreement for no additional consideration under this Agreement and without delay to provide
Century, its Affiliates and Sublicensees with the necessary licenses under the Licensed Technology for the Exploitation of such
products, including amending the definition of “Licensed Product” to remove the limitation that iPSC be exclusive
manufactured by CDI. The Parties shall negotiate in good faith as soon as reasonably practical the terms of a manufacturing and
supply agreement under which CDI or its Affiliate would itself manufacture and supply human iPSC (including TiPSC) and CDI and/or
its Affiliates or contractors would manufacture and supply the Licensed Products to Century, its Affiliates and Sublicensees (a
“Supply Agreement”) and the terms of a quality agreement which would provide the responsibilities of Century and
CDI or its Affiliates for quality assurance of human iPSC (including TiPSC) and the Licensed Products referenced in the Supply
Agreement (a “Quality Agreement”).
(b) The Supply Agreement and Quality Agreement shall each contain terms and conditions that are commercially reasonable given the
terms of the Parties’ collaboration under this Agreement, including manufacturing capacity, quantity, forecasting, timeliness
of delivery, quality, cost, and failure of supply that are consistent with prevailing industry standards for Third Party contract
manufacturing agreements for comparable products.
(c)
The Supply Agreement shall provide:
(i) CDI’s (and its Affiliates) exclusive right to manufacture and supply human iPSC (including TiPSC) and the Licensed Products
to Century, its Affiliates and Sublicensees;
(ii) obligations of CDI (or its Affiliates or contractors) to perform manufacturing activities in a good scientific manner and in compliance
in all material respects with all applicable Law; and
(iii) Century’s ability to manufacture by itself or through its Affiliate, or to grant to a Third Party manufacturer, excluding
any manufacturer set forth on Schedule 3.7(a), (a “Century CMO”) the right to manufacture, the Licensed Products in
minimal quantities necessary to prevent a supply interruption in the event of a Non-Supply Event and for such purposes CDI’s
transfer of the Licensed Technology to Century or its Affiliate or such Third Party manufacturer, upon Century’s request.
Details of the technology transfer provided by CDI will be set forth in the Supply Agreement.
ARTICLE
4
Payment Terms
4.1
Consideration. In consideration of the rights and licenses granted to Century herein, Century shall issue to CDI 7,500,000
shares of Common Stock of Century, $0.0001 par value per share (the “Common Stock”), which such issuance shall
take place on the Closing Date, as defined in the stock purchase agreement as to the Common Stock to be entered into between the
Parties (“Common Stock Purchase Agreement”). The detailed terms and conditions of CDI’s subscription
of the Common Stock are set forth in the Common Stock Purchase Agreement and the Subscription Agreement that the Parties and Versant
entered into on the Effective Date.
ARTICLE
5
Intellectual Property Protection and Related Matters
5.1
Ownership. As between the Parties, each Party or its Affiliates shall solely own all Intellectual Property, including Patent
Rights related thereto, made, conceived, reduced to practice, or otherwise discovered, whether prior to, on or after the Effective
Date, solely by employees, agents and consultants of such Party or its Affiliates. For purposes of determining ownership under
this Section 5.1, inventorship shall be determined in accordance with the rules of inventorship under U.S. patent laws,
subject to applicable mandatory Law.
5.2
Prosecution and Maintenance of Licensed Patent Rights.
(a)
As of the Effective Date, CDI shall have the first right to Prosecute and Maintain all Licensed Patent Rights worldwide within
the Field; provided that, subject to Section 5.2(b), CDI shall consult with and take into good-faith consideration
reasonably in advance any comments from Century with respect to such Prosecution and Maintenance, provided further that Century
shall respond to CDI’s request for consultation in a timely and diligent manner. CDI shall pursue in good faith all reasonable
claims requested by Century in the prosecution of any Licensed Patent Rights in the Territory. In the event CDI fails or chooses
not to Prosecute or Maintain any Licensed Patent Rights in a country within the Field, CDI shall provide Century written notice
of such decision at least thirty (30) days before any deadline for taking action to avoid abandonment (or other loss of rights)
of such Licensed Patent Rights within the Field and Century shall have the right, but not the obligation, in its sole discretion,
to Prosecute and Maintain such Licensed Patent Rights in such country within the Field at its own expense.
(b) With respect to the Prosecution and Maintenance of any Licensed Patent Rights by CDI, CDI shall: (i) choose patent counsel reasonably
acceptable to the other Party; (ii) instruct such patent counsel to furnish Century with copies of all correspondence relating
to the Licensed Patent Rights within the Field received from the United States Patent and Trademark Office and any other patent
office promptly after receipt; (iii) instruct such patent counsel to furnish Century with copies of all correspondence relating
to the Licensed Patent Rights within the Field sent to the United States Patent and Trademark Office and any other patent office
promptly after it is sent; and (iv) instruct such patent counsel to furnish Century with copies of all proposed filings or other
correspondence to the United States Patent and Trademark Office and any other patent office in advance of such filing to permit
Century a reasonable opportunity to review and comment on such response. CDI shall include any reasonable and timely comments
from Century with respect to the Prosecution and Maintenance of the applicable Licensed Patent Rights within the Field within
the Territory and shall instruct its patent counsel to do so. Further, CDI shall permit Century to directly communicate with the
its patent counsel so long as CDI is copied in all important communication and shall not unreasonably refuse to implement any
reasonable and timely comment provided by Century to the extent they relate to any Licensed Patent Rights within the Field within
the Territory, or any claims therein, that cover the Licensed Products in the Field. For the avoidance of doubt, this Section
5.2(b) shall not apply with respect to Century in the event Century controls the Prosecution and Maintenance as a result of
CDI’s failure or election not to Prosecute and Maintain such Licensed Patent Rights within the Field within the Territory
pursuant to Section 5.2(a).
(c)
Both Parties shall reasonably cooperate with each other and patent counsel in Prosecution and Maintenance of the Licensed Patent
Rights in all countries within the Field, including, as reasonably requested, (i) providing patent counsel with data and other
information as appropriate with respect thereto, (ii) providing any necessary powers of attorney (including limited powers of
attorney) and (iii) executing any other required documents or instruments for such Prosecution and Maintenance.
(d) The
Party controlling the Prosecution and Maintenance of the applicable Licensed Patent Rights within the Field in accordance with Section
5.2(a) or 5.2(b), as
applicable, is referred to as the “Prosecuting Party”. The
Parties shall be equally responsible for the out-of-pocket costs for the Prosecution and Maintenance of all Licensed Patent Rights
within the Field. For clarity, such expenses shall not include any expenses of the other Party incurred by such other Party in
connection with (a) its reasonable and timely comment on patent prosecution, (b) its rights to undertake enforcement actions,
or (c) any actions undertaken by such other Party other than at the Prosecuting Party’s request. The Prosecuting Party also
agrees not to knowingly take any action to materially diminish the value of the Licensed Patent Rights within the Field.
5.3
Third Party Infringement.
(a) Each Party shall notify the other Party promptly of any knowledge it acquires of any actual or potential infringements of the
Licensed Patent Rights with respect to any activities of a Third Party in the Field in any country in the world and shall provide
the other Party with all available evidence regarding such known or suspected infringement or unauthorized use.
(b)
Sole Right of Enforcement. Century shall have the first right, but not the obligation, to initiate a lawsuit or take other
reasonable action to enforce the Licensed Patent Rights, in each case solely in the case of infringement or unauthorized use or
misappropriation related to a Licensed Product in the Field within the Territory, or the manufacture, use, sale or import thereof,
in the Field within the Territory; provided that Century shall not take any action or settle any suit that materially affects
the scope and validity of the Licensed Patent Rights without the prior written approval of CDI (such consent not to be unreasonably
withheld, conditioned or delayed). CDI shall cooperate fully in the prosecution of any such suit or action as may be reasonably
requested by Century, including joining any action as party-plaintiff if required by law, regulation or court or administrative
order; provided that Century shall promptly reimburse all costs (including reasonable counsel fees and expenses) actually incurred
by CDI in connection with such cooperation. Century shall have the sole and exclusive right to select counsel for any suit or
action initiated by it pursuant to this Section 5.3(b) and shall bear its own costs incurred in any such suit or action,
including the fees and expenses of the counsel selected by it. Any amount recovered in any suit or action or settlement of any
such suit or action brought by Century pursuant to this Section 5.3(b) shall be allocated to Century. If Century fails
to initiate any law suit or take other reasonable action to enforce the Licensed Patent Rights within (A) one hundred eighty (180)
days following the notice of alleged infringement, unauthorized use or misappropriation or (B) ten (10) days before the time limit,
if any, set forth in the appropriate laws and regulations for the filing of such action, whichever comes first, CDI shall have
the right, but not the obligation, to bring and control any such action at its own expense and by counsel of its own choice, and
Century shall have the right, at its own expense, to be represented in any such action by counsel of its own choice. Any amount
recovered in any suit or action or settlement of any such suit or action brought by CDI pursuant to this Section 5.3(b)
shall be allocated to CDI.
5.4
Patent Invalidity Claim. During the Term, each Party shall promptly notify the other Party in the event of any legal or administrative
action by any Third Party against a Licensed Patent Right of which such Party becomes aware, including any nullity, revocation, reexamination
or compulsory license proceeding or similar proceeding. To the extent such
action is in
connection with an enforcement of such Patent Right under Section 5.3, Century’s rights with respect to
defending any such Patent Right in any such proceeding shall correspond to those set forth in Section 5.3, and the
non-enforcing Party, shall cooperate fully with the enforcing Party in preparing and formulating a response to such legal or
administrative action.
5.5
Patent Term Extensions. Century shall have the sole right to obtain patent term extensions or supplemental protection
certificates or their equivalents with respect to any Licensed Product in the Field, including with respect to any Licensed Patent
Right in the Territory and CDI shall reasonably cooperate with Century in connection therewith. CDI shall have the sole right
to obtain patent term extensions or supplemental protection certificates or their equivalents with respect to any Licensed Patent
Right in any country worldwide, and Century shall reasonably cooperate with CDI in connection therewith.
5.6
Patent Marking. Century shall comply with the patent marking statutes in each country in which Licensed Products are sold
by or on behalf of Century and/or its Affiliates or Sublicensees.
5.7
Third Party Licenses. To the extent either Party has any right to Prosecute and Maintain or enforce any Patent Rights or
otherwise be involved in such activities (including the right to decide on matters related to patent term extensions) pursuant
to a Third Party License, such Party shall exercise such rights in accordance consistent with this Article 5. To the extent
that a Third Party licensor of a Party has retained any right to Prosecute and Maintain or enforce any Patent Rights or otherwise
be involved in such activities (including the right to decide on matters related to patent term extensions) pursuant to a Third
Party License, such Party will use Commercially Reasonable Best Efforts to cause such Third Party licensor to take the actions
(or refrain from taking action, as applicable) consistent with this Article 5.
ARTICLE
6
Confidentiality
6.1 Confidential
Obligations. Each Party shall (a) maintain in strict confidence the Confidential Information of the other Party to the
same extent such Party maintains its own confidential information, but in no event less than a reasonable degree of care, (b)
not disclose such Confidential Information to any Third Party without the prior written consent of the other Party (except as
permitted pursuant to Section 6.3 below), and (c) not use such Confidential Information for any purpose except those
expressly permitted by this Agreement. The obligations of confidentiality, non-disclosure and non-use under this Section
6.1 shall be in full force during the Term and for a period of [***] thereafter. Each Party, upon the request
of the other Party, will return all copies of or destroy (and certify such destruction in writing) the Confidential
Information disclosed or transferred to it by the other Party pursuant to this Agreement, within sixty (60) days of such
request or, if earlier, the termination or expiration of this Agreement; provided, however that a Party may retain (i)
Confidential Information of the other Party which expressly survives such termination pursuant to this Agreement, and (ii)
one (1) copy of all other Confidential Information in archives solely for the purpose of establishing the contents thereof;
provided, further, that a Party is not required to return or destroy
Confidential Information contained in electronic
back-ups unless and until such Confidential Information is accessed.
6.2
Exceptions to Confidentiality. Notwithstanding the foregoing, the obligations of confidentiality set forth in Section
6.1 shall not apply to information that, in each case as demonstrated by competent written documentation:
(a) is publicly disclosed or made generally available to the public by the disclosing Party, either before or after it becomes known
to the receiving Party;
(b) was known to the receiving Party, without any obligation to keep it confidential, prior to the date of first disclosure by the
disclosing Party to the receiving Party, as shown by the receiving Party’s files and records;
(c) is subsequently disclosed to the receiving Party by a Third Party lawfully in possession thereof without obligation to keep it
confidential and without a breach of such Third Party’s obligations of confidentiality;
(d) has been publicly disclosed or made generally available to the public other than through any act or omission of the receiving
Party or its Affiliates or their subcontractors or Sublicensees in breach of this Agreement;
(e) has been independently developed by the receiving Party without the aid, application or use of the disclosing Party’s Confidential
Information (the competent written proof of which must be contemporaneous with such independent development); or
(f) to WARF to the extent necessary to perform CDI’s obligations under the WARF License Agreement.
6.3
Authorized Disclosure. Notwithstanding Section 6.1, a Party may disclose Confidential Information of the other Party
to the extent such disclosure is reasonably necessary in the following instances:
(a) Prosecuting and Maintaining Patent Rights in accordance with this Agreement; provided that the non-filing Party whose Confidential
Information is being disclosed is given a reasonable opportunity to review the proposed disclosure of such Confidential Information
and the filing Party considers in good faith any comments provided by the non-filing Party;
(b) communicating and making filings with Regulatory Authorities or otherwise complying with applicable Laws or submitting information
to tax or other governmental authorities; provided that if a Party is required by Law to make any public disclosure of
Confidential Information of the other Party, to the extent it may legally do so, it will give reasonable advance written notice
to the other Party of such disclosure and will use its reasonable efforts to secure confidential treatment of such Confidential
Information prior to its disclosure (whether through protective orders or otherwise), and shall disclose only that portion of
the Confidential Information which is legally required to be disclosed;
(c)
for Regulatory Approval of Licensed Products or to research, develop, make, have made, use, have used, offer to sell, sell, import,
export, Commercialize or otherwise exploit Licensed Products in accordance with this Agreement;
(d) subject to Section 6.4(b), to its Affiliates, and to prospective and actual acquirers, lenders, licensees, and sublicensees,
and to each of their employees, consultants, contractors, agents, accountants, lawyers, advisors, investors and underwriters,
in each case only on a need to know basis, each of whom, in the case of Third Parties, prior to disclosure must be bound by written
or professional ethical obligations of confidentiality and non-use equivalent in scope to those set forth in this Article 6
and a disclosing Party shall be responsible for any breach of confidentiality by a receiving Party under this Section 6.3(d),
including Century CMO; or
(e)
to the extent mutually agreed to in writing by the Parties.
6.4
Press Releases and Other Permitted Disclosures.
(a)
CDI and Century each agree not to disclose any of the terms and conditions of this Agreement to any Third Party, except as described
below in this Section 6.4 or as otherwise agreed in writing by the Parties. The Parties have agreed on a press release
to be issued by each Party announcing this Agreement after the Effective Date in substantially the form set forth in Exhibit D;
provided that the timing of the publication and release of such press release is in the sole discretion of an announcing Party.
Each Party shall have the right to disclose the existence of this Agreement, including that the fact that such Party has received
a license to the other Party’s Licensed Technology or Century Technology, as applicable without disclosing the Licensed
Know-How or Century Know-How. Subject to the other provisions of this Agreement, no other press release, public statement or public
disclosure concerning the existence or terms of this Agreement shall be made, either directly or indirectly, by either Party without
the prior written approval of the other Party. If disclosure of the terms and conditions of this Agreement or its filing publicly
is required by applicable Law or applicable stock exchange regulation, or by order or other ruling of a competent court or governmental
authority, as set forth in Section 6.4(d), then CDI or Century or its respective Affiliates, as the case may be, may also
disclose such terms or this Agreement in a public statement or disclosure subject to Section 6.3(b). Once any public statement
or public disclosure has been approved in accordance with this Section 6.4, then either Party may appropriately communicate
information contained in such permitted statement or disclosure.
(b) Century may disclose the terms and conditions of this Agreement to (i) its Affiliates, employees, consultants, agents or
professional advisors (including attorneys, accountants and actual and prospective investment bankers), (ii) actual or
potential investors, lenders, Sublicensees, licensees, licensors or collaborators, or (iii) acquirers or merger
partners that have entered into a letter of intent or are actively negotiating a definitive acquisition or merger
agreement with Century; in each case under the foregoing clause (i), (ii) or (iii), under obligations of confidentiality at
least as restrictive as those set forth herein, and solely in connection with Century performing its obligations or
exercising its rights under this Agreement or for the purpose of assisting the recipient with evaluating and entering
into a transaction with Century.
(c) CDI may disclose the terms and conditions of this Agreement to (i) its Affiliates, employees, consultants, agents or professional
advisors (including attorneys, accountants and actual and prospective investment bankers), (ii) WARF, (iii) actual or potential
investors, lenders or licensees, or (iv) acquirers or merger partners that have entered into a letter of intent or are actively
negotiating a definitive acquisition or merger agreement with CDI; in each case under the foregoing clause (i), (ii) (iii) or
(iv), under obligations of confidentiality at least as restrictive as those set forth herein, and solely in connection with CDI
performing its obligations or exercising its rights under this Agreement or for the purpose of assisting the recipient with evaluating
and entering into a transaction with CDI; provided, however, that CDI shall redact financial terms from any such disclosure
made to any actual or potential licensee.
(d) Notwithstanding the foregoing provisions of this Article 6, a Party or its Affiliates may disclose the existence and terms
of this Agreement or the Confidential Information of the other Party where required, as reasonably determined by the legal counsel
of the disclosing party, by applicable Law, by applicable stock exchange regulation or by order or other ruling of a competent
court or other governmental authority, although, to the extent practicable, the other Party shall be given at least five (5) Business
Days advance written notice of any such legally required disclosure to comment and the disclosing party shall reasonably consider
such comments provided by such other Party on the proposed disclosure. In case either Party or its Affiliates is obliged to publicly
disclose or file this Agreement as a “material agreement” in accordance with applicable Law or applicable stock exchange
regulations (“SEC Filing”), this Agreement shall be redacted by the filing party to the extent permissible
upon the reasonably advice of legal counsel, and the filing party shall provide the other Party a copy of such redacted agreement
in advance of such SEC Filing to give reasonable opportunity the other Party to review and comment on the scope of such redaction
in consultation with their own counsel; provided that the filing arty shall consider in good faith any comments provided
by such other Party.
ARTICLE
7
Representations, Warranties and Covenants
7.1
Representations of Authority. Each Party represents and warrants to the other that as of the Effective Date it has full
right, power and authority to enter into this Agreement and to perform its respective obligations under this Agreement.
7.2
Consents. Each Party represents and warrants that as of the Effective Date all necessary consents, approvals and authorizations
of all government authorities and other Persons required to be obtained by such Party in connection with execution, delivery and
performance of this Agreement have been obtained.
7.3 No
Conflict. Each Party represents and warrants that, as of the Effective Date, the execution and delivery of this
Agreement and the performance of such Party’s obligations hereunder (a) do not conflict with or violate any requirement
of applicable Laws and (b) do not conflict with, violate or breach or constitute a default of, or require any consent under,
any
contractual obligations of such Party, except such consents as have been obtained as of the Effective Date.
7.4
Employee, Consultant and Advisor Obligations. Each Party represents and warrants that, as of the Effective Date, each of
its and its Affiliates’ employees, consultants and advisors has executed an agreement or has an existing obligation under
law obligating such employee, consultant or advisor to maintain the confidentiality of Confidential Information to the extent
required under Article 6.
7.5
Intellectual Property.
(a)
Each Party represents and warrants to the other Party that (i) it owns or Controls the entire right, title and interest in and
to the Licensed Patent Rights or Century Patent Rights, as the case may be, free and clear of all liens, charges and encumbrances,
(ii) it has the right to grant to the other Party the rights and licenses under the Licensed Patent Rights and Century Patent
Rights granted in this Agreement and has not previously assigned, transferred, conveyed or otherwise encumbered its right, title
and interest in such Patent Rights in any manner inconsistent with the terms hereof, and will not take any of the foregoing actions
in any manner inconsistent with the terms hereof, (iii) none of the Licensed Patent Rights or Century Patent Rights was fraudulently
procured from the relevant governmental patent granting authority, (iv) as of the Effective Date, there is no claim or demand
of any Person pertaining to, or any proceeding which is pending or threatened, that asserts the invalidity, misuse or unenforceability
of the Licensed Patent Rights or Century Patent Rights or challenges its ownership of such Patent Rights or makes any adverse
claim with respect thereto, including any claim that such Patent Rights infringe or misappropriate Intellectual Property of any
Third Party, and, to the knowledge of such Party (without any duty to investigate), there is no basis for any such claim, demand
or proceeding, (v) to the knowledge of such Party (without any duty to investigate), as of the Effective Date, the Licensed Patent
Rights or Century Patent Rights are not being infringed by any Third Party, (vi) the Licensed Patent Rights or Century Patent
Rights include all Patent Rights that are owned or exclusively licensed by it as of the Effective Date and (vii) none of its Affiliates
own or control, as of the Effective Date, any Patent Rights pertaining to differentiation of human iPSC that are reasonably necessary
to Exploit a Licensed Product.
(b) During the Term, each Party shall retain and maintain sufficient legal or beneficial title and ownership of, or sufficient
license rights under, any Licensed Patent Rights or Century Patent Rights to enable such Party to grant the licenses and
rights to such Patent Rights that would be granted to the other Party under, and as reasonably necessary to practice, such
Patent Rights in accordance with the license to be granted under this Agreement. Neither Party shall, during the Term, sell,
assign, transfer, license, pledge, fail to maintain control of, otherwise dispose of, or grant any option or other right,
title or interest in to or under, or incur any lien or encumbrance on, any Licensed Patent Rights or Century Patent Rights,
or respective rights and licenses under this Agreement as the case may be. Notwithstanding any provision to the contrary, a
Party may sell, assign, transfer, license, pledge, fail to maintain control of, otherwise dispose of, or grant any option or
other right, title or interest in to or under, or incur any lien or encumbrance on, any Patent Rights licensed under this
Agreement to any Affiliate of such Party so long as such Party’s obligations as licensor remains unchanged under this
Agreement and its
Affiliate shall become jointly and severally responsible as a licensor together with such Party under this
Agreement.
(c)
If During the Term, CDI develops, conceives, generates any Intellectual Property pertaining to differentiation of human iPSC that
are reasonably necessary to Exploit the Licensed Products, CDI shall maintain Control over such Intellectual Property and shall
not transfer, assign or license such Intellectual Property to an Affiliate of CDI or to any third party without the prior consent
of Century.
7.6
No Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES
OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT,
OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS ARE MADE OR GIVEN BY OR ON BEHALF OF A PARTY. EXCEPT AS EXPRESSLY
STATED IN THIS AGREEMENT, ALL REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE, ARE HEREBY EXPRESSLY
EXCLUDED.
ARTICLE
8
Indemnification; Insurance; and Limitation on Damages
8.1
By Century. Century agrees to defend CDI, its Affiliates and their respective directors, officers, employees, consultants
and agents at Century’s cost and expense, and shall indemnify and hold harmless CDI and its Affiliates and their respective
directors, officers, employees, consultants and agents from and against any liabilities, losses, costs, damages, fees or expenses
arising out of any Third Party (excluding any Affiliate) claim, suit, action or demand relating to (a) any breach by Century of
any of its representations, warranties or obligations pursuant to this Agreement, (b) personal injury, property damage or other
damage resulting from the Exploitation of Licensed Products in the Field within the Territory by or on behalf of Century or its
Affiliates or Sublicensees or (c) the willful misconduct or grossly negligent acts of Century, its Affiliates, subcontractors,
licensee or Sublicensees (excluding CDI and its Affiliates as licensees or Sublicensees of Century hereunder); excluding, in each
case (a), (b) and (c), any damages or other amounts for which CDI has an obligation to indemnify Century pursuant to Section
8.2, as to which damages or amounts each Party shall indemnify the other to the extent of their respective liability for such
damages or amounts.
8.2
By CDI. CDI agrees to defend Century, its Affiliates and their respective directors, officers, employees, consultants and agents
at CDI’s cost and expense, and shall indemnify and hold harmless Century and its Affiliates and their respective directors, officers,
employees, consultants and agents from and against any liabilities, losses, costs, damages, fees or expenses arising out of any Third
Party (excluding any Affiliate) claim, suit, action or demand relating to (a) any breach by CDI of any of its representations, warranties
or obligations pursuant to this Agreement, (b) personal injury, property, damage or other damage resulting from the Exploitation of Licensed
Products in the Field outside the Territory by or on behalf of CDI, its Affiliates or Sublicensees or (c) the willful misconduct or grossly
negligent acts of CDI, its Affiliates, subcontractors, licensee or Sublicensees (excluding Century and its Affiliates as
licensees or Sublicensees to
CDI hereunder); excluding, in each case (a), (b) and (c), any damages or other amounts for which Century has an obligations
to indemnify CDI pursuant to Section 8.1, as to which damages or amounts each Party shall indemnify the other to the
extent of their respective liability for such damages or amounts.
8.3
Procedures. A Person entitled to indemnification under this Article 8 (an “Indemnified Party”)
shall give prompt written notification to the Party from whom indemnification is sought (the “Indemnifying Party”)
of any claim, suit, action or demand for which indemnification is sought under this Agreement; provided, however, that
no delay or failure on the part of an Indemnified Party in so notifying the Indemnifying Party shall relieve the Indemnifying
Party of any liability or obligation hereunder except to the extent of any damage or liability caused by or arising out of such
delay or failure. Within thirty (30) days after delivery of such notification, the Indemnifying Party may, upon written notice
thereof to the Indemnified Party, assume control of the defense of such claim, suit, action or demand with counsel reasonably
satisfactory to the Indemnified Party. If the Indemnifying Party does not assume control of such defense, the Indemnified Party
shall control such defense. The Party not controlling such defense may participate therein with counsel of its own choosing at
its own expense; provided that, the Indemnified Party shall have the right to retain its own counsel, at the expense of
the Indemnifying Party, if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be
inappropriate because of actual or potential differences in the interests of such Indemnified Party and any other party represented
by such counsel. The Indemnified Party shall not agree to any settlement of such action, suit, proceeding or claim without the
prior written consent of the Indemnifying Party, which shall not be unreasonably withheld, delayed or conditioned.
8.4
Insurance. Each Party shall procure and maintain insurance or self-insurance, including general liability insurance and,
starting at the time at which a Licensed Product first enters clinical testing in human subjects by or on behalf of Century or
its Affiliates or Sublicensees, product liability insurance, in each case adequate to cover its obligations hereunder and consistent
with normal business practices of prudent companies similarly situated, which insurance shall identify the other Party as an additional
insured starting at the time at which a Licensed Product first enters clinical testing in human subjects by or on behalf of Century
or its Affiliates or Sublicensees. It is understood that any such insurance shall not be construed to create a limit of each Party’s
liability with respect to its indemnification obligations under this Article 8. Each Party shall provide the other Party
with written evidence of such insurance upon request. Each Party shall provide the other Party with written notice at least thirty
(30) days prior to the cancellation, non-renewal or material change in such insurance or self-insurance which could adversely
affect rights hereunder.
8.5
No Consequential or Punitive Damages. EXCEPT WITH RESPECT TO (A) THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER
PARTY UNDER THIS AGREEMENT WITH RESPECT TO THIRD PARTY CLAIMS, SUITS, ACTIONS OR DEMANDS, (B) A BREACH OF ARTICLES 2.5(c) or 3.7(a)
OR (C) A BREACH OF THE CONFIDENTIALITY AND NON-USE OBLIGATIONS OF ARTICLE 6, NEITHER PARTY HERETO WILL BE LIABLE FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES,
INCLUDING LOST PROFITS, ARISING
FROM OR RELATING TO THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES.
8.6
Limitation of CDI’s Liability. CDI’s liability for any damages arising out of or related to this Article
8 shall under no circumstances exceed [***] US dollars.
ARTICLE
9
Term and Termination
9.1
Term. This Agreement shall become effective as of the Effective Date and shall otherwise remain in effect, unless terminated
as set forth in this Article 9 (the “Term”).
9.2
Termination for Material Breach.
(a) Any failure by a Party (the “Breaching Party”) to comply with any of its material obligations contained in
this Agreement (such failure, a “Material Breach”) shall entitle the other Party (the “Non-Breaching
Party”) to give to the Breaching Party written notice specifying the nature of the Material Breach, requiring the Breaching
Party to cure such Material Breach.
(b) If such Material Breach is not cured within sixty (60) days after the receipt of notice pursuant to Section 9.2(a) above,
the Non-Breaching Party shall be entitled to terminate this Agreement on written notice to the Breaching Party and without prejudice
to any of its other rights conferred on it by this Agreement; provided that if a Material Breach cannot reasonably be cured within
such sixty (60)-day period and the Breaching Party promptly delivers a plan to cure such Material Breach (reasonably acceptable
to the Non-Breaching Party) and cures such Material Breach up to a maximum cure period of one hundred twenty (120) days from the
date of initial notice; further provided, however, that if the Breaching Party disputes the existence of a Material Breach, the
matter shall be submitted for resolution in accordance with Section 10.11, and the Breaching Party shall not have the right
to terminate this Agreement unless and until a final decision of Material Breach is rendered under Section 10.11 and the
Breaching Party fails to cure such Material Breach within sixty (60) days thereafter.
9.3
Termination for Failure to Develop a Licensed Product. If Century fails to [***], CDI shall have the right to terminate
this Agreement pursuant to the terms of this Section 9.3. Notwithstanding the foregoing CDI may [***].
9.4
Termination for Cause concerning Reprogramming License. In the event that (i) the Reprogramming License Agreement expires
or terminates for any reason or (ii) WARF
License
expires or terminates for any reason, CDI shall be entitled to terminate this Agreement with an immediate effect upon a written
notice to Century.
9.5
Termination for Bankruptcy. To the extent allowed under applicable Law, either Party shall have the right to terminate
this Agreement in the event that the other Party admits its inability to pay its debts generally as they become due or in the
event of the commencement of any proceeding in or for bankruptcy, insolvency, dissolution or winding up by or against the other
Party (other than pursuant to a corporate restructuring), or the appointment of a receiver or similar agent by a court of competent
jurisdiction, that is not dismissed or otherwise disposed of within sixty (60) days thereafter and/or the administrator of the
bankruptcy estate or the Party under in-court restructuring has not, within five (5) days after the receipt of an inquiry from
the other Party, confirmed that the bankruptcy estate or the Party under in-court restructuring will adopt this Agreement.
9.6
Termination for Convenience. Century may terminate this Agreement, at any time and for any reason or no reason, in its
entirety or on an indication-by-indication basis, a Licensed Product-by-Licensed Product basis (to exclude such product from the
Field) or country-by-country basis (to eliminate such country from the Territory), by providing ninety (90) days’ prior
written notice to CDI. The termination shall become effective at the end of the ninety (90) day period. The indication in respect
of which Century terminates this Agreement is called the Abandoned Indication.
9.7
Effects of Termination.
(a)
Generally. Expiration or termination of this Agreement shall not relieve the Parties of any obligation accruing prior to
such expiration or termination. Any expiration or termination of this Agreement shall be without prejudice to the rights of either
Party against the other accrued or accruing under this Agreement prior to expiration or termination. Termination of this Agreement
shall be in addition to, and shall not prejudice, the Parties’ remedies at law or in equity, including the Parties’
ability to receive legal damages or equitable relief with respect to any breach of this Agreement, regardless of whether or not
such breach was the reason for the termination. In the event of any early termination of this Agreement, the Parties will work
together in good faith to determine and implement reasonable wind-down procedures with respect to relevant Licensed Product-related
activities ongoing at the time of such termination, which shall include continuation of the licenses granted to Century hereunder
(and subject to the continuing terms and conditions of this Agreement) to permit Century and its Affiliates and Sublicensees to
continue and complete any ongoing clinical trials of Licensed Products and to make or have made such Licensed Products as necessary
to continue and complete such clinical trials; provided, however, in that the event such termination is by CDI pursuant
to Section 9.2, such activities shall be limited to those necessary for Century to comply with regulatory obligations,
or medical or ethical obligations to patients consistent with industry standards.
(b) Return
or Destruction of Confidential Information. Upon the expiration or termination of this Agreement, each Party
shall promptly return or destroy all of such other Party’s Confidential Information that relates to a Licensed Products
or that was provided by or on behalf of such other Party hereunder that is in the possession or control of such Party (or any
of its Affiliates), except that such Party will have the right maintain one (1) copy of intangible Confidential Information
of such other Party for legal and archival purposes.
(c) Product Reversion. Subject to Section 2.5(b), upon termination of this Agreement, Century shall negotiate in good
faith with CDI for a period not to exceed sixty (60) days from the effective date of termination the terms and conditions of an
agreement under which Century will transfer the development, manufacture and Commercialization of the Licensed Products to CDI,
including a license under any Regulatory Documentation, Know-How and Patent Rights developed or used by Century in the development,
manufacture and Commercialization of the Licensed Products within the Field in the Territory. If the Parties fail to agree on
such terms and conditions and execute such an agreement within such sixty (60)-day period, then Century shall have no obligations
to transfer any such items or grant a license under any such Regulatory Documentation, Know-How or Patent Rights.
9.8
Survival. The following provisions shall survive the expiration or termination of this Agreement: Article 1 (Definitions)
(to the extent necessary to give effect to other surviving provisions), Article 5 (Intellectual Property), Article 6
(Confidentiality), Article 8 (Indemnification; Insurance; and Limitation on Damages) (other than Section 8.4
(Insurance)) and Article 10 (Miscellaneous Provisions), and Sections 2.5(b) (Sublicensing), 9.7 (Effects
of Termination) and this Section 9.8 (Survival).
ARTICLE
10
Miscellaneous Provisions
10.1 Governing Law; Language. This Agreement and all disputes arising out of or related to this Agreement shall be construed
and the respective rights of the Parties determined in accordance with the laws of the State of Wisconsin, U.S.A., excluding application
of any conflict of laws. This Agreement and all communications related to it, or to any dispute or controversy arising out of
it, shall be conducted in English.
10.2
Notice. Any notices required or permitted by this Agreement shall be in writing, shall specifically refer to this Agreement,
and shall be sent by hand, recognized national overnight courier, confirmed electronic mail or registered or certified mail, postage
prepaid, return receipt requested, to the following address of the Parties:
If
to CDI:
FUJIFILM
Cellular Dynamics, Inc.
525
Science Drive, Madison, WI 53711
Attention:
Chief Technology Officer
Email:
fcdi-licensing@cellulardynamics.com
With
a copy to:
FUJIFILM
Cellular Dynamics, Inc.
525
Science Drive, Madison, WI 53711
Attention:
General Counsel
If
to Century:
Century
Therapeutics, Inc.
54
West 21st Street, Suite 408, New York, NY 10010
Attention:
Chief Executive Officer
Email:
lalo@centurytherapeutics.com
With
a copy to:
Goodwin
Procter LLP
100
Northern Avenue
Boston,
MA 02210
Attention:
Mitchell S. Bloom, Esq.
Email:
mbloom@goodwinlaw.com
All
notices under this Agreement shall be deemed effective upon receipt. A Party may change its contact information immediately upon
written notice to the other Party in the manner provided in this Section 10.2.
10.3
Assignment. Neither Party may, without the consent of the other Party, assign or transfer any of its rights and obligations
hereunder; provided that each Party may assign this Agreement, in its entirety, without the consent of the other Party,
(a) in connection with a sale or transfer of all or substantially all of the business and assets of each Party to which this Agreement
relates, including by way of merger, consolidation, transfer, or sale of assets related to this Agreement or (b) to an Affiliate
or in connection with a reorganization, provided, further that in each case each Party shall ensure that upon any assignment or
transfer under this Section 10.3 the assignee or transferee or an Affiliate, as the case may be, agrees in writing, in
form and substance reasonably satisfactory to the other Party, to perform and comply with all obligations of such Party under,
and to be bound by the terms and conditions of, this Agreement as if such assignee or transferee or an Affiliate were a direct
party to this Agreement. Any assignment in circumvention of the foregoing shall be void. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. For
clarity, if Century is involved in a change of control with a Third Party, then: (a) the Patent Rights and Know-How controlled
by such Third Party (or any Affiliate thereof, excluding Century as a result of such transaction) existing as of the date of closing
of such change of control (if such Third Party becomes the assignee of this Agreement); or (b) the Patent Rights and Know-How
controlled by such Third Party (if such Third Party remains an Affiliate of Century), in each case, will be excluded from the
definition of Century Know-How and Century Patent Rights, unless Century or its Third Party acquirer actually uses or applies
any such Patent Rights or Know-How to Exploit any Licensed Product (which such Patent Rights or Know-How will be Century Patent
Rights or Century Know-How, as applicable, for purposes of this Agreement).
10.4 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to its subject matter
and supersedes all prior agreements or understandings between the Parties relating to its subject matter.
10.5
Interpretation. The captions and headings to this Agreement are for convenience only, and are to be of no force or effect
in construing or interpreting any of the provisions of this Agreement. Unless specified to the contrary, references to Articles,
Sections or Exhibits mean the particular Articles, Sections or Exhibits to this Agreement and references to this Agreement include
all Exhibits hereto. Unless context otherwise clearly requires, whenever used in this Agreement: (a) the words “include”
or “including” shall be construed as incorporating, also, “but not limited to” or “without limitation;”
(b) the word “day” or “year” means a calendar day or year unless otherwise specified; (c) the word “notice”,
“consent”, or “approval” and references to other written communications contemplated under this Agreement
shall mean notice, consent, approval or communication in writing (whether or not specifically stated); (d) the words “hereof,”
“herein,” “hereby” and derivative or similar words refer to this Agreement (including any Exhibits); (e)
the word “or” shall be construed as the inclusive meaning identified with the phrase “and/or;” (f) provisions
that require that a Party or the Parties hereunder “agree,” “consent” or “approve” or the
like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter or
otherwise; (g) words of any gender include the other gender; (h) words using the singular or plural number also include the plural
or singular number, respectively; and (i) the word “law” (or “laws”) when used herein means any applicable,
legally binding statute, ordinance, resolution, regulation, code, guideline, rule, order, decree, judgment, injunction, mandate
or other legally binding requirement of a government entity, together with any then-current modification, amendment and re-enactment
thereof, and any legislative provision substituted therefor. The Parties and their respective counsel have had an opportunity
to fully negotiate this Agreement. If any ambiguity or question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue
of the authorship of any provision of this Agreement. No prior draft of this Agreement shall be used in the interpretation or
construction of this Agreement.
10.6
Amendment and Waiver. This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument
signed by an authorized representative of both Parties. Any waiver of any right or failure to act in a specific instance shall
relate only to such instance and shall not be construed as an agreement to waive any right or fail to act in any other instance,
whether or not similar.
10.7
Severability. In the event that any provision of this Agreement shall be held invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect any other provision of this Agreement. The Parties shall consult one another
and use reasonable efforts to agree upon a valid and enforceable provision that is a reasonable substitute for the invalid or
unenforceable provision and this Agreement shall be automatically amended to reflect such mutually agreed provision.
10.8 Use
of Name. Neither Party shall use the other Party’s name (except in connection with disclosures permitted under Article
6) or logo without the other Party’s express prior written consent, which consent may be granted in the context
of the Parties mutually approving a press release or other public disclosure related to this Agreement.
10.9
Counterparts. This Agreement may be executed in counterparts, each of which counterparts, when so executed and delivered,
shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument.
10.10
Force Majeure. Neither Party will be responsible for delays resulting from causes beyond the reasonable control of such
Party, including fire, explosion, flood, war, strike, or riot, provided that the nonperforming Party uses Commercially
Reasonable Best Efforts for a company of its size and resources to avoid or remove such causes of nonperformance and continues
performance under this Agreement with reasonable dispatch whenever such causes are removed.
10.11
Dispute Resolution
(a)
Escalation. If any dispute arises out of or relates to this Agreement, the Parties agree to first seek to resolve such
dispute by referring such dispute to the respective Chief Executive Officers of each Party for resolution. Such referral shall
take place within thirty (30) days after a written request by either Party to the other Party that resolution by the Chief Executive
Officers be attempted. If, within sixty (60) days following the dispute being referred to the Chief Executive Officers of the
Parties, the Chief Executive Officers of the Parties have not resolved the dispute, and a Party wishes to pursue the matter, such
Party may initiate binding arbitration in accordance with Section 10.11(b).
(b)
Alternative Dispute Resolution. Any dispute arising out of or relating to this Agreement that has not been resolved pursuant
to Section 10.11(a) shall be shall be finally settled, in Tokyo in the event Century is a claimant and in New York in the
event CDI is a claimant, under the Rules of Arbitration of the International Chamber of Commerce (“ICC”). The
arbitral tribunal shall consist of three arbitrators, one nominated by the claimant in the request for arbitration, the second
nominated by the respondent within thirty (30) days of receipt of the request for arbitration, and the third, who shall act as
presiding arbitrator, nominated by the two party appointed arbitrators within twenty (20) days of the nomination of the second
arbitrator. If any arbitrators are not nominated within these time periods, the ICC the International Court of Arbitration shall,
upon the request of any Party, make the appointment(s).
(c)
No Limitation. Nothing in this Section 10.11 shall be construed as limiting in any way the right of a Party to seek
a preliminary injunction or other provisional relief with respect to any actual or threatened breach of this Agreement or to bring
an action in aid of arbitration. Should any Party seek an injunction or other equitable relief, or bring an action in aid of arbitration,
then for purposes of determining whether to grant such injunction or other equitable relief, or whether to issue any order in
aid of arbitration, the dispute underlying the request for such injunction or other equitable relief, or action in aid of arbitration,
may be heard by the court in which such action or proceeding is brought.
10.12
No Third Party Beneficiaries. No Person other than Century, CDI and their respective Affiliates, successors and permitted
assignees hereunder, shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.
10.13
Independent Contractors. It is expressly agreed that Century and CDI shall be independent contractors and that the relationship
between Century and CDI shall not constitute a partnership, joint venture or agency. Neither Century nor CDI shall have the authority
to make any statements, representations, or commitments of any kind, or to take any action, which shall be binding on the other
Party, without the prior written consent of such other Party.
[remainder
of page intentionally left blank]
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.
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FUJIFILM CELLULAR DYNAMICS, INC
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CENTURY THERAPEUTICS, INC.
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By:
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/s/ Seimi
Satahe
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By:
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/s/ Osvaldo
Flores
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Name:
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Seimi
Satahe
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Name:
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Osvaldo
Flores
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Title:
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CEO
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Title:
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Chief
Executive Officer
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Schedule
3.7(a)
Prohibited
Third Party Manufacturers
[***]
Exhibit
A
Licensed
Know-How
[***]
Exhibit
B
Licensed
Patent Rights
[***]
Exhibit
D
Press
Release
[***]
Exhibit 10.22
[***]
Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not
material and
the registrant customarily and actually treats as private and confidential.
Differentiation
Execution Version
FIRST
AMENDMENT TO LICENSE AGREEMENT
This
First Amendment to License Agreement (the “First Amendment”) is made and effective as of March 23,2021 (the
“First Amendment Effective Date”) between Century Therapeutics, Inc. (f/k/a Century Therapeutics, LLC), a Delaware
corporation (“Century”) having a principal place of business at 3675 Market Street, Philadelphia, PA 19104
USA, and FUJIFILM Cellular Dynamics Inc., a Wisconsin corporation (“CDI”) having an address at 525 Science
Drive, Madison, WI 53711 USA, and amends the License Agreement entered into between Century Therapeutics, Inc. (“Century
Inc.”) and CDI signed as of September 18,2018 (the “License Agreement”). All capitalized terms used
but not otherwise defined herein shall have the meaning set forth in the License Agreement.
RECITALS
WHEREAS,
on September 18, 2018, Century Inc. and CDI entered into the License Agreement;
WHEREAS,
pursuant to the License Agreement, CDI granted Century Inc. an exclusive license under the Licensed Technology to Exploit the
Licensed Products within the Field in the Territory;
WHEREAS,
pursuant to the Common Stock Purchase Agreement dated as of September 13, 2018, Century Inc. issued CDI 7,500,000 shares of Common
Stock of Century Inc., in satisfaction of Section 4.1 of the License Agreement;
WHEREAS,
Century Inc. has assigned all of its rights and obligations under the License Agreement to Century;
WHEREAS,
subject to the terms of the Supply Agreement, CDI desires to allow Century to practice the Licensed Technology for the differentiation
and manufacture of Licensed Products;
WHEREAS,
in consideration of the rights granted to Century pursuant to this First Amendment, Century desires to grant to CDI the option
to license certain Know-How and Improvements, on the terms and subject to the conditions set forth in this First Amendment; and
WHEREAS,
pursuant to, and in accordance with, Section 10.6 of the License Agreement, Century and CDI desire that the License Agreement
be amended as set forth herein.
THEREFORE,
in consideration of the mutual covenants and conditions set forth in this First Amendment, it is agreed as follows:
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1.
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Amendments
to the License Agreement.
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1.1. Section 1.17 of the License Agreement shall be amended and restated as follows:
““Exploit”
or “Exploitation” means, with respect to a particular Licensed Product, to make, have made, use, have used,
manufacture, have manufactured, sell, have sold, offer for sale, have offered for sale, import, have imported, export and have
exported, including to research, develop, commercialize or otherwise exploit such Licensed Product.”
1.2. Section 1.29 of the License Agreement shall be amended and restated as follows:
““Licensed
Know-How” means all Know-How that is Owned or Controlled by CDI as of the Effective Date or during the Term that is
reasonably necessary to Exploit a Licensed Product, including, without limitation, any Know-How set forth on Exhibit A. For clarity,
Licensed Know-How shall not include any Know-How related to the reprogramming of human somatic cells to iPSCs, and Century’s
rights in such Know-How, if any, are as set forth in the Reprogramming License.”
1.3. Section 1.31 of the License Agreement shall be amended and restated as follows:
““Licensed
Product” means cancer immunotherapy products (for the treatment of cancer in humans) consisting of cells that are or
are modifications of T cells, NK cells, dendritic cells, and macrophages derived from human iPSC (including TiPSC). For the sake
of clarity, such “modifications” exclude materials or substances extracted, isolated from, or secreted by, such modified
or unmodified cells.”
1.4. Section 1.32 of the License Agreement shall be amended and restated as follows:
““Licensed
Technology” means Licensed Patent Rights and Licensed Know-How. For clarity, Licensed Technology includes Improvements
of the Century Licensed Technology Owned or Controlled by CDI.”
1.5. Section 1.33 of the License Agreement shall be amended and restated as follows:
““Reserved.”
1.6. Section 1.43 of the License Agreement shall be amended and restated as follows:
““Regulatory
Documentation” shall mean all applications, registrations, licenses, authorizations and approvals (including all Regulatory
Approvals), all correspondence submitted to or received from Regulatory Authorities (including minutes and official contact reports
relating to any communications with any Regulatory Authority) and all supporting documents and all clinical studies and tests,
relating to the Licensed Products and all data contained in any of the foregoing, including all INDs, Regulatory Approvals, regulatory
drug lists, advertising and promotion documents, manufacturing data, drug master files, clinical data, adverse event files and
complaint files, but excluding all FCDI Regulatory Documentation.”
1.7. Section 1.48 of the License Agreement shall be amended and restated as follows:
““Supply
Agreement” has the meaning set forth in Section 3.7.”
1.8. After
giving effect to the amendments contemplated in Sections 1.1, 1.2, 1.3, 1.4, 1.5 and 1.6 above, Article 1 of the
License Agreement shall be amended to add the following definitions, in appropriate alphabetical and numerical order, and the
section numbers of Article 1 of the License Agreement and all cross references thereto in the License Agreement are hereby updated
to reflect the addition of such defined terms:
““Century
Manufacturing Technology” means any Know-How and other inventions, improvements, discoveries or developments, whether
or not patentable, Owned or Controlled by Century that are conceived of, reduced to practice, discovered, tested or developed
by or on behalf of Licensee in connection with Licensee’s exercise of its rights under the License Agreement or Collaboration
Agreement, in each case to the extent related to manufacturing, analytical development and/or process development. For purposes
of clarity, “Century Manufacturing Technology” does not include technologies of gene editing, targets and binders
and switches but does include, without limitation, any and all of the following:
(i) strategies, criteria or methods for analytical
test development and quality control test development for drug substances and/or drug products including, without limitation:
determination of the respective tests that are required for intermediates, release and characterization; the development of the
appropriate tests; and stability studies and shelf life determination; (ii) criteria and/or methods for cell expansion and scale
up process; methods for, and results from, a suite of in vitro and in vivo assays that test cell performance and function; and
evaluation analysis of such results; (iii) criteria, methods or processes relating to any of the following: closed unit operations
(example: closed continuous or batch centrifugation); scale up of cell expansion and cell harvest steps; process choreography,
i.e., the optimal order of combining streams, transferring streams, sampling and measuring intermediates, and defining hold times;
identification of standard, or design of custom-made, product-contact containers for combining streams, transferring streams,
and sampling; cell cryopreservation; drug product vial filling and visual inspection at large scale; and shipping and clinical
handling and administration of cryopreserved products; and (iv)pre-IND regulatory and Chemistry CMC strategies, interactions (meetings
and briefing books), and composition of an IND-enabling technical package supporting development of an immunotherapy for cancer
(where “IND” means an investigational new drug application with the FDA, or the equivalent application in any foreign
jurisdiction filed with another Regulatory Authority).”
““Collaboration
Agreement” means the Master Collaboration Agreement dated as of October 21, 2019 between Century and CDI, as amended
by Amendment No. 1 to Master Collaboration Agreement dated as of July 17, 2020, and by Amendment No. 2 to Master Collaboration
Agreement dated as of the First Amendment Effective Date.”
““FCDI
Regulatory Documentation” shall mean (i) all applications, registrations, licenses, authorizations and approvals (including
all Regulatory Approvals, if any), all correspondence submitted to or received from Regulatory Authorities (including minutes
and official contact reports relating to any communications with any Regulatory Authority) and all supporting documents and all
clinical studies and tests, in each case to the extent relating to any of the following (and not also to any Licensed Product):
(a) any Reprogrammed iPS Cells (including TiPSCs) manufactured by CDI, (b) the manufacture by CDI of any such Reprogrammed iPS
Cells (wherein such manufacture includes all activities performed by or on behalf CDI through (inclusive of) cryopreservation
of such Reprogrammed iPS Cells) and/or (c) the reprogramming plasmids used by CDI in any such manufacture and (ii) all data contained
in any of the foregoing in clause (i), including all INDs, Regulatory Approvals, regulatory drug lists, advertising and promotion
documents, manufacturing data, drug master files, clinical data, adverse event files and complaint files; and in each case of
(i) and (ii), to the extent owned and controlled by CDI.”
1.9. Section 2.1 of the License Agreement shall be amended and restated as follows:
“2.1
License Grants to Century. Subject to the terms and conditions of this Agreement, CDI hereby grants to Century the following licenses:
(a) an
exclusive, non-transferable (except in accordance with Section 10.3), fully paid-up, sublicensable (with the ability to
sublicense through multiple tiers) license under the Licensed Technology to Exploit the Licensed Products within the Field in
the Territory. Notwithstanding any term or implication herein to the contrary and for the sake of clarity, the foregoing license
excludes any license or right under the Licensed Patent Rights (i) to manufacture, have manufactured, sell, have sold, offer for
sale or have offered for sale any product or service to any third party in furtherance of any research or development of a Licensed
Product other than a Licensed Product that that is being researched, developed or commercialized by or on behalf of Century or
its Affiliates or Sublicensees, or (ii) to grant any sublicense to any Third Party to manufacture, have manufactured, sell, have
sold, offer for sale or have offered for sale any product or service to any other Third Party in furtherance of any research or
development of a product
other than a Licensed Product that that is being researched, developed or commercialized by or on behalf
of Century or its Affiliates or Sublicensees; and
(b) an
exclusive, non-transferable (except in accordance with Section 10.3), fully paid-up, license and right of reference, with the
right to grant sublicenses through multiple tiers and further rights of reference, under any Regulatory Documentation Owned
and Controlled by CDI and any master file included in the FCDI Regulatory Documentation at any time during the Term so long
as CDI Owns or Controls such Regulatory Documentation, to Exploit the Licensed Products within the Field in the
Territory.”
1.10.
Section 2.2(c) of the License Agreement shall be amended and restated as follows:
“(c)
a fully paid-up, non-exclusive, non-transferable (except in accordance with
Section 10.3), sublicensable (with the ability to sublicense through multiple tiers) worldwide license under the Century Licensed
Technology and Century Manufacturing Technology to manufacture the Licensed Products in the Field; and”
1.11.
After giving effect to the amendment in Section 1.9 above, Section 2.2 of the License Agreement shall be amended to include a
new paragraph (d) which provides:
“(d)
a fully paid-up, non-exclusive, non-transferable (except in accordance with
Section 10.3), sublicensable (with the ability to sublicense through multiple tiers) worldwide license under the Century Manufacturing
Technology for manufacturing and process development activities outside of the Field for cells other than human iPSC (including
TiPSC)-derived T cells, NK cells, macrophages and dendritic cells; [***].”
1.12. Section 2.5(c) of the License Agreement shall be amended and restated as follows:
“(c)
Century shall use commercially reasonable efforts to include in any sublicense by Century or any Affiliate of Century to a Third
Party (or any further sublicenses by the applicable Sublicensee) of any rights granted by CDI under Section 2.1 that the
Sublicensee will grant to Century licenses to any Sublicensee Technology and licenses and rights of reference under any Regulatory
Documentation on terms that are substantially similar to the licenses granted by CDI to Century in Section 2.1 (but with
respect to outside the Territory) (replacing all references to the “Territory” under Section 2.1 with “outside
the Territory”), which license must be fully sublicensable to CDI (through multiple tiers) pursuant to the terms and conditions
of this Agreement. In such event, such Sublicensee Technology will be deemed Century Licensed Technology or Century Manufacturing
Technology, as applicable, hereunder and included within the licenses granted to CDI hereunder. Notwithstanding any provision
to the contrary, in the event Century obtains from the Sublicensee (a) licenses to any and all Sublicensee Technology and (b)
licenses and rights of reference under any Regulatory Documentation Owned or Controlled by Sublicensees (and its Affiliates),
to Exploit the Licensed Products in the Field, Century shall ensure to make such licenses and rights sublicensable to CDI (through
multiple tiers) to in the case of Century Licensed Technology, Exploit the Licensed Products in the Field outside the Territory.”
1.13. Section 2.5(d) of the License Agreement shall be amended and restated as follows:
(d) CDI
shall use commercially reasonable efforts to include in any sublicense by CDI to a Third Party (or any further sublicenses by
the applicable Sublicensee) of any rights granted by Century under Section 2.2 that the Sublicensee will grant to CDI licenses
to any Sublicensee Technology and licenses and rights of reference under any Regulatory Documentation and any master file included
in the FCDI Regulatory Documentation on terms that are substantially similar to the licenses granted by Century to CDI in Section
2.2 (but with respect to the Territory) (replacing all references to the “outside the Territory” with “Territory”),
which license must be fully sublicensable to Century (through multiple tiers) pursuant to the terms and conditions of this Agreement.
In such event, such Sublicensee Technology will be deemed Licensed Technology hereunder and included within the licenses granted
to Century hereunder. Notwithstanding any provision to the contrary, in the event CDI will obtain from the Sublicensee (a) licenses
to any and all Sublicensee Technology and (b) licenses and rights of reference under any Regulatory Documentation Owned or Controlled
by Sublicensees (and its Affiliates), to Exploit the Licensed Products in the Field, CDI shall ensure to make such licenses and
rights sublicensable to Century (through multiple tiers) to Exploit the Licensed Products in the Field in the Territory.”
1.14. Section 2.5(e) of the License Agreement shall be amended and restated as follows:
“(e)
For purposes of Sections 2.5(c) and 2.5(d), “Sublicensee Technology” means any and all Know-How and
Patent Rights that such Sublicensee (and its Affiliates) controls by way of
developing, generating, or inventing during the term of the applicable sublicense agreement in the course of activities for the
Exploitation of the Licensed Products or otherwise in the exercise of the sublicensed rights thereunder and that are necessary
or useful for (i) the Exploitation of the Licensed Products in the Field or (ii) manufacturing and process development activities
outside of the Field for cells other than human iPSC (including TiPSC)-derived T cells, NK cells, macrophages and dendritic cells.”
1.15. Section 2.7 of the License Agreement shall be amended and restated as follows:
“2.7
Regulatory Related Matters.
“(a)
Technical Support. Each Party shall, or shall cause its Affiliates to, use
commercially reasonable efforts to provide the other Party (including such other Party’s Affiliates) with the necessary
technical support and transfer of Century Know How or Licensed Know-How or Regulatory Documentation where necessary to allow such
Party to Exploit the Licensed Products in the Field in its respective territory pursuant to this Agreement, and in accordance
with this Section 2.7. Further, CDI expressly agrees that Century shall have the right to reference any drug master files
and all equivalents, and related proprietary dossiers, in any country or jurisdiction, as required by a Regulatory Authority maintained,
or that at any time during the Term become maintained, by CDI in the ordinary course of business relating to the Licensed Technology
insofar as such information is necessary in connection with obtaining any Regulatory Approval for Licensed Products in the Field
in the Territory. Century expressly agrees that CDI shall have the right to reference any drug master files and all equivalents,
and related proprietary dossiers, in any country or jurisdiction, as required by a Regulatory Authority maintained, or that at
any time during the Term become maintained, by Century and its Affiliates and their respective Sublicensees in the ordinary course
of business relating to the Century Licensed Technology insofar as such information is necessary in connection with obtaining
any Regulatory Approval for Licensed Products in the Field outside the Territory.
(b) Other
Regulatory Matters. The provisions of Section 8 of the Quality Agreement and Section 2.0 of the Table set forth in the Quality
Agreement shall apply to this Agreement, mutatis mutandis. To the extent the Quality Agreement expires or is terminated
prior to the expiration or earlier termination of this Agreement, such provisions of the Quality Agreement will survive such expiration
or termination for purposes of this Section 2.7, and be incorporated herein by reference.”
1.16. Article 2 of the License Agreement shall be amended to include a new Section 2.10 which provides:
“2.10
Tech Transfer of Century Manufacturing Technology. After the First Amendment Effective Date and during the Term, Century
will use commercially reasonable efforts to disclose to CDI Century Manufacturing Technology in existence on the First Amendment
Effective Date, including, but not limited to, by providing access to and information transfer of Century Manufacturing Technology
and providing copies or samples of relevant documentation, materials, and other embodiments of such Century Manufacturing Technology,
in the ordinary course of business and as hereinafter provided in this
Section 2.10. After the First Amendment Effective Date but not later than on the [***] anniversary of the First Amendment Effective
Date, the Parties will establish a plan for the initial disclosure by Century of Century Manufacturing Technology in existence
on the First Amendment Effective Date to CDI. The JSC will oversee and facilitate Century’s performance of such disclosure.
In addition, during the Term, upon the request by CDI, but not more than twice per Calendar Year, Century will promptly disclose
to CDI any new Century Manufacturing Technology developed, Owned or Controlled by Century and provide copies or samples of relevant
documentation, materials, and other embodiments of such Century Manufacturing Technology.”
1.17. Section 3.7 of the License Agreement shall be amended and restated as follows:
“3.7
Manufacture. Effective as of the First Amendment Effective Date, the Parties are entering into a manufacturing and supply
agreement under which CDI or its Affiliate will manufacture and supply human iPSC (including TiPSC) and CDI and/or its Affiliates
or contractors would manufacture and supply certain Licensed Products, in each case, to Century for itself and its Affiliates
and Sublicensees (as the same may be amended from time to time, the “Supply Agreement”) and as of June 29,
2020, entered
into a quality agreement which provides the responsibilities of Century and CDI or its Affiliates for quality assurance of human
iPSC (including TiPSC) and such Licensed Products (as the same may be amended from time to time, the “Quality Agreement”).
Except as set forth in the Supply Agreement, Century shall have the sole discretion whether to manufacture and supply iPSC (including
TiPSC) or Licensed Products itself or through its Affiliates or to use CDI or a Third Party, other than any manufacturer set forth
on Schedule 3.7 (such Third Party, a “Century CMO”) for such manufacture and supply.”
1.18. Section 9.6 of the License Agreement shall be amended and restated as follows:
“9.6
Termination for Convenience. Century may terminate this Agreement, at any time and for any reason or no reason, in its
entirety or on an indication- by-indication basis, a Licensed Product- by-Licensed Product basis (to exclude such product from
the Field) or country- by-country basis (to eliminate such country from the Territory), by providing ninety (90) days’ prior
written notice to CDI. The termination shall become effective at the end of the ninety (90) day period. The indication in respect
of which Century terminates this Agreement is referred to herein as the “Abandoned Indication.”
1.19. The License Agreement shall be amended such that each reference to Schedule 3.7(a) are replaced as references to Schedule 3.7.
2. Notice.
Pursuant to, and in accordance with Section 10.2 of the License Agreement, as of the First Amendment Effective Date, Century’s
contact information is as follows:
If
to Century:
Century
Therapeutics, Inc.
3675
Market Street
Philadelphia,
PA 19104
Attention:
Chief Executive Officer
Email:
lalo@centurytx.com
With
a copy to:
Troutman
Pepper Hamilton Sanders LLP
3000
Two Logan Square
Philadelphia,
PA 19103
Attention:
Rachael M. Bushey, Esq.
Email:
rachael.bushey@troutman.com
3.1. Effect
of this First Amendment. This First Amendment amends the terms of the License Agreement and is deemed incorporated into, and
governed by all other terms of, the License Agreement. To the extent that the License Agreement is explicitly amended by this
First Amendment, the terms of this First Amendment will control where the terms of the License Agreement are contrary to or conflict
with the terms of this First Amendment. All other terms and conditions of the License Agreement not explicitly amended by this
First Amendment shall remain in full force and effect. The License Agreement shall, together with this First Amendment, be read
and construed as a single instrument.
3.2. Counterparts. This First Amendment may be signed in any number of counterparts, including facsimile copies thereof or electronic
scan copies thereof delivered by electronic mail, each of which shall be deemed an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
[remainder
of page intentionally left blank]
IN
WITNESS WHEREOF, the Parties have executed this First Amendment as of the First Amendment Effective Date.
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CENTURY THERAPEUTICS,
INC.
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By:
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/s/ Osvaldo Flores
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Name: Osvaldo Flores, Ph.D.
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Title: President and Chief Executive Officer
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FUJIFILM CELLULAR DYNAMICS INC.
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By:
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/s/ Takeshi Yamamoto
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Name: Takeshi Yamamoto
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Title: President and Chief Executive Officer
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[Signature
page to First Amendment to License Agreement]
Exhibit
10.23
[***]
Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not
material and the registrant customarily and actually treats as private and confidential.
LICENSE
AGREEMENT
This
License Agreement (including any exhibits attached hereto, this “Agreement”) is made and is effective on the
Effective Date between Century Therapeutics, Inc., a Delaware corporation (“Century”) having an address at
54 West 21st Street, Suite 408, New York, NY 10010 USA and FUJIFILM Cellular Dynamics Inc., a Wisconsin corporation (“CDI”)
having an address at 525 Science Drive, Madison, WI 53711 USA. Century and CDI are each referred to as a “Party”
and collectively referred to as the “Parties.”
Recitals
WHEREAS,
Century is a biotechnology company interested in development and commercialization of cancer immunotherapy products based
on T cells, NK cells, dendritic cells, and macrophages derived from human iPSCs (as defined below) exclusively manufactured by
CDI, subject to the terms and conditions of this Agreement;
WHEREAS,
CDI possesses and controls certain patent rights related to the reprogramming of human somatic cells to iPSCs; and
WHEREAS,
Century wishes to obtain, and CDI wishes to grant to Century, a non- exclusive license under the Licensed Patent Rights (as
defined below) for the research, development and commercialization of the Licensed Products (as defined below) in the Territory
(as defined below) within the Field (as defined below), with the right to grant sublicenses as set forth herein, in all cases
subject to the terms and conditions of this Agreement;
NOW
THEREFORE, CDI and Century, intending to be legally bound, agree as follows:
Article
1
Definitions
1.1 “Abandoned Indication” shall have the meaning set forth in Section 9.6
1.2 “Affiliate” means, with respect to a Party, any Person that controls, is controlled by, or is under common
control with such Party. For purposes of this Section 1.2, “control” shall refer to (a) in the case of a Person
that is a corporate entity, direct or indirect ownership of more than fifty percent (>50%) of the stock or shares having the
right to vote for the election of directors of such Person and (b) in the case of a Person that is not a corporate entity, the
possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
1.3 “Bankruptcy Code” has the meaning set forth in Section 2.7(a).
1.4 “BLA” means a Biologics License Application as defined in the United States Federal Food, Drug, and Cosmetic
Act and the regulations promulgated thereunder (21 C.F.R. §§ 314 et seq).
1.5 “Business Days” means a day that is not a Saturday, Sunday or a day on which banking institutions in Boston,
Massachusetts or Wisconsin are authorized by Law to remain closed.
1.6 “Calendar Year” means each successive period of twelve (12) months commencing on January 1 and ending on December
31; provided, however, that the first Calendar Year hereunder shall commence on the Effective Date and the final Calendar
Year hereunder shall end on the effective date of termination or expiration of this Agreement.
1.7 “Change of Control Event” means (i) the sale or disposition of all or substantially all the assets of the Century
or its direct or indirect parent corporation; (ii) the reorganization, merger, consolidation, or similar transaction involving
the Century or its direct or indirect parent corporation which results in the voting securities of such entity outstanding immediately
prior to that transaction ceasing to represent at least fifty percent (50%) of the combined voting power of the surviving entity
immediately after such transaction; (iii) the acquisition in one or more transactions by any “person”, as that term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
together with any of such person’s “affiliates” or “associates”, as such terms are used in the Exchange
Act, of fifty percent (50%) or more of the outstanding shares of the voting capital stock of the Century or its direct or indirect
parent corporation (excluding any employee benefit plan or related trust sponsored or maintained by that entity); or (iv) any
event or series of events in which the individuals who are the directors of the Century or its direct or indirect parent corporation
as of the Effective Date (“Incumbent Directors”) cease for any reason to constitute at least fifty percent
(50%) of the board of directors of that entity; provided, however, that if any new director is approved by a vote of at
least fifty percent (50%) of the Incumbent Directors, such new director will be considered an Incumbent Director.
1.8 “Collaboration Agreement” means a master collaboration agreement to be entered into the Parties pursuant to
Section 3.5.
1.9 “Commercialize” means to engage in any and all activities directed to transporting, storing, marketing, detailing,
promoting, distributing, importing, exporting, using, offering to sell or selling a product.
1.10 “Commercially Reasonable Best Efforts” means efforts consistent with the efforts and resources as commonly
used by a pharmaceutical or biotechnology company, as applicable, of comparable size and resources of such Party for a product
at a similar stage of research, development or commercialization having similar product characteristics at a similar stage in
its development or product life, taking into account relevant factors including patent coverage, relative safety and efficacy,
product profile, the competitiveness of the marketplace, the proprietary position of such product, the regulatory structure involved,
the market potential of such product and other relevant factors, including comparative technical, legal, scientific, medical and/or
economic factors, all as measured by the facts and circumstances in effect at the time when the relevant activities are conducted.
1.11 “Confidential
Information” means any confidential or proprietary information furnished by one Party (or its Affiliate) to the other Party
(or its Affiliate) in connection with this
Agreement, whether during the Term or prior to the execution hereof, provided that
such information is (a) specifically designated as confidential at the time of disclosure or confirmed as confidential within ten
(10) Business Days of disclosure, (b) reasonably identifiable by an individual familiar with the industry as confidential or
proprietary or (c) accompanied by correspondence indicating such information is exchanged in confidence between the Parties. Without
limiting the generality of the foregoing, Confidential Information includes:
(a)
non-public information disclosed by Century to CDI in reports submitted by Century to CDI pursuant to Section 3.2;
(b)
non-public information disclosed by Century to CDI relating to patent application prosecution files for the Licensed Patent Rights;
(c)
any information that constitutes “Confidential Information” under that certain Mutual Non-disclosure Agreement, dated
February 14, 2018, by and between CDI, Fujifilm and Versant Venture Management, LLC (“Versant”) (which for
purposes of this Agreement, any “Confidential Information” of Versant shall be considered the Confidential Information
of Century hereunder);
(d)
the terms of this Agreement and WARF License Agreement;
(e)
the Development Plan and the Development Report;
(f)
the royalty accounting reports set forth in Section 4.1 (c)(iii); and
(g)
non-public information in relation to the Licensed Patent Rights.
1.12 “Controlled” means, with respect to Patent Rights as such relates to a Party or its Affiliates, that such Party
or applicable Affiliate owns or has a license or sublicense to such Patent Rights and has the legal right to grant a license or
sublicense, including having received any necessary Third Party consents, to such Patent Rights to the other Party as provided
for in this Agreement, or has the ability to assign its right, title and interest in and to such Patent Rights to the other Party,
without violating the terms of any agreement or other arrangement with any Third Party. Notwithstanding the foregoing, with respect
to any Patent Right acquired or in- licensed for which a Party would be required to make payments to any Third Party in connection
with the license or access granted to the other Party under this Agreement, such Patent Right will only be treated as “Controlled”
by the licensing Party pursuant to the terms of Article 2.
1.13 “Derivative Materials” means Reprogrammed iPS Cell Derivative Materials.
1.14 “Development” and “Developments” means (i) Derivative Materials; (ii) any inventions, discoveries
or developments, whether patentable, that are conceived of, reduced to practice, discovered, tested or developed through the use
of the inventions of the Licensed Patent Rights, Reprogrammed iPS Cells or Derivative Materials; and (iii) any compositions, products
or other materials in which the Reprogrammed iPS Cells or Derivative Materials were used in any way in their discovery or testing.
1.15 “Development Plan” has the meaning as set forth in Section 3.3 of Differentiation License Agreement.
1.16 “Development Report” means the written report of Century’s (or its Sublicensee(s)’) progress under
the Development Plan, or since the previously submitted Development Report, as provided under Section 3 having at least the information
specified on Exhibit C of this Agreement.
1.17 “Differentiation License Agreement” means a certain agreement entered into between the Parties on Effective
Date under which CDI grants an exclusive license to Century under certain patent rights and know-how related to human iPSC-derived
T cells, NK cells, dendritic cells, and macrophages under the terms and conditions set forth therein.
1.18 “DMF” means a drug master file and all equivalents, and related proprietary dossiers, in any country or jurisdiction
for the Licensed Products with appropriate information related to the reprogramming of human somatic cells to iPSCs for the regulatory
submission for the Licensed Product and the development of the Licensed Products.
1.19 “Effective Date” shall have the meaning set forth in Section 9 of this Agreement.
1.20 “European Union” or “E.U.” means the economic, scientific, and political organization of
member states known as the European Union, as its membership may be altered from time to time, and any successor thereto, and
includes, for purposes of this Agreement, Great Britain (whether Great Britain is a member of the E.U. or not).
1.21 “Exploit” or “Exploitation” shall mean, with respect to a particular Licensed Product, to
make, have made, use, have used, sell, have sold, offer for sale, have offered for sale, import, and have imported, including
to research, develop, Commercialize or otherwise exploit, such Licensed Product, provided, however “Exploit” or “Exploitation”
does not include any activities to make or have made human iPSC by reprogramming of human somatic cells into iPSC.
1.22 “FDA” means the United States Food and Drug Administration and any successor agency thereto.
1.23 “Field” means any cancer immunotherapeutic use in humans and subject to a prior written agreement between the
Parties pursuant to Section 10.6, any other use.
1.24 “Fujifilm” means Fujifilm Corporation.
1.25 “ICC” shall have the meaning set forth in Section 10.11(b).
1.26 “Indemnified Party” shall have the meaning set forth in Section 8.3.
1.27 “Indemnifying Party” shall have the meaning set forth in Section 8.3.
1.28 “Intellectual
Property” means ideas, concepts, discoveries, inventions, developments, Know-How, trade secrets, techniques, methodologies,
modifications, innovations,
improvements,
writings, documentation, electronic code, data and rights (whether or not protectable under state, federal or foreign patent, trademark,
copyright or similar laws) or the like, whether or not written or otherwise fixed in any form or medium, regardless of the media on which
contained and whether or not patentable or copyrightable.
1.29 “iPSC(s)” means human induced pluripotent stem cell(s), including T-cell- derived induced pluripotent stem
cell(s) (TiPSC).
1.30 “Know-How” means any and all commercial, technical, regulatory, scientific and other know-how and information,
knowledge, technology, materials (including biological and chemical materials), methods, processes, practices, standard operating
procedures, formulae, instructions, skills, techniques, procedures, assay protocols, experiences, ideas, technical assistance,
designs, drawings, assembly procedures, specifications, regulatory filings, data and results (including biological, chemical,
pharmacological, toxicological, pharmaceutical, physical and analytical, pre-clinical, clinical, safety, regulatory, manufacturing
and quality control data and know-how, including study designs and protocols), whether or not confidential, proprietary or patentable,
in written, electronic or any other form.
1.31 “Law” means all laws, statutes, rules, codes, regulations, orders, judgments or ordinances applicable to a
Party, this Agreement or the activities contemplated hereunder.
1.32 “Licensed Patent Rights” means (i) those patent and patent applications listed on Exhibit B and (ii) Patent
Rights Owned by CDI at any time during the Term that are (a) related to reprogramming of human cells to iPSCs and (b) reasonably
essential to Exploit a Licensed Product.
1.33 “Licensed Product” means cancer immunotherapy products (for the treatment of cancer in humans) consisting of
cells that are or are modifications of T cells, NK cells, dendritic cells, and macrophages derived from human iPSC (including
TiPSC) exclusively manufactured by CDI. For the sake of clarity, such “modifications” exclude materials or substances
extracted, isolated from, or secreted by, such modified or unmodified cells.
1.34 “Non-Commercial Research Purposes” means use of the technology for internal academic research purposes or other
internal not-for-profit or scholarly purposes not involving the use of the technology to perform services for a fee or for the
production or manufacture of products for sale to third parties.
1.35 “Owned” means, with respect to patents, patent applications that a Person owns, solely or jointly, in each
case with the ability to grant a right, license, or access to such material, information or Intellectual Property right to another
Person on the terms and conditions set forth herein, without violating the terms of any agreement or other arrangement with any
of such Person’s Affiliates and/or Third Party(ies). “Ownership” has the correlative meaning.
1.36 “Patent
Rights” means with respect to any patents or patent applications, (a) such patents or patent applications; (b) patents
issuing from such patent applications; (c) substitutions, divisionals, renewals, continuations or continuations-in-part (only
to the extent of claims that are entitled to the priority date of the parent application); (d) patents of addition, restorations,
extensions, supplementary protection certificates, registration or confirmation patents, patents
resulting from post-grant proceedings, re-issues and re-examinations; (e) other patents or patent applications claiming and entitled
to claim priority to (i) such patents and patent applications specified in (a), (b), (c) or (d) or (ii) any patent or patent
application from which such patents and patent applications specified in (a), (b), (c) or (d) claims and is entitled to claim
priority; (f) all rights of priority attendant to such listed in (a) through (e); and (g) in each case of such patents and patent
applications described in (a) through (e), including all counterparts and foreign equivalents thereof filed in any country,
territory or jurisdiction in the world.
1.37 “Person” means any natural person or any corporation, company, partnership, joint venture, firm or other entity,
including a Party, or any government or agency or political subdivision thereof.
1.38 “Regulatory Approval” means, with respect to a country or territory, the approvals (including any applicable
governmental price and reimbursement approvals), licenses, registrations or authorizations of Regulatory Authorities necessary
for the commercialization of a pharmaceutical product in such country or territory, including, as applicable, approval of an BLA
or comparable filing in the United States or approval of a comparable filing in any other country or jurisdiction.
1.39 “Regulatory Authority” means a federal, national, multinational, state, provincial or local regulatory agency,
department, bureau or other governmental entity with authority over the testing, manufacture, use, storage, import, promotion,
marketing or sale of a product in the applicable country.
1.40 “Reprogrammed iPS Cells” means cells obtained or created by changing the state of a cell to a state of pluripotency
using methods or materials that would otherwise constitute infringement of any of the claims of the Licensed Patent Rights.
1.41 “Reprogrammed iPS Cell Derivative Materials” means any compositions or materials derived from the use of Reprogrammed
iPS Cells, or produced by the use of Reprogrammed iPS Cells, or which incorporate wholly or partially Reprogrammed iPS Cells,
including without limitation, fully or partially differentiated cells or cell lines derived from Reprogrammed iPS Cells.
1.42 “SEC Filing” shall have the meaning set forth in Section 6.4(d).
1.43 “Selling
Price” means (a) in the case where Century transacts a sale with an end user (including an end user that is an
Affiliate), the invoice price to the end user of Licensed Products (regardless of uncollectible accounts) less any shipping
costs, allowances because of returned Licensed Products, or sales taxes; (b) in the case where Century transacts a sale with
a Third Party or an Affiliate for the purposes of enabling the Third Party or Affiliate to directly or indirectly resell or
distribute Licensed Products and where Century does not have the ability to know the price an end user pays to Third Party or
Affiliate, the average invoice price to the end user of that type of Licensed Product during the applicable calendar quarter
(regardless of uncollectible accounts) less any shipping costs, allowances because of returned Licensed Products, or sales
taxes; and (c) in the case where Century transacts a sale with a Third Party or an Affiliate for the purposes of enabling the
Third Party or Affiliate to directly or indirectly resell
or distribute Licensed Products and where Century does have the
ability to know the price an end user pays to Third Party or Affiliate, the invoice price to the end user of Licensed
Products (regardless of uncollectible accounts) less any shipping costs, allowances because of returned Licensed Products, or
sales taxes. The “Selling Price” for a Licensed Product that is transferred to a Third Party without charge or at
a discount, e.g., for promotional purposes, will be the average invoice price to the end user of that type of Licensed
Product during the applicable calendar quarter.
1.44 “Signing Date” means the date on which an authorized representative of either Party last executed this Agreement.
1.45 “Sublicensee” shall have the meaning set forth in Section 2.3(a).
1.46 “Term” means the term of this Agreement as provided in Section 9.1.
1.47 “Territory” means worldwide, excluding Japan and any country(ies) eliminated from the Territory pursuant to
Section 9.6.
1.48 “Third Party” means any Person other than a Party or any of its Affiliates.
1.49 “United States” or “U.S.” means the United States of America and its territories and possessions
(including the District of Columbia and Puerto Rico).
1.50 “WARF License Agreement” means the License Agreement, dated as of June 6, 2012, between Wisconsin Alumni Research
Foundation (“WARF”) and CDI, as amended.
1.51 “WARF Patent Rights” means the Licensed Patent Rights that are licensed to CDI by WARF under the WARF License
Agreement.
Article
2
License Grant; Technology Transfer
2.1 License
Grants to Century. Subject to the terms and conditions of this Agreement and WARF License Agreement, CDI hereby grants to Century,
a non-exclusive, non- transferable (except in accordance with Section 10.3), royalty bearing, sublicensable (with limitation as
set forth in Section 2.3(a)) license under the Licensed Patent Rights to Exploit the Licensed Products within the Field in the
Territory. Notwithstanding any term or implication herein to the contrary and for the sake of clarity, the foregoing license excludes
any license or right under the Licensed Patent Rights (i) to manufacture, have manufactured, sell, have sold, offer for sale or have
offered for sale any product or service to any Third Party in furtherance of any research or development of a Licensed Product other
than a Licensed Product that is being researched, developed or Commercialized by or on behalf of Century or its Affiliates or Sublicensees,
or (ii) to grant any sublicense to any Third Party to manufacture, have manufactured, sell, have sold, offer for sale or have offered
for sale any product or service to any other Third Party in furtherance of any research or development of a Licensed Product other than
a Licensed Product that that is being researched, developed or commercialized by or on behalf of
Century or its Affiliates or
Sublicensees. License Grants to CDI. Subject to the terms and conditions of this Agreement, Century (on behalf of
itself and its Affiliates) hereby grants to, and will require its Sublicensee(s) to grant, to CDI the following licenses and
options:
(a) a world-wide, non-exclusive, royalty-free, irrevocable, paid-up license, with the right to grant sublicenses, to WARF, the University
of Wisconsin, the WiCell Research Institute and the Morgridge Institute for Research, to make, have made, use and otherwise practice
Developments for Non-Commercial Research Purposes in organizations associated with either WARF or the University of Wisconsin;
(b) a non-exclusive, non-transferable (except in accordance with Section 10.3), fully paid-up, sublicensable (with the ability
to sublicense through multiple tiers) license (i) to make, have made, use and otherwise practice Developments made by Century
or its Affiliates or Sublicensees in the Field outside the Territory or within the Territory in connection with Abandoned Indication
and (ii) to practice Developments to manufacture the Licensed Products in the Field worldwide; and
(c) an option to obtain a non-exclusive, non-transferable (except in accordance with Section 10.3), sublicensable (with the
ability to sublicense through multiple tiers) license, under Intellectual Property Rights that are owned or controlled by a Third
Party and licensed to Century or its Affiliate to Exploit the Licensed Products in the Field outside the Territory or within the
Territory in connection with the Abandoned Indication, provided, however, in the event Century or its Affiliates or Subcontractors
are required to pay royalty for its sublicense to CDI and its Sublicensees the Parties will agree on an equitable apportionment
of any royalty between the Parties to reflect the fair value attributable to the use of such Intellectual Property Rights for
the Exploitation of the Licensed Products in each Party’s territory.
2.3. Sublicensing.
(a) Subject to the terms and conditions of this Agreement and WARF License Agreement, Century shall have the right to grant sublicenses
under the license granted to it under Section 2.1 to Affiliates and Third Parties (each, a “Sublicensee”)
through multiple tiers; provided that any such sublicense shall only be through one tier solely, if such sublicense includes
a sublicense of Licensed Patent Rights under the WARF License Agreement and the terms of such license require the consent of WARF
thereunder for Sublicensee to have further rights to sublicense; provided further that any sublicense shall be pursuant
to a written agreement and each sublicense shall be subject to terms and conditions no less restrictive than those set forth in
this Agreement. For the avoidance of doubt, each sublicense terminates automatically upon the termination of this Agreement.
(b) Century shall have the same responsibility for the activities of any Sublicensee as if the activities were directly those of
Century. Century shall be responsible for each of its Sublicensees complying with all obligations of Century under this
Agreement that are applicable to sublicenses and any breach by a Sublicensee under any such sublicense shall be deemed to be
a breach of Century under this Agreement. Century will provide CDI with the name, contact information and address of each
Sublicensee, as well as information regarding the number of full-time employees of any such Sublicensee. Century will provide
to CDI copies of
each sublicense agreement and any amendments thereto within thirty (30) days of executing a sublicense. If
such sublicense includes a sublicense of Licensed Patent Rights under the WARF License Agreement and the terms thereof
promptly and without condition from such licensor its consent to such sublicense and shall provide Century with copies of all
communications with or from WARF promptly after transmission or receipt, as applicable, related to such efforts to obtain
consent.
(c) If this Agreement is terminated for any reason other than by Century pursuant to Section 9.6, then, at the option of any
Sublicensee not in default of the applicable sublicense (or any provision of this Agreement applicable to such Sublicensee), a
terminating Party shall use Commercially Best Efforts to execute a possible direct license arrangement with such Sublicensee under,
and subject to the terms and conditions of, this Agreement.
2.4 Technical Support. CDI shall, or shall cause its Affiliates to, use Commercially Reasonable Best Efforts to provide Century
(including Century’s Affiliates) with the reasonably necessary technical support where reasonably necessary to allow Century
to Exploit the Licensed Products in the Field in the Territory pursuant to this Agreement. Further, CDI expressly agrees that
Century shall have the right to reference any DMF as required by a Regulatory Authority maintained, or that at any time during
the Term becomes maintained, by CDI in the ordinary course of business insofar as such DMF is necessary in connection with obtaining
any Regulatory Approval by Century or its Sublicensees for Licensed Products in the Field in the Territory. For clarification,
CDI may establish and maintain DMF with appropriate information for the regulatory submissions of Century, and its Sublicensees
for the Licensed Product and the Development of the Licensed Product in the Territory. Century expressly agrees that CDI shall
have the right to reference any DMF that are maintained, or that at any time during the Term becomes maintained, by Century and
its Sublicensees in the ordinary course of business relating to the Developments insofar as such information is necessary in connection
with obtaining any Regulatory Approval for Licensed Products in the Field outside the Territory.
2.5 No
Implied License. Except as explicitly set forth in this Agreement, neither Party shall acquire any license, intellectual property
interest or other rights, by implication or otherwise, in any Know-How or under any Patent Rights Owned or Controlled by the other
Party or its Affiliates.
2.6 WARF License Agreement.
(a) Limitations
under the WARF License Agreement. The license set forth in Section 2.1 includes sublicenses under the WARF License Agreement.
CDI has, prior to the Effective Date, provided Century with copies of the WARF License Agreement (including all amendments). Century
acknowledges that its rights with respect to the WARF Patent Rights are subject to the terms and conditions of the WARF License Agreement,
including the field limitations and rights reserved to Third Parties. Century acknowledges that the license grant to CDI under the WARF
License Agreement (A) is limited to products or services that are used (x) as research tools in drug discovery and development of the
Licensed Products of Century or its Sublicensees, and (y) in the treatment of disease in humans, as applicable, and, therefore, that
the license grant to Century under Section 2.1 with respect to the WARF Patent Rights in-licensed by CDI pursuant to the WARF
License Agreement shall be only in such fields as to CDI’s rights
to such WARF Patent Rights, and (B) such license is subject to rights retained by the
U.S. Government and the license grant to Century under Section 2.1 with respect to the Licensed Patent Rights
in-licensed by CDI pursuant to the WARF License Agreement is subject to the provisions of 37 C.F.R. Part 401 of the U.S.
Federal Regulations.
(b) CDI hereby acknowledges and agrees to the extent permitted by applicable law that CDI will not [***].
(c) Covenants Regarding the WARF License Agreements CDI agrees that during the Term:
(i) CDI shall not modify, amend or terminate any of its rights or obligations under the WARF License Agreement to Century’s
disadvantage without Century’s prior written consent which consent shall not be unreasonably withhold, delayed or conditioned.
CDI shall provide Century with a copy of any modified or amended the WARF License Agreement;
(ii) To the extent CDI has not disclosed to Century CDI’s non- compliance with the WARF License Agreement, as of the Effective
Date, CDI shall promptly notify Century if CDI knows or reasonably believes that it will not be able to comply with the terms
and conditions of the WARF License Agreement;
(iii) CDI shall furnish Century with copies of all notices received by CDI relating to any alleged breach by CDI under the WARF License
Agreement within ten (10) Business Days after CDI’s receipt thereof; in addition, if CDI should at any time breach an the
WARF License Agreement or become unable to timely perform its obligations thereunder, CDI shall immediately notify Century unless
Century has not been advised of similar types of CDI’s non-performance of the WARF License Agreement;
(iv) If
CDI cannot cure or otherwise resolve any alleged breach under the WARF License Agreement, CDI shall so notify Century within [***]
of CDI’s first becoming aware of such inability, which shall not be less than [***] prior to the expiration
of the cure period under the WARF License Agreement; provided that CDI shall use commercially reasonable efforts to cure or
otherwise resolve any such alleged breach; and
(v) Notwithstanding
any provision to the contrary CDI shall reserve its rights to terminate the WARF License Agreement with due cause at any
time during the
Term in which event CDI shall use Commercially Reasonable Best Efforts to cause WARF to enter into a direct
license with Century under the terms no less favorable than those under this Agreement. CDI shall not be held responsible for
terminating the WARF License Agreement so long as Century may enter into a comparable direct license with WARF with the
assistance of CDI.
2.7 Section
365(n) of the Bankruptcy Code
(a)
All rights and licenses granted under or pursuant to any section of this Agreement are and will otherwise be deemed to be for
purposes of Section 365(n) of the United States Bankruptcy Code (Title 11, U.S. Code), as amended or any comparable Law outside
the United States (the “Bankruptcy Code”), licenses of rights to “intellectual property” as defined
in Section 101(35A) of the Bankruptcy Code. Each licensing Party agrees that a licensed Party, as licensee of such rights under
this Agreement, will retain and may fully exercise all of its rights and elections under the Bankruptcy Code or any other provisions
of Law outside the United States that provide similar protection for “intellectual property.” Any agreement supplemental
hereto will be deemed to be “agreements supplementary to” this Agreement for purposes of Section 365(n) of the Bankruptcy
Code.
Article
3
Development,
Commercialization and Manufacture
3.1 Development and Commercialization. Century shall be solely responsible for developing, preparing any and all regulatory
filings for, obtaining Regulatory Approval of, and Commercializing Licensed Products in the Field and in the Territory, in its
sole discretion.
3.2 Diligence.
Century intends to develop the Licensed Products in the Field in the Territory throughout the Term of this Agreement. Century shall use
Commercially Reasonable Best Efforts, or shall cause one or more of its Sublicensees to use Commercially Reasonable Best Efforts, to
continue to pursue the development of Licensed Product [***].
3.3 Development Reports.
(a) Century
shall provide Development Report that summarizes the status of research, development and Commercialization efforts, of Century
and its Sublicensees and activities with respect to Licensed Products, during each semi-annual period to CDI on or before thirty
(30) days from the end of corresponding semi-annual period ending June 30 and December 31 for which a report is due, and will
set forth in each Development Report sufficient detail to enable CDI (and WARF) to ascertain progress of Century and its Sublicensees
toward the requirements of the Development Plan. CDI and WARF reserves the right to audit records of Century and its Sublicensees
relating to the development activities required under this Agreement and the WARF License Agreement. Such record keeping and audit
procedures will be subject to the procedures and restrictions set forth in Section 6 for auditing the financial records of Century
and its Sublicensees.
(b) Century acknowledges that any failure by Century or its Sublicensees, to reasonably implement the Development Report, or to make
timely submission to CDI and Century of any Development Report, or the providing of any false information to CDI and WARF regarding
development activities of Century and its Sublicensees hereunder, will be a Material Breach of the terms of this Agreement, subject
to the right to cure under Section 9.2.
(c) Century further agrees to and warrants that it or its Sublicensees will reach the following “Milestones” with respect
to development of Licensed Product:
(i) [***]; and
(ii) [***].
3.4 Manufacture.
(a) During the Term and subject to this Section 3.4. CDI (and its Affiliates) shall have the exclusive right to manufacture
and supply iPSC to Century for [***] beginning on the Effective Date. If at any time following [***] of the
Effective Date, Century wishes to have a Third Party manufacture human iPSC (including TiPSC), Century shall discuss with CDI
in good faith the possibility of using such Third Party to manufacture human iPSC (including TiPSC), provided that Century
shall have the sole discretion to determine whether to use CDI or such Third Party for such manufacture of iPSC (including TiPSC).
In the event that Century elects to use a Third Party manufacturer, CDI hereby agrees to amend the terms of this Agreement without
delay to provide Century, its Affiliates and Sublicensees with the necessary licenses under the Licensed Patent Rights for the
Exploitation of such products, including amending the definition of “Licensed Product” to remove the limitation that
iPSC be exclusive manufactured by CDI. The Parties shall negotiate in good faith as soon as reasonably practical the terms of
a manufacturing and supply agreement under which CDI or its Affiliate would itself manufacture and supply iPSC (a “Supply
Agreement”) and the terms of a quality agreement which would provide the responsibilities of Century and CDI or its
Affiliates for quality assurance of human iPSC (including TiPSC) and the Licensed Products referenced in the Supply Agreement
(a “Quality Agreement”).
(b) The Supply Agreement and Quality Agreement shall each contain terms and conditions that are commercially reasonable given the
terms of the Parties’ collaboration under this Agreement, including manufacturing capacity, quantity, forecasting, timeliness
of delivery, quality, cost, and failure of supply that are consistent with prevailing industry standards for Third Party contract
manufacturing agreements for comparable products.
(c) The Supply Agreement shall provide:
(i) CDI’s
(and its Affiliates) exclusive right to manufacture and supply human iPSC (including TiPSC) to Century and its Sublicensees:
(ii) CDI’s (and its Affiliates or contractors) obligations to perform manufacturing activities in a good scientific manner and
in compliance in all material respects with all applicable Law; and
(iii) Century’s ability to manufacture by itself or through its Affiliate, or to grant to a Third Party manufacturer the right
to manufacture, the Licensed Products in minimal quantities necessary to prevent a supply interruption in the event of a non-supply
event upon Century’s request.
3.5 Collaboration
Agreement
(a) Within two (2) months from the Effective Date the Parties will use Commercially Reasonable Best Efforts to enter into a Collaboration
Agreement, which shall include among other things the terms set forth on Exhibit A as well as other customary terms. Century acknowledges
that any material breach by Century of the Collaboration Agreement, including its failure to pay consideration under the Collaboration
Agreement will constitute a Material Breach, subject to the termination right under Section 9.2(c).
(b) If the Collaboration Agreement is not entered into between the Parties within two (2) months from the Effective Date for any reasons,
Century shall pay CDI the amount of [***] which is non-refundable and creditable towards any and all amounts due under the Collaboration
Agreement, which such [***] amount shall be due in three (3) equal installments according to the following schedule:
(i) on the day that is two (2) month after the Effective Date;
(ii) on the first anniversary of the payment day set forth in clause (i); and
(iii) on the second anniversary of the payment day set forth in clause (ii).
(c) Century acknowledges that any failure by Century or its Sublicensees, of the payment set forth in Section 3.5(b) will constitutes
a Material Breach, subject to the termination right under Section 9.2(c).
Article
4
Consideration,
Record Keeping
4.1 Consideration.
(a) WARF Royalties.
(i) As
consideration for the license and other rights granted to Century hereunder, Century shall pay to CDI royalties required pursuant to
the terms of the WARF License Agreement with respect to any Licensed Product that is
covered by a WARF Patent Right as follows: [***] on the Selling Price of all Licensed Products. The royalty obligations of Century
shall commence on first commercial sale of a Licensed Product and continue on a Licensed Product-by- Licensed Product and
country-by-country basis, until the expiration or termination of the last to expire WARF Patent Right that covers such Licensed
Product in such country. Upon expiration of the royalty obligations hereunder with respect to the WARF Patent Rights, the license
granted to Century under Section 2.1 with respect to the WARF Patent Rights shall be become fully paid-up, perpetual and
irrevocable.
(ii) If Century is required to make payments to a Third Party for a license or similar right to such Third Party’s patents, in
the absence of which right or license Century could not legally make, use or sell Licensed Products, then the royalty payable
under this Section will be reduced by [***] for each additional [***] of royalties payable to such Third Parties on that Licensed
Product; provided, however, that the adjusted royalty rate to CDI will be no less than [***] of the applicable royalty
rate payable to CDI under this Section 4.1(a)(ii) of this Agreement for such Licensed Products, even in cases where Section
4.1(b)(iii) below also applies.
(iii) In the event that the sale, lease, or other transfer by Century of Licensed Products under this Agreement also requires payment
to CDI of royalties under any other agreement between CDI and Century, the cumulative earned royalties owed to CDI for that Licensed
Product under all such agreements will not exceed the single highest royalty as set forth in those agreements. Century will pay
to CDI royalties under all such agreements individually and on a pro rata basis. (For example, if Century owes to CDI a
[***] earned royalty under this Agreement and a [***] earned royalty under a separate agreement, the cumulative royalties owed
to CDI will be [***], but will be paid proportionately under each agreement in payments of [***] under this Agreement and [***]
on the other.)
(iv) In cases where Century and CDI agree that Century may develop and Commercialize cancer immunotherapy product based on human iPSC
manufactured by a Third Party other than CDI (or its Affiliate) and Century Exploits such product that is covered by the Licensed
Patent Rights, Century shall pay to CDI royalties of [***] on the Selling Price of such products. In such case, such adjusted
royalty rate to CDI as provided in Section 4.1(b)(ii) above will not apply to the rate of [***].
(b)
WARF Milestone Fees.
As
additional consideration for the license and other rights granted to Century hereunder, Century shall pay to CDI the amounts detailed
below within twenty (20) days of the achievement of the corresponding milestones for each Licensed Product developed by or for
Century or its Sublicensees in the Field in the Territory as set forth in Section 3.3(c).
|
Milestone
|
WARF
Milestone Fee
|
|
Filing
an Investigational New Drug application (or an equivalent) for a Licensed Product by Century or its Sublicensees with the
FDA
|
[***]
|
|
File
a BLA (or an equivalent) for a Licensed Product by Century or its Sublicensees with the FDA
|
[***]
|
|
Achievement
by Century or its Sublicensees of [***] in total Selling Price on a single Calendar Year for each Licensed Product.
|
[***]
|
(c) Accounting: Payments.
(i) Amounts owing to CDI under Section 4.1(a) of this Agreement will be paid on a quarterly basis, with such amounts due and
received by CDI on or before the thirtieth (30th) day following the end of the calendar quarter ending on March 31,
June 30, September 30 or December 31 in which such amounts were earned. The balance of any amounts which remain unpaid more than
thirty (30) days after they are due to CDI will accrue interest until paid at the rate of the lesser of one percent (1%) per month
or the maximum amount allowed under applicable law. However, in no event will this interest provision be construed as a grant
of permission for any payment delays.
(ii) Except as otherwise directed, all amounts owing to CDI under this Agreement will be paid in U.S. dollars. All royalties owing
with respect to the Selling Prices are stated in currencies other than U.S. dollars will be converted at the rate shown in the
Federal Reserve Noon Valuation - Value of Foreign Currencies on the day preceding the payment. All payments due under this Agreement
will be made without deduction for taxes, assessments, or other charges of any kind which may be imposed on CDI or WARF with respect
to any amounts payable to CDI or WARF pursuant to this Agreement. All such taxes, assessments, or other charges will be assumed
by Century or its Sublicensee(s). If any deduction or withholding is required by law, Century shall pay to CDI such amount as
will, after the deduction or withholding has been made, leave CDI with the same amount as it would have been entitled to receive
without such deduction or withholding.
(iii) A full accounting showing how any amounts owing to CDI under Section 4.1(b) have been calculated will be submitted to CDI
on the date of each such payment. Such accounting will be on a per-country and Licensed Product line, model or tradename basis
and will be summarized on the form shown in Exhibit C of this Agreement. In the event no payment is owed to CDI, a statement setting
forth that fact will be supplied to CDI.
4.2 Recordkeeping.
(a) Century
and its Sublicensee(s) will keep books and records sufficient to verify the accuracy and completeness of Century’s, and its Sublicensee(s)’s
accounting referred to above, including without limitation inventory, purchase and invoice records relating to any Licensed Products
sold under this Agreement. In addition, Century will keep books and records sufficient to verify the accuracy and completeness of Century’s
Development Report. Such documentation may include, but is not limited to, invoices for studies, laboratory notebooks,
internal job cost records,
and filings made to the Internal Revenue Department to obtain tax credit, if available, for research and development. All
such books and records will be preserved for a period not less than six (6) years after they are created during and after the
Term of this Agreement.
(b) Century and its Sublicensee(s) will take all steps reasonably necessary so that CDI and WARF may, within thirty (30) days of its
request, review Century’s and its Sublicensee(s)’s books and records to allow CDI and WARF to verify the accuracy
of Century’s and its Sublicensee(s)’s Development Report and the payments made by Century and its Sublicensee(s) to
CDI. Such review will be performed no more than annually and by an attorney or registered CPA and scientific expert designated
by CDI at CDI’s expense upon reasonable notice and during regular business hours.
(c) If a royalty payment deficiency is determined, Century and its Sublicensee(s), as applicable, will pay the royalty deficiency
outstanding within thirty (30) days of receiving written notice thereof, plus interest on outstanding amounts as described in
Section 4.1(b)(i). If a royalty payment deficiency for a Calendar Year exceeds the lesser of [***] of the royalties paid
for that year or [***], then Century or its Sublicensee(s) will be responsible for paying out-of-pocket expenses incurred with
respect to such review by CDI and WARF.
Article
5
Intellectual Property Protection
and Related Matters
5.1 Ownership. As between the Parties, each Party or its Affiliates shall solely Own all Intellectual Property, including Patent
Rights related thereto, made, conceived, reduced to practice, or otherwise discovered, whether prior to, on or after the Effective
Date, solely by employees, agents and consultants of such Party or its Affiliates. For purposes of determining ownership under
this Section 5.1, inventorship shall be determined in accordance with the rules of inventorship under U.S. patent Laws.
5.2 Patent Term Extensions. As between the Parties, CDI shall have the sole right to obtain patent term extensions or supplemental
protection certificates or their equivalents with respect to any Licensed Product in the Field, including with respect to any
Licensed Patent Right worldwide and Century shall reasonably cooperate with CDI and WARF in connection therewith.
5.3 Third Party Infringement Each Party shall notify the other Party promptly of any knowledge it acquires of any actual or
potential infringements of the Licensed Patent Rights with respect to any activities of a Third Party in the Field in any country
in the world and shall provide the other Party with all available evidence regarding such known or suspected infringement or unauthorized
use. Notwithstanding any provision to the contrary CDI is not obligated to enforce the Licensed Patent Rights against such Third
Party.
5.4 Defense
of Infringement Claims. If the manufacture, sale or use of a Licensed Product pursuant to this Agreement results in, or may result
in, any claim, suit, or proceeding by a Third Party alleging patent infringement by Century (or its Affiliates or
Sublicensees),
Century shall promptly notify CDI thereof in writing. Century or its Affiliates or Sublicensees shall have the exclusive right to defend
and control the defense of any such claim, suit or proceeding at its own expense, using counsel of its own choice; provided, however,
that Century and its Affiliates and Sublicensees shall afford CDI and WARJF an opportunity to participate in such defense at their own
cost and expense and shall not enter into any settlement which admits or concedes that any aspect of Licensed Patent Rights are invalid
or unenforceable without the prior written consent of CDI, not to be unreasonably withheld. Century shall keep CDI reasonably informed
of all material developments in connection with any such claim, suit, or proceeding.
5.5 Patent
Invalidity Claim. During the Term, each Party shall promptly notify the other Party in the event of any legal or administrative
action by any Third Party against a Licensed Patent Right of which such Party becomes aware, including any nullity, revocation,
reexamination or compulsory license proceeding or similar proceeding.
5.6 Patent Marking. Century agrees to comply with the patent marking statutes in each country in which Licensed Products are
sold by or on behalf of Century and/or its Affiliates or Sublicensees.
5.7 Contest of Validity.
(a) Century, its Affiliates and its Sublicensee(s) must provide CDI at least three (3) months prior written notice before filing any
action that contests the validity of any Licensed Patent Rights during the Term of this Agreement.
(b) In the event Century, its Affiliates or its Sublicensee(s) files any action contesting the validity of any Licensed Patent Rights,
the filing party will pay a royalty rate of [***] times the royalty rate specified in Section 4.1 of this Agreement for
all Licensed Products sold during the pendency of such action. Moreover, should the outcome of such contest determine that any
claim of a Licensed Patent Right challenged is valid and would be infringed by a Licensed Product sold by Century (or its Affiliates
or its Sublicensee(s), if such Sublicensee filed the action) if not for the license granted by this Agreement, Century (or its
Affiliates, its Sublicensee(s), if such Sublicensee filed the action) will thereafter, and for the remaining Term of this Agreement,
pay a royalty rate of [***] times the royalty rate specified in Section 4.1 of this Agreement.
(c) In the event that Century, its Affiliates, or its Sublicensee(s) contests the validity of any Licensed Patent Rights during the
Term of this Agreement, Century agrees (and will require its Affiliates and its Sublicensee(s) to agree) to pay to CDI all royalties
due under the Agreement during the period of challenge. For the sake of clarity, such amounts will not be paid into any escrow
or other account, but directly to CDI, and will not be refunded.
Article
6
Confidentiality
6.1 Confidential Obligations. Each Party shall (a) maintain in strict confidence the Confidential Information of the other
Party to the same extent such Party maintains its own confidential information, but in no event less than a reasonable degree
of care, (b) not disclose such Confidential Information to any Third Party without the prior written consent of the other Party
(except as permitted pursuant to Section 6.3 below), and (c) not use such Confidential Information for any purpose except
those expressly permitted by this Agreement. The obligations of confidentiality, non-disclosure and non-use under this Section
6.1 shall be in full force during the Term and for a period of [***] thereafter. Except as may be authorized in advance
in writing by CDI, Century will only grant access to CDI’s Confidential Information to its Affiliates, its Sublicensee(s)
and those officers and employees of Century, its Affiliates and its Sublicensee(s) involved in research relating to the Licensed
Patent Rights. Century will require its Affiliates and its Sublicensee(s) and all such officers and employees to be bound by terms
of confidentiality no less restrictive than those set forth in this Article 6. Century, its Affiliates and its Sublicensee(s)
will not use any Confidential Information including, but not limited to, for the purpose of claiming priority to the Licensed
Patent Rights in any patent prosecution. As between the Parties, Confidential Information of WARF, including the WARF License
Agreement shall be deemed to be CDI’s Confidential Information Each Party, upon the request of the other Party, will return
all copies of or destroy (and certify such destruction in writing) the Confidential Information disclosed or transferred to it
by the other Party pursuant to this Agreement, within sixty (60) days of such request or, if earlier, the termination or expiration
of this Agreement.
6.2 Exceptions to Confidentiality. Notwithstanding the foregoing, the obligations of confidentiality set forth in Section
6.1 shall not apply to information that, in each case as demonstrated by competent written documentation:
(a) is publicly disclosed or made generally available to the public by the disclosing Party, either before or after it becomes known
to the receiving Party;
(b) was known to the receiving Party, without any obligation to keep it confidential, prior to the date of first disclosure by the
disclosing Party to the receiving Party, as shown by the receiving Party’s files and records;
(c) is subsequently disclosed to the receiving Party by a Third Party lawfully in possession thereof without obligation to keep it
confidential and without a breach of such Third Party’s obligations of confidentiality;
(d) has been publicly disclosed or made generally available to the public other than through any act or omission of the receiving
Party or its Affiliates in breach of this Agreement; or
(e) has
been independently developed by the receiving Party without the aid, application or use of the disclosing Party’s Confidential
Information (the competent written proof of which must be contemporaneous with such independent development).
6.3 Authorized
Disclosure. Notwithstanding Section 6.1, a Party may disclose Confidential Information of the other Party to the extent
such disclosure is reasonably necessary in the following instances:
(a) Prosecuting and Maintaining Patent Rights in accordance with this Agreement; provided that the non-filing Party whose Confidential
information is being disclosed is given a reasonable opportunity to review the proposed disclosure of such Confidential Information
and the filing Party considers in good faith any comments provided by the non-filing Party;
(b) communicating and making filings with Regulatory Authorities or otherwise complying with applicable Laws or submitting information
to tax or other governmental authorities, including referencing any DMF in accordance with Section 2.4; provided that if
a Party is required by Law to make any public disclosure of Confidential Information of the other Party, to the extent it may
legally do so, it will give reasonable advance written notice to the other Party of such disclosure and will use its reasonable
efforts to secure confidential treatment of such Confidential Information prior to its disclosure (whether through protective
orders or otherwise), and shall disclose only that portion of the Confidential Information which is legally required to be disclosed;
(c) to the extent mutually agreed to in writing by the Parties; or
(d) to WARF to the extent necessary to perform CDI’s obligations under the WARF License Agreement.
6.4 Press Releases and Other Permitted Disclosures.
(a) CDI and Century each agree not to disclose any of the terms and conditions of this Agreement to any Third Party, except as described
below in this Section 6.4 or as otherwise agreed in writing by the Parties. The Parties have agreed on a press release
to be issued by Century announcing this Agreement after the Effective Date in substantially the form set forth in Exhibit D; provided
that the timing of the publication and release of such press release shall be agreed to by the Parties. Each Party shall have
the right to disclose the existence of this Agreement, including that Century has received a license to CDI’s Licensed Patent
Rights. Subject to the other provisions of this Agreement, no press release, public statement or public disclosure concerning
the existence or terms of this Agreement shall be made, either directly or indirectly, by either Party without the prior written
approval of the other Party. Once any public statement or public disclosure has been approved in accordance with this Section
6.4, then either Party may appropriately communicate information contained in such permitted statement or disclosure.
(b) Century
may disclose the terms and conditions of this Agreement on a strictly need-to-know basis to (i) its Affiliates, employees, consultants,
independent contractors, agents or professional advisors (including attorneys, accountants and actual and prospective investment
bankers), (ii) actual or potential investors, lenders, Sublicensees, licensees, licensors, or collaborators, but only with the
express prior written consent of CDI, which shall not be unreasonably conditioned, delayed or withheld (and, for clarity, the
conditioning of such consent
on only a redacted copy of this Agreement approved by CDI being disclosed to any of the foregoing
persons in this clause (ii) shall not automatically be deemed to be unreasonable) or (iii) acquirers or merger partners that have
entered into a letter of intent or are actively negotiating a definitive acquisition or merger agreement with Century; in each
case under the foregoing clause (i), (ii) or (iii), under obligations of confidentiality at least as restrictive as those set
forth herein, and solely in connection with Century performing its obligations or exercising its rights under this Agreement or
for the purpose of assisting the recipient with evaluating and entering into a transaction with Century.
(c) CDI may disclose the terms and conditions of this Agreement on a strictly need-to-know basis to (i) its Affiliates, employees,
consultants, independent contractors, agents or professional advisors (including attorneys, accountants and actual and prospective
investment bankers), (ii) actual or potential investors, lenders, licensors, licensees, or collaborators, but except in the case
of CDI’s licensors of any of the Licensed Patent Rights (to which this clause does not apply), only with the express prior
written consent of Century, which shall not be unreasonably conditioned, delayed or withheld (and, for clarity, the conditioning
of such consent on only a redacted copy of this Agreement approved by Century being disclosed to any of the foregoing persons
in this clause (ii) shall not automatically be deemed to be unreasonable), or (iii) acquirers or merger partners that have entered
into a letter of intent or are actively negotiating a definitive acquisition or merger agreement with CDI; in each case under
the foregoing clause (i), (ii) or (iii), under obligations of confidentiality at least as restrictive as those set forth herein,
and solely in connection with CDI performing its obligations or exercising its rights under this Agreement or for the purpose
of assisting the recipient with evaluating and entering into a transaction with CDI.
(d) Notwithstanding the foregoing provisions of this Article 6, a Party may disclose the existence and terms of this Agreement
or the Confidential Information of the other Party where required, as reasonably determined by the legal counsel of the disclosing
Party, by applicable Law, by applicable stock exchange regulation or by order or other ruling of a competent court or other governmental
authority, although, to the extent practicable, the other Party shall be given at least three (3) Business Days advance written
notice of any such legally required disclosure to comment and the disclosing Party shall reasonably consider such comments provided
by such other Party on the proposed disclosure. In case either Party is obliged to publicly disclose or file this Agreement as
a “material agreement” in accordance with applicable Law or applicable stock exchange regulations (“SEC Filing”),
this Agreement shall be redacted by the filing Party to the extent permissible upon the advice of legal counsel, and the filing
Party shall provide the other Party a copy of such redacted Agreement in advance of such SEC Filing to enable the other Party
to review and comment on the scope of such redaction; provided that the filing Party shall consider in good faith any comments
provided by such other Party.
Article
7
Representations, Warranties and Covenants
7.1 Representations
of Authority. Each Party represents and warrants to the other that as of the Effective Date it has full right, power and authority
to enter into this Agreement and to perform its respective obligations under this Agreement.
7.2 Consents.
Each Party represents and warrants that as of the Effective Date all necessary consents (excluding WARF’s consent set
forth in Section 9.1), approvals and authorizations of all government authorities and other Persons required to be obtained
by such Party in connection with execution, delivery and performance of this Agreement have been obtained.
7.3 No Conflict. Each Party represents and warrants that, as of the Effective Date, the execution and delivery of this Agreement
and the performance of such Party’s obligations hereunder (a) do not conflict with or violate any requirement of applicable
Laws and (b) do not conflict with, violate or breach or constitute a default of, or require any consent under, any contractual
obligations of such Party, except such consents as have been obtained as of the Effective Date. For the avoidance of doubt, this
Agreement is subject to the WARF License Agreement and in the case of any inconsistency between the WARF License Agreement and
this Agreement the WARF License Agreement prevails.
7.4 Employee, Consultant and Advisor Obligations. Each Party represents and warrants that, as of the Effective Date, each of
its and its Affiliates’ employees, consultants and advisors has executed an agreement or has an existing obligation under
law obligating such employee, consultant or advisor to maintain the confidentiality of Confidential Information to the extent
required under Article 6.
7.5 Intellectual Property.
(a) CDI
represents and warrants to Century that (i) it Controls the entire right, title and interest in and to the Licensed Patent Rights,
(ii) it has the right to grant to Century the rights and licenses under the Licensed Patent Rights granted in this Agreement and
will not take any of the foregoing actions in any manner inconsistent with the terms hereof, (iii) to the knowledge of CDI, none
of the Licensed Patent Rights was fraudulently procured from the relevant governmental patent granting authority, (iv) as of the
Effective Date, except for the currently pending dispute between CDI and [***] to the extent fully disclosed to Century
as of the Effective Date, current pending opposition and third party observation against EP patent to the knowledge of CDI, there
is no claim or demand of any Person pertaining to, or any proceeding which is pending or threatened, that asserts the invalidity,
misuse or unenforceability of the Licensed Patent Rights or challenges its ownership of such Patent Rights or makes any adverse
claim with respect thereto, including any claim that such Patent Rights infringe or misappropriate Intellectual Property of any
Third Party, and, to the knowledge of CDI, there is no basis for any such claim, demand or proceeding, (v) except for the currently
pending dispute between CDI and [***] to the extent fully disclosed to Century as of the Effective Date, to the knowledge
of CDI (without any duty to investigate), as of the Effective Date, the Licensed Patent Rights are not being infringed by any
Third Party, (vi) the Licensed Patent Rights include all Patent Rights that are owned or exclusively licensed by it as of the
Effective Date with respect to the reprogramming of human somatic cells to iPSCs except for the Patent Rights exclusively licensed
from [***] and (vii) none of its Affiliates own or control, as of the Effective Date, any Patent Rights
pertaining to reprogramming of human somatic cells to iPSC that are reasonably necessary to Exploit a Licensed Product.
(b) During the Term, CDI shall uses Commercially Reasonable Best Efforts to retain and maintain sufficient license rights under, any
Licensed Patent Rights to enable CDI to grant the licenses and rights to such Patent Rights as reasonably necessary to practice,
such Patent Rights in accordance with the license to be granted under this Agreement. CDI shall not, during the Term, sell, assign,
transfer, pledge, fail to maintain control of otherwise dispose of, or incur any lien or encumbrance on, any Licensed Patent Rights.
Notwithstanding any provision to the contrary, CDI may sell, assign, transfer, license, pledge, fail to maintain control of, otherwise
dispose of, or grant any option or other right, title or interest in to or under, or incur any lien or encumbrance on, any Patent
Rights licensed under this Agreement so long as such disposition is subject to this Agreement.
(c) Nothing in this Agreement will, however, be construed as: (i) a warranty or representation by CDI as to the validity, enforceability,
or scope of any of the Licensed Patent Rights; (ii) a warranty or representation that anything made, used or transferred under
the licenses granted in this Agreement will or will not infringe patents of Third Parties; (iii) an obligation to furnish any
assistance, or Know-How not provided in the Licensed Patent Rights or any materials or services other than those specified in
this Agreement; or (iv) an obligation to file any patent application or secure or maintain any patent right Century represents
and warrants that Products produced under the licenses granted herein shall be manufactured substantially in the United States
as required by 35 U.S.C § 204 and applicable regulations of Chapter 37 of the Code of Federal Regulations.
(d) If During the Term, CDI develops, conceives, generates any Intellectual Property pertaining to reprogramming of human somatic
cells to iPSC that are reasonably necessary to Exploit the Licensed Products, CDI shall maintain Control over such Intellectual
Property.
7.6 No
Warranties.
(a) EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN ARTICLE 7 HEREOF, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF
ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT,
OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS, ARE MADE OR GIVEN BY OR ON BEHALF OF A PARTY. EXCEPT AS EXPRESSLY
STATED IN THIS AGREEMENT, ALL REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE, ARE HEREBY EXPRESSLY
EXCLUDED.
Article
8
Indemnification; Insurance; and Limitation on Damages
8.1 By
Century. Century, its Affiliates and its Sublicensee(s) will, at all times during the Term of this Agreement and
thereafter, indemnify, defend and hold harmless CDI, WARF, the Morgridge Institute for Research, the WiCell Research
Institute, and the University of Wisconsin (the “University”), and their respective trustees, directors,
officers, shareholders
and
employees (including without limitation any inventors of the Licensed Patent Rights) against all liabilities, demands, damages,
settlements, suits, claims, proceedings, costs and expenses, including legal expenses and reasonable attorney’s fees, arising
out of or relating to the death of or injury to any person or persons or any damage to property, due to the sale, marketing, use, or
manufacture of Licensed Products or Developments. CDI at all times reserves the right to select and retain counsel of its own to
defend CDI’s interests in any such proceeding.
8.2 By CDI. CDI, its Affiliates and its Sublicensee(s) will, at all times during the Term of this
Agreement and thereafter, indemnify, defend and hold harmless Century, its Affiliates and its Sublicensees, and their respective
trustees, directors, officers, shareholders and employees against all liabilities, demands, damages, settlements, suits, claims,
proceedings, costs and expenses, including legal expenses and reasonable attorney’s fees, arising out of or relating to
(a) any material breach by CDI of any of its representations, warranties or obligations pursuant to this Agreement, or (b) the
willful misconduct or grossly negligent acts of CDI or its Affiliates; excluding, in each case (a) and (b), any damages or other
amounts for which Century has an obligations to indemnify CDI pursuant to Section 8.1, as to which damages or amounts each
Party shall indemnify the other to the extent of their respective liability for such damages or amounts.
8.3 Procedures. A Person entitled to indemnification under this Article 8 (an “Indemnified Party”)
shall give prompt written notification to the Party from whom indemnification is sought (the “Indemnifying Party”)
of any claim, suit, action or demand for which indemnification is sought under this Agreement; provided, however, that no delay
or failure on the part of an Indemnified Party in so notifying the Indemnifying Party shall relieve the Indemnifying Party of
any liability or obligation hereunder except to the extent of any damage or liability caused by or arising out of such delay or
failure. Within thirty (30) days after delivery of such notification, the Indemnifying Party may, upon written notice thereof
to the Indemnified Party, assume control of the defense of such claim, suit, action or demand with counsel reasonably satisfactory
to the Indemnified Party. If the Indemnifying Party does not assume control of such defense, the Indemnified Party shall control
such defense. The Party not controlling such defense may participate therein with counsel of its own choosing at its own expense;
provided that, the Indemnified Party shall have the right to retain its own counsel, at the expense of the Indemnifying
Party, if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate because
of actual or potential differences in the interests of such Indemnified Party and any other party represented by such counsel.
The Indemnified Party shall not agree to any settlement of such action, suit, proceeding or claim without the prior written consent
of the Indemnifying Party, which shall not be unreasonably withheld, delayed or conditioned.
8.4 Insurance.
Century warrants, and will have its Affiliates and its Sublicensee(s) warrant, that it now maintains and will continue to maintain
liability insurance coverage reasonably appropriate to the risk involved in use, sale, marketing, and manufacture of Licensed
Products or Developments, under this Agreement, and that such insurance coverage is sufficient to cover CDI and the inventors
of the WARF Patent Rights as additional insureds. Upon CDI’s request, Century, its Affiliates and its Sublicensee(s), if
applicable, will present evidence to CDI that such coverage is being maintained.
8.5 No Consequential or Punitive Damages. TO THE MAXIMUM EXTENT PERMITTED BY LAW, IN NO EVENT WILL EITHER PARTY OR THEIR RESPECTIVE
TRUSTEES, DIRECTORS, OFFICERS AND EMPLOYEES (INCLUDING WITHOUT LIMITAION ANY INVENTORS OF THE LICENSED PATENT RIGHTS) BE LIABLE
FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND. INCLUDING ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS,
REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY.
8.6 Limitation of Liability. EXCEPT FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, CDI’S LIABILITY UNDER OR IN CONNECTION WITH THIS AGREEMENT HOWSOEVER ARISING (WHETHER IN CONTRACT, TORT, NEGLIGENCE,
BREACH OF STATUTORY DUTY, OR OTHERWISE) WILL NOT EXCEED THE TOTAL AMOUNTS ACTUALLY PAID BY CENTURY UNDER THIS AGREEMENT BEFORE
THE DATE OF THE ACTION OR OMISSION ALLEGED TO HAVE CAUSED SUCH LIABILITY.
Article
9
Term and Termination
9.1 Term. This Agreement shall become effective either on the Signing Date or the date on which WARF provides CDI with a written
consent to this Agreement, whichever comes later (the “Effective Date”) and shall otherwise remain in effect,
unless terminated as set forth in this Article 9, (the “Term”), provided, however with respect to the
Licensed Patent Rights, this Agreement shall remain until the expiration of the last to expire Licensed Patent Rights unless earlier
terminated as set forth in this Article 9.
9.2 Termination for Material Breach.
(a) Any material failure by a Party (the “Breaching Party”) to comply with any of its material obligations contained
in this Agreement (such failure, a “Material Breach”) shall entitle the other Party (the “Non-Breaching
Party”) to give to the Breaching Party written notice specifying the nature of the Material Breach, requiring the Breaching
Party to cure such Material Breach.
(b) If
such Material Breach is not cured within sixty (60) days after the receipt of notice pursuant to Section 9.2(a) above, the Non-Breaching
Party shall be entitled to terminate this Agreement on written notice to the Breaching Party and without prejudice to any of its other
rights conferred on it by this Agreement; provided that if a Material Breach cannot reasonably be cured within such sixty (60)-day period
and the Breaching Party promptly delivers a plan to cure such Material Breach (reasonably acceptable to the Non-Breaching Party) and
uses Commercially Reasonable Best Efforts to implement such plan, then the cure period shall be extended for so long as the Breaching
Party is using Commercially Reasonable Best Efforts to cure such Material Breach (up to a maximum cure period of one hundred twenty (120)
days from the date of initial notice); further provided, however, that if the Breaching Party disputes the
existence of a Material Breach, the matter shall be
submitted for resolution in accordance with Section 10.11, and the Breaching Party shall not have the right to
terminate this Agreement unless and until a final decision of Material Breach is rendered under Section 10.11 and the
Breaching Party fails to cure such Material Breach within sixty (60) days thereafter.
(c) Notwithstanding any provision to the contrary herein, if Century at any time (i) defaults in the timely payment of any monies
due to CDI or the timely submission to CDI of any report, (ii) fails to actively pursue any Development Plan, or (iii) commits
any breach of any other covenant herein contained, and Century fails to remedy any such breach or default within ninety (90) days
after written notice thereof by CDI, or if Century, its Affiliates or its Sublicensee(s) commits any act of bankruptcy, becomes
insolvent, is unable to pay its debts as they become due, files a petition under any bankruptcy or insolvency act, or has any
such petition filed against it which is not dismissed within sixty (60) days, or offers any component of the Licensed Patent Rights,
or Reprogrammed iPS Cells to its creditors, CDI may, at its option, terminate this Agreement by giving notice of termination to
Century.
9.3 Termination
for Failure to Develop a Licensed Product. If Century fails to [***], CDI shall have the right
to terminate this Agreement pursuant to the terms of this Section 9.3. Notwithstanding the foregoing CDI may [***].
9.4 Termination for Termination of Differentiation License Agreement. In the event that the Differentiation License Agreement
terminates or expires CDI shall be entitled to terminate this Agreement with an immediate effect on a written notice to Century.
9.5 Termination for Bankruptcy. To the extent allowed under applicable Law, either Party shall have the right to terminate
this Agreement in the event that the other Party admits its inability to pay its debts generally as they become due or in the
event of the commencement of any proceeding in or for bankruptcy, insolvency, dissolution or winding up by or against the other
Party (other than pursuant to a corporate restructuring), or the appointment of a receiver or similar agent by a court of competent
jurisdiction, that is not dismissed or otherwise disposed of within sixty (60) days thereafter and/or the administrator of the
bankruptcy estate or the Party under in-court restructuring has not, within five (5) days after the receipt of an inquiry from
the other Party, confirmed that the bankruptcy estate or the Party under in-court restructuring will adopt this Agreement.
9.6 Termination for Convenience. Century may terminate this Agreement, at any time and for any reason or no reason, in its
entirety or on a Licensed Product-by-Licensed Product basis (to exclude such product from the Field) or country-by-country basis
(to eliminate such country from the Territory), by providing [***] prior written and unambiguous notice to CDI.
The termination shall become effective at the end of the [***] period.
9.7 Effects of Termination.
(a) Generally.
Upon termination of this Agreement or WARF License Agreement, the licenses granted herein will immediately terminate. In the event
of termination under Section 9.4, Century, its Affiliates and its Sublicensee(s) will have [***] to cease all activities
involving the use of Licensed Patent Rights and Development for any purpose, and will destroy all Licensed Products in its
possession. Century, its Affiliates and its Sublicensee(s) will remain obligated to pay any outstanding amounts owed as of the date
of termination and all such amounts will be paid within [***] of termination.
In
the event of any early termination of this Agreement, the Parties will use Commercially Reasonable Best Efforts to work together
in good faith to establish and implement reasonable wind-down procedures with respect to relevant Licensed Product-related activities
ongoing at the time of such termination, which shall include continuation of the licenses granted to Century hereunder (and subject
to the continuing terms and conditions of this Agreement) to permit Century and its Affiliates and Sublicensees to continue and
complete any ongoing clinical trials of Licensed Products and to make or have made such Licensed Products as necessary to continue
and complete such clinical trials; provided, however, in that the event such termination is by CDI pursuant to Section
9.2, such activities shall be limited to those necessary for Century to comply with regulatory obligations, or medical or
ethical obligations to patients consistent with industry standards.
(b) Return or Destruction of Confidential Information. Upon the expiration or termination of this Agreement, each Party shall
promptly return or destroy all of such other Party’s Confidential Information that relates to a Licensed Products or that
was provided by or on behalf of such other Party hereunder that is in the possession or control of such Party (or any of its Affiliates).
(c) Survival. The following provisions shall survive the expiration or termination of this Agreement: Article 1 (Definitions)
(to the extent necessary to give effect to other surviving provisions), Article 5 (Intellectual Property), Article 6
(Confidentiality), Article 8 (Indemnification; Insurance; and Limitation on Damages) (other than Section 8.4 (Insurance))
and Article 10 (Miscellaneous Provisions), and Sections 2.3(c) (Sublicensing), 4.1(a)(iii) (Reports, Payments
and Accounting), 9.7 (Effects of Termination) and this Section 9.7(c) (Survival).
Article
10
Miscellaneous Provisions
10.1 Governing
Law; Language. This Agreement and all disputes arising out of or related to this Agreement shall be construed and the respective
rights of the Parties determined in accordance with the Laws of the State of Wisconsin, excluding application of any conflict
of laws principles that would require application of the laws of a jurisdiction other than the Laws of the State of Wisconsin.
This Agreement and all communications related to it, or to any dispute or controversy arising out of it, shall be conducted in
English.
10.2 Notice. Any notices required or permitted by this Agreement shall be in writing, shall specifically refer to this Agreement,
and shall be sent by hand, recognized national overnight courier, confirmed electronic mail or registered or certified mail, postage
prepaid, return receipt requested, to the following address of the Parties:
If
to CDI:
FUJIFILM
Cellular Dynamics Inc.
525 Science Drive, Madison, WI 53711
Attention: Chief Technology Officer
Email:
fcdi-licensing@cellulardynamics.com
With
a copy to:
FUJIFILM
Cellular Dynamics, Inc.
525 Science Drive, Madison, WI 53711
Attention: General Counsel
If
to Century:
Century
Therapeutics, Inc.
54 West 21st Street, Suite 408, New York, NY 10010
Attention: Chief
Executive Officer
Email: lalo@centurytherapeutics.com
With
a copy to:
Goodwin
Procter LLP
100 Northern Avenue
Boston, MA 02210
Attention: Mitchell S. Bloom, Esq.
Email: mbloom@goodwinlaw.com
All
notices under this Agreement shall be deemed effective upon receipt. A Party may change its contact information immediately upon
written notice to the other Party in the manner provided in this Section 10.2.
10.3 Assignment.
(a) Neither
Party may, without the consent of the other Party, assign or transfer any of its rights and obligations hereunder; provided that
each Party may assign or transfer this Agreement, in its entirety, without the consent of the other Party, (a) in connection with a sale
or transfer of all or substantially all of the business and assets of such Party or that portion of the assets of such Party to which
this Agreement relates, including by way of a Change of Control Event, transfer, or sale of assets related to this Agreement; provided
further that, in the case of any such proposed assignment or transfer by Century, it has complied with Section 10.3(b), or
(b) to an Affiliate. Any assignment or transfer in circumvention of the
foregoing
shall be void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their
respective permitted successors and assigns.
10.4 Notwithstanding the foregoing, Century will notify CDI in writing at least thirty (30) days in advance of any proposed assignment
or transfer including by way any Change of Control Event and, with respect to any such assignment or transfer to any non-Affiliate,
pay to CDI a fee of [***] to allow the transfer or assignment of the license granted herein to such non-Affiliate(s), within thirty
(30) days after the occurrence of such event. In the event of such assignment or transfer Century shall nevertheless remain liable
for all of its obligations, and those of any such assignee or transferee, to CDI hereunder. Entire Agreement. This Agreement constitutes
the entire agreement between the Parties with respect to its subject matter and supersedes all prior agreements or understandings
between the Parties relating to its subject matter. For the avoidance of doubt, the Non-Disclosure Agreement entered into between
the Parties as of February 18, 2018 shall continue to be effective with respect thereof.
10.5 Interpretation. The captions and headings to this Agreement are for convenience only, and are to be of no force or effect
in construing or interpreting any of the provisions of this Agreement. Unless specified to the contrary, references to Articles,
Sections or Exhibits mean the particular Articles, Sections or Exhibits to this Agreement and references to this Agreement include
all Exhibits hereto. Unless context otherwise clearly requires, whenever used in this Agreement: (a) the words “include”
or “including” shall be construed as incorporating, also, “but not limited to” or “without limitation;”
(b) the word “day” or “year” means a calendar day or year unless otherwise specified; (c) the word “notice”,
“consent”, or “approval” and references to other written communications contemplated under this Agreement
shall mean notice, consent, approval or communication in writing (whether or not specifically stated); (d) the words “hereof,”
“herein,” “hereby” and derivative or similar words refer to this Agreement (including any Exhibits); (e)
the word “or” shall be construed as the inclusive meaning identified with the phrase “and/or;” (f) provisions
that require that a Party or the Parties hereunder “agree,” “consent” or “approve” or the
like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter or
otherwise; (g) words of any gender include the other gender; (h) words using the singular or plural number also include the plural
or singular number, respectively; and (i) the word “law” (or “laws”) when used herein means any applicable,
legally binding statute, ordinance, resolution, regulation, code, guideline, rule, order, decree judgment, injunction, mandate
or other legally binding requirement of a government entity, together with any then-current modification, amendment and re- enactment
thereof, and any legislative provision substituted therefor. The Parties and their respective counsel have had an opportunity
to fully negotiate this Agreement. If any ambiguity or question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue
of the authorship of any provision of this Agreement. No prior draft of this Agreement shall be used in the interpretation or
construction of this Agreement.
10.6 Amendment
and Waiver. This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by an
authorized representative of both Parties. Any waiver of any right or failure to act in a specific
instance
shall relate only to such instance and shall not be construed as an agreement to waive any right or fail to act in any other instance,
whether or not similar.
10.7 Severability.
In the event that any provision of this Agreement shall be held invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect any other provision of this Agreement. The Parties shall consult one another and use reasonable
efforts to agree upon a valid and enforceable provision that is a reasonable substitute for the invalid or unenforceable provision
and this Agreement shall be automatically amended to reflect such mutually agreed provision.
10.8 Use of Name. Century, its Affiliates and its Sublicensee shall not use the name of CDI, any inventor of the WARF Patent
Rights, or the name of WARF or the University of Wisconsin in any other form of publicity (except in connection with disclosures
permitted under Article 6) or logo without the prior written approval of the entity or person whose name is being used,
except where a disclosure is required by any applicable law or the rules of any securities exchange. Notwithstanding the foregoing,
CDI shall have the right to disclose to existing and potential licensees the fact that CDI has entered into this Agreement with
Licensee.
10.9 Counterparts. This Agreement may be executed in counterparts, each of which counterparts, when so executed and delivered,
shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument.
10.10 Force Majeure. Neither Party will be responsible for delays resulting from causes beyond the reasonable control of such
Party, including fire, explosion, flood, war, strike, or riot, provided that the nonperforming Party uses Commercially
Reasonable Best Efforts for a company of its size and resources to avoid or remove such causes of nonperformance and continues
performance under this Agreement with reasonable dispatch whenever such causes are removed.
10.11 Dispute Resolution.
(a) Escalation. If any dispute arises out of or relates to this Agreement, the Parties agree to first seek to resolve such
dispute by referring such dispute to the respective Chief Executive Officers of each Party for resolution. Such referral shall
take place within thirty (30) days after a written request by either Party to the other Party that resolution by the Chief Executive
Officers be attempted. If, within sixty (60) days following the dispute being referred to the Chief Executive Officers of the
Parties, the Chief Executive Officers of the Parties have not resolved the dispute, and a Party wishes to pursue the matter, such
Party may initiate binding arbitration in accordance with Section 10.11(b).
(b) Alternative
Dispute Resolution. Any dispute arising out of or relating to this Agreement that has not been resolved pursuant to Section 10.11(a)
shall be shall be finally settled, in Tokyo in the event Century is a claimant and in New York in the event CDI is a claimant, under
the Rules of Arbitration of the International Chamber of Commerce (“ICC”). The arbitral tribunal shall consist of
three arbitrators, one selected by the claimant in the request for arbitration, the second selected by the respondent within thirty (30)
days of receipt of the request for arbitration, and the third, who shall act as presiding arbitrator, selected by the two
party
appointed arbitrators within thirty (30) days of the selection of the second arbitrator. If any arbitrators are not selected within these
time periods, the International Court of Arbitration shall, upon the request of any Party, make the selection(s).
(c) No
Limitation. Nothing in this Section 10.11 shall be construed as limiting in any way the right of a Party to seek a
preliminary injunction or other provisional relief with respect to any actual or threatened breach of this Agreement or to bring
an action in aid of arbitration. Should any Party seek an injunction or other equitable relief, or bring an action in aid of arbitration,
then for purposes of determining whether to grant such injunction or other equitable relief, or whether to issue any order in
aid of arbitration, the dispute underlying the request for such injunction or other equitable relief, or action in aid of arbitration,
may be heard by the court in which such action or proceeding is brought.
10.12 No
Third Party Beneficiaries. No Person other than Century, CDI and their respective Affiliates, successors and permitted assignees
hereunder, shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.
10.13 Independent Contractors. It is expressly agreed that Century and CDI shall be independent contractors and that the relationship
between Century and CDI shall not constitute a partnership, joint venture or agency. Neither Century nor CDI shall have the authority
to make any statements, representations, or commitments of any kind, or to take any action, which shall be binding on the other
Party, without the prior written consent of such other Party.
[remainder
of page intentionally left blank]
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the Signing Date.
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FUJIFILM
CELLULAR DYNAMICS INC.
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CENTURY
THERAPEUTICS, INC.
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By:
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/s/ Seimi Satahe
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By:
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/s/ Osvaldo Flores
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Name:
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Seimi Satahe
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Name:
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Osvaldo Flores
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Title:
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CEO
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Title:
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Chief Executive Officer
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Date:
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18 Sep 2018
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Date:
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13 Sept 2018
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Exhibit
A
Term
sheet for Collaboration Agreement
[***]
Exhibit
B
Licensed
Patent Rights Controlled by CDI
[***]
Exhibit
C
Development
Report
[***]
Exhibit
D
Press
Release
[***]
Exhibit 10.24
[***] Certain information in this document
has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and the registrant customarily and actually treats as private and confidential.
Reprogramming
Execution Version
FIRST AMENDMENT
TO
LICENSE AGREEMENT
This First Amendment
to License Agreement (the “First Amendment”) is made and effective as of March 23, 2021 (the “First
Amendment Effective Date”) between Century Therapeutics, Inc. (f/k/a Century Therapeutics, LLC), a Delaware corporation
(“Century”) having a principal place of business at 3675 Market Street, Philadelphia, PA 19104 USA, and FUJIFILM
Cellular Dynamics Inc., a Wisconsin corporation (“CDI”) having an address at 525 Science Drive, Madison, WI
53711 USA, and amends the License Agreement by and between Century (as assignee of Century Therapeutics, Inc. (“Century
Inc.”)) and CDI dated September 18, 2018 (as amended, the “License Agreement”). All capitalized terms
used but not otherwise defined herein shall have the meaning set forth in the License Agreement.
RECITALS
WHEREAS, on September
18, 2018, Century Inc. and CDI entered into the License Agreement;
WHEREAS, pursuant to
the License Agreement CDI granted Century Inc. a non-exclusive license under the Licensed Patent Rights to Exploit the Licensed
Products in the Field in the Territory;
WHEREAS, Century Inc.
assigned all of its rights and obligations under the License Agreement to Century;
WHEREAS, certain terms
of the License Agreement were modified as set forth in that certain Letter Agreement Regarding WARF/CDI License Agreement and CDI/Century
Sublicense Agreement dated as of July 2, 2019, by and among CDI, Century and Wisconsin Alumni Research Foundation (“WARF
Side Letter”); and
WHEREAS, pursuant to,
and in accordance with, Section 10.6 of the License Agreement, Century and CDI desire that the License Agreement, as modified by
the WARF Side Letter, be amended as set forth herein.
THEREFORE, in consideration
of the mutual covenants and conditions set forth in this First Amendment, it is agreed as follows:
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1.
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Amendments to the License Agreement.
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1.1. Section 1.11 (g) of the License Agreement shall be amended and restated as follows:
“non-public information
in relation to the Licensed Patent Rights, Licensed Know-How or Developments.”
1.2. Section 1.12 of the License Agreement shall be amended and restated as follows:
““Controlled”
means, with respect to Patent Rights or Know-How as such relates to a Party or its Affiliates, that such Party or applicable Affiliate
owns or has a license or sublicense to such Patent Rights or Know-How and has the legal right to grant a license or sublicense, including
having received any necessary Third Party consents, to such Patent Rights or Know-How to the other Party as provided for in this Agreement,
or has the ability to assign its right, title and interest in and to such Patent
Rights or Know-How to
the other Party, without violating the terms of any agreement or other arrangement with any Third Party. Notwithstanding the foregoing,
with respect to any Patent Right or Know-How acquired or in-licensed for which a Party would be required to make payments to any
Third Party in connection with the license or access granted to the other Party under this Agreement, such Patent Right or Know-How
will only be treated as “Controlled” by the licensing Party pursuant to the terms of Article 2.”
1.3. Section 1.21 of the License Agreement shall be amended and restated as follows:
““Exploit”
or “Exploitation” shall mean with respect to a particular Licensed Product, to make, have made, manufacture,
have manufactured, use, have used, sell, have sold, offer for sale, have offered for sale, import, and have imported, including
to research, develop, Commercialize or otherwise exploit, such Licensed Product.”
1.4. Section 1.32 of the License Agreement shall be amended and restated as follows:
““Licensed
Patent Rights” means (i) those patents and patent applications listed on Exhibit B and (ii) Patent Rights Owned by CDI
at any time during the Term that are (a) (1) related to reprogramming of human cells to iPSCs and (2) reasonably essential to Exploit
a Licensed Product or
(b) Improvements of the Century Licensed Technology Owned or Controlled by CDI.”
1.5. Section 1.33 of the License Agreement shall be amended and restated as follows:
““Licensed
Product” means cancer immunotherapy products (for the treatment of cancer in humans) consisting of cells that are or
are modifications of T cells, NK cells, dendritic cells, and macrophages derived from human iPSC (including TiPSC). For the sake
of clarity, such “modifications” exclude materials or substances extracted, isolated from, or secreted by, such modified
or unmodified cells.”
1.6. After giving effect to the amendments contemplated in Sections 1.1, 1.2, 1.3, 1.4 and 1.5 above, Article 1 of the
License Agreement shall be amended to add the following definitions, in appropriate alphabetical and numerical order, and the section
numbers of Article 1 of the License Agreement and all cross references thereto in the License Agreement are hereby updated to reflect
the addition of such defined terms:
““Century
Licensed Technology” means Improvements Owned or Controlled by Century or its Affiliates that relate to the
Licensed Patent Rights, the reprogramming of human somatic cells or the manufacture of iPSC(s) (including TiPSC(s)) or
Reprogrammed iPS Cells. For purposes of clarity, “Century Licensed Technology” does not include technologies of
gene editing, targets and binders and switches but does include, without limitation, any and all of the following: (i)
strategies, criteria or methods for analytical test development and quality control test development for the reprogramming of
human somatic cells or the manufacture of iPSC(s) (including TiPSC(s)) or Reprogrammed iPS Cells including, without
limitation: determination of the respective tests that are required for intermediates, release and characterization; the
development of the appropriate tests; and stability studies and shelf life determination; (ii) criteria and/or methods for
cell expansion and scale up process; methods for, and results from, a suite of in vitro and in vivo assays that test cell
performance and function; and evaluation analysis of such results; and (iii) criteria, methods or processes relating to any
of the following: closed unit operations (example: closed continuous or batch centrifugation); scale up of cell expansion and
cell harvest steps; process choreography, i.e., the optimal order of combining streams, transferring streams, sampling and
measuring intermediates, and defining hold times; identification of standard, or design of custom-made, product-contact
containers for combining streams, transferring streams, and sampling; and cell cryopreservation; and cell vial filling and
visual inspection at large scale.”
““Improvements”
means any Intellectual Property that is an improvement to then-existing Licensed Patent Rights or Licensed Know-How that is developed
by either Party or Third Parties acting on their behalf while performing activities under this Agreement or in the course of activities
in the exercise of the rights licensed hereunder (including the Exploitation of Licensed Products within the Field) and all intellectual
property rights (including Patent Rights) thereto. For purposes of clarity, “Improvements” does not include technologies
of gene editing, targets and binders and switches.”
““Licensed
Know-How” means Know-How that is Owned or Controlled by CDI that is necessary for the practice of the Licensed Patent
Rights and relates to the reprogramming of human somatic cells or the manufacture of Reprogrammed iPS Cells (including TiPSC(s)).
For clarity, Licensed Know-How includes Improvements of the Century Licensed Technology Owned or Controlled by CDI, but excludes
technologies of gene editing, targets and binders and switches.”
““Sublicensee
Technology” means any and all Know-How and Patent Rights that such Sublicensee (and its Affiliates) controls by way of
developing, generating or inventing during the term of the applicable sublicense agreement in the course of activities in the exercise
of the sublicensed rights thereunder.”
1.7. Section 2.1 of the License Agreement shall be amended and restated as follows:
“License Grants
to Century. (a) Subject to the terms and conditions of this Agreement and the WARF License Agreement, CDI hereby grants to
Century, a non-exclusive, non-transferable (except in accordance with Section 10.3), royalty bearing, sublicensable (with
limitation as set forth in Section 2.3(a)) license under the Licensed Patent Rights to Exploit the Licensed Products within
the Field in the Territory, and (b) subject to the terms and conditions of this Agreement, CDI hereby grants to Century a non-exclusive,
non-transferable (except in accordance with Section 10.3), royalty-free, fully paid-up, sublicensable (with limitation as
set forth in Section 2.3(a)), license under the Licensed Know-How to make, have made, use, and have used, research and develop
iPSC(s) (including TiPSC(s)), Reprogrammed iPS Cells to Exploit the Licensed Products within the Field in the Territory. Notwithstanding
any term or implication herein to the contrary and for the sake of clarity, the foregoing license excludes any license or right
under the Licensed Patent Rights (i) to manufacture, have manufactured, sell, have sold, offer for sale or have offered for sale
any product or service to any Third Party in furtherance of any research or development of a Licensed Product other than a Licensed
Product that is being researched, developed or Commercialized by or on behalf of Century or its Affiliates or Sublicensees, or
(ii) to grant any sublicense to any Third Party to manufacture, have manufactured, sell, have sold, offer for sale or have offered
for sale any product or service to any other Third Party in furtherance of any research or development of a product other than
a Licensed Product that that is being researched, developed or commercialized by or on behalf of Century or its Affiliates or Sublicensees.”
1.8. Section 2.2 of the License Agreement shall be amended and restated as follows:
“2.2. License
Grants to CDI. Subject to the terms and conditions of this Agreement, Century (on behalf of itself and its Affiliates) hereby
grants to, and will require its Sublicensee(s) to grant, to CDI the following licenses and options:
(a) a
world-wide, non-exclusive, royalty-free, irrevocable, paid-up license, with the right to grant sublicenses, to WARF, the University
of Wisconsin, the WiCell Research Institute and the Morgridge Institute for Research, to make, have made, use and otherwise practice
Developments for Non-Commercial Research Purposes in organizations associated with either WARF or the University of Wisconsin;
(b) a non-exclusive, non-transferable (except in accordance with Section 10.3), fully paid-up, sublicensable (with
the ability to sublicense through multiple tiers) license (i) to make, have made, use and otherwise practice Developments made
by Century or its Affiliates or Sublicensees in the Field outside the Territory or within the Territory in connection with Abandoned
Indication and (ii) to practice Developments to manufacture the Licensed Products in the Field worldwide; and
(c) a fully paid-up, non-exclusive, non-transferable (except in accordance with Section 10.3), sublicensable (with
limitation as set forth in Section 2.3(d)) worldwide license under the Century Licensed Technology to make, have made, use,
and have used, research and develop iPSC(s) (including TiPSC(s)), Reprogrammed iPS Cells or Reprogrammed iPS Cell Derivative Materials)
outside the Field, except that such rights granted under this Section 2.2(c) shall not be used in conjunction with any other
technology to differentiate such iPSC(s) into T cells, NK cells, macrophages or dendritic cells; [***]; and
(d) an option to obtain a non-exclusive, non-transferable (except in accordance with Section 10.3), sublicensable
(with the ability to sublicense through multiple tiers) license, under Intellectual Property Rights that are owned or controlled
by a Third Party and licensed to Century or its Affiliate to Exploit the Licensed Products in the Field outside the Territory or
within the Territory in connection with the Abandoned Indication, provided however, in the event Century or its Affiliates
or Subcontractors are required to pay royalty for its sublicense to CDI and its Sublicensees the Parties will agree on an equitable
apportionment of any royalty between the Parties to reflect the fair value attributable to the use of such Intellectual Property
Rights for the Exploitation of the Licensed Products in each Party’s territory.”
1.9. Section 2.3 of the License Agreement shall be amended to include new paragraphs (d), (e) and (f) which provide:
“(d) CDI shall
have the right to grant sublicenses under the Developments and any
Century Licensed Technology to its Affiliates and any Third Party (through multiple tiers); provided, that any such sublicense
granted shall be pursuant to a written agreement and each sublicense shall be subject to all relevant restrictions and limitations
set forth in this Agreement. CDI will be responsible for each of the Sublicensees complying with all obligations of CDI under this
Agreement that are applicable to Sublicensees and any breach by a Sublicensee under any such sublicense shall be deemed to be a
breach of CDI under this Agreement. CDI will notify Century in writing of the identity of any Sublicensees without delay.
(e) Notwithstanding
anything to the contrary contained herein, Century shall use commercially reasonable efforts to include in any sublicense by Century
or any Affiliate of Century to a Third Party (or any further sublicenses by the applicable Sublicensee) of any rights granted
by CDI under Section 2.1(b) that the Sublicensee will grant to Century licenses to any Sublicensee Technology on terms
that are substantially similar to the licenses granted by CDI to Century in Section 2.1(b) (but with respect to outside
the Field), which license must be fully sublicensable to CDI (through multiple tiers) pursuant to the terms and conditions of
this Agreement. In such event, such Sublicensee Technology will be treated as “Century Licensed Technology” hereunder
and included within the licenses granted to CDI pursuant to Section 2.2(c).
(f) CDI
shall use commercially reasonable efforts to include in any sublicense by CDI or any Affiliate of CDI to a Third Party (or any
further sublicenses by the applicable CDI sublicensee) of any rights granted by Century under Section 2.2(c) that the CDI
sublicensee will grant to CDI licenses to any Sublicensee Technology on terms that are substantially similar to the licenses granted
by Century to CDI in Section 2.2(c), which license must be fully sublicensable to Century (through multiple tiers) pursuant
to the terms and conditions of this Agreement. In such event, such Sublicensee Technology will be treated as “Licensed Patent
Rights” or “Licensed Know-How” (as applicable) hereunder and included within the licenses granted to Century
pursuant to Section 2.1(b).”
1.10. Section 2.4 of the License Agreement shall be amended and restated as follows:
“2.4 Regulatory
Related Matters.
(a) Technical
Support. Each Party shall, or shall cause its Affiliates to, use commercially reasonable efforts to provide the other Party
(including the other Party’s Affiliates) with the reasonably necessary technical support where reasonably necessary to allow
the other Party to Exploit the Licensed Products in the Field in the Territory (in the case of Century as the other Party) or
outside the Territory (in the case of CDI as the other Party) pursuant to this Agreement, and in accordance with this Section
2.4. Further, CDI expressly agrees that Century shall have the right to reference any DMF as required by a Regulatory Authority
maintained, or that at any time during the Term becomes maintained, by CDI in the ordinary course of business insofar as such
DMF is necessary in connection with obtaining any Regulatory Approval by Century or its Sublicensees for Licensed Products in
the Field in the Territory. For clarification, CDI may establish and maintain DMF with appropriate information for the regulatory
submissions of Century, and its Sublicensees for the Licensed Product and the Development of the Licensed Product in the Territory.
Century expressly agrees that CDI shall have the right to reference any DMF that are maintained, or that at any time during the
Term becomes maintained, by Century and its Sublicensees in the ordinary course of business relating to the Developments insofar
as such information is necessary in connection with obtaining any Regulatory Approval for Licensed Products in the Field outside
the Territory.
(b) Other Regulatory
Matters. The provisions of Section 8 of the Quality Agreement and Section 2.0 of the Table set forth in the Quality Agreement
shall apply to this Agreement, mutatis mutandis. To the extent the Quality Agreement expires or is terminated prior to the
expiration or earlier termination of this Agreement, such provisions of the Quality Agreement will survive such expiration or termination
for purposes of this Section 2.4, and be incorporated herein by reference.”
1.11. Article 2 of the License Agreement shall be amended to include a new Section 2.8 which provides:
“2.8 Tech Transfer.
(a) After
the First Amendment Effective Date and during the Term, CDI will use commercially reasonable efforts to disclose to Century Licensed
Know-How in existence on the First Amendment Effective Date including, but not limited to, by providing access to and information
transfer of Licensed Know-How and providing copies or samples of relevant documentation, materials, and other embodiments of such
Licensed Know-How in the ordinary course of business and as provided in Section 2.8(c). In addition to the disclosure of Licensed
Know-How by CDI to Century pursuant to Section 2.8(c), during the Term, upon the request of Century, but not more than [***] per
Calendar Year, CDI will promptly disclose to Century any new Licensed Know-How developed, Owned or Controlled by CDI during such
period relating to the Exploitation of the Licensed Products and provide copies or samples of relevant documentation, materials,
and other embodiments of such Licensed Know-How.
(b) After the First Amendment Effective Date and during the Term, Century will use commercially reasonable efforts to
disclose to CDI Century Licensed Technology in existence on the First Amendment Effective Date including, but not limited to, by
providing access to and information transfer of Century Licensed Technology and by providing copies or samples of relevant documentation,
materials, and other embodiments of such Century Licensed Technology in the ordinary course of business and as provided in Section
2.8(c). In addition to the disclosure of Century Licensed Technology by Century to CDI pursuant to Section 2.8(c), during the Term,
upon the request by CDI, but not more than twice per Calendar Year, Century will promptly disclose to CDI any new Century Licensed
Technology developed, Owned or Controlled by Century and provide copies or samples of relevant documentation, materials, and other
embodiments of such Century Licensed Technology.
(c) After
the First Amendment Effective Date but not later than on the [***] anniversary of the First Amendment Effective Date, the Parties
will establish a plan for the disclosure by CDI of Licensed Know-How in existence on the First Amendment Effective Date to Century
as contemplated in Section 2.8(a) and the disclosure by Century of Century Licensed Know-How in existence on the First Amendment
Effective Date to CDI as contemplated in Section 2.8(b). The JSC (as defined in the Differentiation License Agreement) will oversee
and facilitate the Parties’ respective performance of such disclosures.”
1.12. Section 3.4 of the License Agreement shall be amended and restated as follows:
“3.4 Manufacture.
Effective as of the First Amendment Effective Date, the Parties are entering into a manufacturing and supply agreement under which
CDI or its Affiliate will manufacture and supply human iPSC (including TiPSC) and CDI and/or its Affiliates or contractors will
manufacture and supply certain Licensed Products, in each case, to Century for itself and its Affiliates and Sublicensees (as the
same may be amended from to time, the “Supply Agreement”) and as of June 29, 2020, entered into a quality agreement
which provides the responsibilities of Century and CDI or its Affiliates for quality assurance of human iPSC (including TiPSC)
and such Licensed Products (as the same may be amended from time to time, the “Quality Agreement”). Except as
set forth in the Supply Agreement, Century shall have the sole discretion whether to manufacture and supply iPSC (including TiPSC),
Reprogrammed iPS Cells or Reprogrammed iPS Cell Derivative Materials or any Licensed Products itself or through its Affiliates
or to use CDI or a Third Party (other than any manufacturer set forth on Schedule 3.7 of the Differentiation License Agreement)
for such manufacture and supply.”
1.13. Section 4.1 (b) of the License Agreement shall be amended to include a new paragraph after the table included in such section
which provides:
“For clarity,
the foregoing WARF Milestone Fees shall only become payable with respect to a Licensed Product that is covered by a WARF Patent
Right, and each such WARF Milestone Fee is payable only once with respect to each such Licensed Product upon the achievement of
the corresponding milestone. In no event will more than $6,000,000 be payable in WARF Milestone Fees with respect to each Licensed Product
that is covered by a WARF Patent Right.”
1.14. Section 9.6 of the License Agreement shall be amended and restated as follows:
“9.6 Termination
for Convenience. Century may terminate this Agreement, at any time and for any reason or no reason, in its entirety or on
an indication-by-indication, a Licensed Product-by-Licensed Product basis (to exclude such product from the Field) or country-by-country
basis (to eliminate such country from the Territory), by providing ninety (90) days’ prior written and unambiguous notice
to CDI. The termination shall become effective at the end of the ninety (90) day period. The indication in respect of which Century
terminates this Agreement is referred to herein as the “Abandoned Indication.””
2. Notice. Pursuant to, and in accordance with Section 10.2 of the License Agreement, as of the First Amendment
Effective Date, Century’s contact information is as follows:
If to Century:
Century Therapeutics,
Inc.
3675 Market
Street
Philadelphia,
PA 19104
Attention:
Chief Executive Officer
Email: lalo@centurytx.com
With a copy to:
Troutman Pepper
Hamilton Sanders LLP
3000 Two Logan Square
Philadelphia, PA 19103
Attention: Rachael M. Bushey, Esq.
Email: rachael.bushey@troutman.com
3.1. Effect of this First Amendment. This First Amendment amends the terms of the License Agreement and is deemed
incorporated into, and governed by all other terms of, the License Agreement. To the extent that the License Agreement is explicitly
amended by this First Amendment, the terms of this First Amendment will control where the terms of the License Agreement are contrary
to or conflict with the terms of this First Amendment. All other terms and conditions of the License Agreement not explicitly amended
by this First Amendment shall remain in full force and effect. The License Agreement shall, together with this First Amendment,
be read and construed as a single instrument.
3.2. WARF Side Letter. This First Amendment does not, and is not intended to, amend, modify or supplement the terms
of the WARF Side Letter, which remains in full force and effect. In the event of any conflict between the terms of the License
Agreement, as amended by this First Amendment, and the WARF Side Letter, the WARF Side Letter shall control.
3.3. Counterparts. This First Amendment may be signed in any number of counterparts, including facsimile copies
thereof or electronic scan copies thereof delivered by electronic mail, each of which shall be deemed an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
[remainder of page intentionally left
blank]
IN WITNESS WHEREOF,
the Parties have executed this First Amendment as of the First Amendment Effective Date.
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CENTURY THERAPEUTICS, INC.
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By:
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/s/ Osvaldo Flores
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Name: Osvaldo Flores, Ph.D.
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Title: President and Chief Executive Officer
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FUJIFILM CELLULAR DYNAMICS INC.
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By:
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/s/ Takeshi Yamamoto
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Name: Takeshi Yamamoto
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Title: President and Chief Executive Officer
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[Signature Page to First Amendment
to License Agreement]
Exhibit 10.25
[***]
Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information
is not material and the registrant customarily and actually treats as private and confidential.
Execution
Version
MANUFACTURING
AND SUPPLY AGREEMENT
THIS
MANUFACTURING AND SUPPLY AGREEMENT (the “Agreement”) is made and entered into as of March 23, 2021 (“Effective
Date”)
BY
AND BETWEEN:
Century
Therapeutics, Inc., (f/k/a Century Therapeutics, LLC) a company registered in Delaware, United States, whose
registered office is at 3675 Market Street, Philadelphia, PA 19104, United States (hereafter referred to as:
“CENTURY” or “Century”);
and
FUJIFILM
Cellular Dynamics, Inc., a company registered in Wisconsin, whose registered office is at 525 Science Drive, Madison, WI 53711,
United States (hereafter referred to as: “FCDI”).
WHEREAS:
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CENTURY
is engaged in the discovery and development of cell therapies, including the Product(s) (as defined in Article 1
below);
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FCDI
and Century are parties to the Reprogramming License Agreement (as defined in Article 1 below) and the Differentiation
License Agreement (as defined in Article 1 below), each of which
contemplates that such parties will also enter into a Supply Agreement and a
Quality Agreement. Century and FCDI now desire to enter into this Agreement
pursuant thereto, in addition to the Quality Agreement, dated as of June 29, 2020
(as the same may be amended from time to time, the “Quality
Agreement”);
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FCDI
will operate as an independent contract manufacturer with the capability to provide analytical
testing, technology transfers, process and analytical development and GMP manufacturing activities for the Product(s) on the
terms and conditions of this Agreement;
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CENTURY
wishes for FCDI to conduct the technology transfer and to provide process and analytical development activities, if any, and
GMP manufacturing activities for the Product(s) as further described in, and on the
terms and conditions of, this Agreement;
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FCDI
wishes to conduct the aforementioned technology transfer and to provide the aforementioned Activities, including GMP
manufacturing activities for the Product(s) as further described in, and on the
terms and conditions of, this Agreement.
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NOW,
THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
Article
1 - Definitions
For
the purpose of this Agreement, the following terms shall be defined as follows:
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1.1.
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“Activity”
or “Activities” means: all activities performed by FCDI for CENTURY pursuant
to Work Orders, including but not limited to, the Technology Transfer Activities, Process
Development Activities, Analytical Testing Development Activities, Manufacturing Activities,
Analytical Test Activities, QA Review Activities and any related or other activities
or activities as more fully described in the applicable Work Order but excluding activities that are expressly contemplated
in or to be performed pursuant to the MCA.
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1.2.
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“Affiliate”
means: any person or legal entity that controls, or is controlled by or is under common
control with, either of the Parties. For the purpose of this definition, a person or legal entity shall be deemed to
“control” another legal entity if it owns, directly or indirectly, in
excess of fifty percent (50%) of the outstanding
voting securities or capital stock of such legal entity or any other comparable equity
or ownership interest with respect to a legal entity.
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1.3.
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“Agreement”
or “MSA” means: this Manufacturing and Supply Agreement, including all appendices thereto (the
“Appendices”) and any Work Order(s) signed by the Parties, in each case
attached hereto and incorporated herein by reference. For clarity, this Agreement includes its Appendices and the Work
Order(s), any of which may be amended from time to time in accordance with the provisions hereof.
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1.4.
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“Analytical
Test Activities” means: the analytical test activities, if any, to be conducted and/or provided by FCDI in the
Analytical Test Phase in accordance with this Agreement, as described in the
applicable Work Order(s).
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1.5.
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“Analytical
Testing Development Activities” means: the activities, if any, to be conducted
and/or provided by FCDI in the Process Development Phase in accordance with this Agreement,
as described in the applicable Work Order(s).
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1.6.
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“Analytical
Testing Development Objectives” means: the objectives to be met by the provision of the Analytical Testing Development
Activities, as described in the applicable Work Order.
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1.7.
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“Analytical
Test Phase” means: the period during which the Analytical Test Activities, if any, will be carried out.
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1.8.
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“Applicable
Laws” means: all laws, regulations, rules, ordinances, binding guidelines and guidances, requirements and orders of any
government or governmental subdivision of each jurisdiction in which the
manufacture of Products or any other Activities provided hereunder take place to
the extent
applicable to such manufacture or the provision of such other
Activities, as the context requires.
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1.9.
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“Batch”
means: with respect to each Product produced by FCDI for CENTURY, one (1) unit of the
standard production quantity of Product obtained from one (1) production Run as set forth
in the applicable Work Order.
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1.10.
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“Batch
Production Records” or “BPRs” means: the production records and other
supporting documents providing the manufacturing history of a Batch, as required under GMP. Batch Production Records or BPRs
may also be referred to as “Manufacturing Procedures” or
“MP.”
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1.11.
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“Century
Process Development Activities” means: the activities, if any, to be conducted
and/or provided by Century that are interdependent with Process Development Activities
to be conducted and/or provided by FCDI, in the Process Development Phase in accordance
with this Agreement, In each case, as described in the applicable Work Order(s).
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1.12.
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“Certificate
of Analysis” or “CoA” means: the GMP compliant certificate of analysis
containing the outcome of the analytical testing of the Product corresponding to each Batch as performed according to the
Release Specifications.
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1.13.
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“Certificate
of Compliance” or “CoC” means: the certificate of compliance confirming that each Batch of Product is, in
all material respects, manufactured, tested, stored and supplied by FCDI in compliance with this Agreement and, in as far as
applicable, the Release Specifications and GMP, in all material respects.
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1.14.
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“Clinical
Studies” or “Clinical Trials” means: the use of the Product pursuant
to any protocols which have received or do receive approval by the authorized regulatory authorities for the purpose of
conducting clinical studies in humans to determine the safety, efficacy or other
characteristics of the Product.
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1.15.
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“Current
Best Practice” means: the most recent version of written procedures.
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1.16.
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“Differentiation
License Agreement” means that certain License Agreement dated as of September 18, 2018 and pertaining to certain patent
rights and know how related to the manufacture of human iPSC (including
TiPSC)-derived T cells, NK cells, dendritic cells, and macrophages by and
between FCDI and Century Therapeutics, Inc., as assigned to Century and as may be
amended from time to time.
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1.17.
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“Draft
Procedures” means: the draft procedures to develop a manufacturing process for the Product as agreed in writing between
the Parties.
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1.18.
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“Draft
Release Specifications” means: the draft specifications to be agreed by FCDI and CENTURY in writing after completion of
the Process Development Activities but prior to the performance of an Engineering
Batch, if any, which draft specifications, as agreed to in writing by the Parties,
shall constitute an amendment to the applicable Work Order.
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1.19.
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“Engineering
Batch” means: the product obtained from a production Run at scale (not under GMP) and in accordance with the agreed
Draft Procedures and Draft Release Specifications and final process, as agreed after
the Technology Transfer Phase or Process Development Phase but prior to the
commencement of the Manufacturing Phase. The product resulting from this Batch will
be tested to see if the Technology Transfer Objectives or Process Development
Objectives can be met at large scale and Is not intended for use in Clinical
Studies. It is contemplated that an Engineering Batch will require QA review and
approval for testing and release of the Product but only to the extent the same is
consistent with the FCDI quality management system.
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1.20.
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“Engineering
Batch Activities” means: the manufacturing activities concerning an Engineering
Batch, including but not limited to scale-up, to be conducted and/or provided by FCDI
in the Engineering Phase in accordance with this Agreement
and as described in the applicable Work Order(s).
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1.21.
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“Engineering
Phase” means: the period during which the Engineering Batch Activities, if any, will be carried out, and which period
commences on the date that FCDI begins production of the first Engineering Batch and
ends upon completion of the Engineering Batch Activities whereby the last
Engineering Batch is to be produced as specified in the applicable Work
Order.
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1.22.
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“Exclusivity
Term” means: the term beginning on the Effective Date and expiring on the fifth (5th) anniversary of the
Effective Date.
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1.23.
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“Facility”
means: FCDI’s facility located at 465 Science Drive, Madison, Wisconsin, U.S.A.
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1.24.
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“Financial
Terms” means: the financial terms of this Agreement, as set forth in each Work Order. Except as may be expressly
otherwise agreed in a Work Order and notwithstanding anything to the contrary
herein, the Financial Terms will reflect financial terms providing for at least
the following compensation to FCDI for the relevant Activities:
[***].
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1.25.
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“GMP”
means: current United States Good Manufacturing Practices (in Manufacturing, Processing,
Packing, or Holding of Drugs and Finished Pharmaceuticals) as set forth in the Federal
Register volume 66 Number 186 and those sections applicable within the FDA Regulations at 21 CFR Parts 210, 211, 600, 601 and
610, including relevant FDA Guidances on the manufacture of investigational drugs,
the current European Good Manufacturing Practices for Medicinal Products as set
forth in 2001/20/EC, 2001/83/EC, 2003/94/EC and 2005/28/EC (as amended), the E.U. Guide
to GMP (The rules governing medicinal products in the European Union, Volume IV), including
Annex 13 (Manufacture of Investigational Medicinal Products), and applicable International
Conference on Harmonisation (ICH) guidelines as in effect at the time of manufacture
by FCDI of the Product and the performance by FCDI of the
Activities.
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1.26.
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“GMP
Batch” means: a Batch that meets the Release Specifications, and is manufactured
under GMP, in all material respects.
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1.27.
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“GMP
Procedures” means: the final procedures (following review and discussion of the Draft Procedures) agreed by FCDI and
CENTURY in writing after the Process Development Activities or after the completion
of the Engineering Batches pursuant to which a GMP Batch will, in all material
respects, have to be manufactured.
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1.28.
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“IND”
means an investigational new drug application with the FDA, or the equivalent application in any foreign jurisdiction filed
with another regulatory authority.
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1.29.
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“Joint
Steering Committee” or “JSC” will have the meaning set forth in Article
4.
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1.30.
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“Manufacturing
Activities” means: the GMP manufacturing activities to be conducted and/or provided by FCDI in the Manufacturing Phase
in accordance with this Agreement, as described in the applicable Work
Order(s).
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1.31.
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“Manufacturing
Phase” means: the period during which the Manufacturing Activities, if any, will be carried out, and which period
commences on the date that FCDI begins production of the first GMP Batch and
ends upon completion of the Manufacturing Activities whereby the last GMP Batch
is to be manufactured and released, as described in the applicable Work
Order.
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1.32.
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“Master
Cell Bank” means: a cell bank prepared and characterized under GMP and accompanied by GMP documentation, that is
capable of producing the Product.
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1.33.
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“Material”
or “Materials” means: research or Master Cell Bank(s) specific reagents and
other materials or process information supplied by or on behalf of CENTURY to the extent required for particular Activities,
and as described in the applicable Work Order. Unless included in the applicable
Work Order, commercially available Raw Materials are excluded.
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1.34.
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“MCA”
means: that certain Master Collaboration Agreement by and between the Parties dated October
21, 2019, as such agreement may be amended from time to time.
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1.35.
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“NK
Cells” means: human iPSC (including TiPSC) derived NK cells.
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1.36.
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“NK
Cell Product” means: a Product that is being researched and developed by CENTURY
or its sublicensees (including any Affiliates) that is or is a modification of NK Cells derived from human iPSC (including
TiPSC).
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1.37.
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“Non-Supply
Event” means FCDI or its Affiliate [***].
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1.38.
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“Parties”
and “Party” means: FCDI and CENTURY collectively, and FCDI or CENTURY each
individually, respectively, as the context may require.
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1.39.
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“Process
Development Activities” means: the activities, if any, to be conducted and/or provided by FCDI, independently or
interdependently with Century’s conduct or provision of the Century
Process Development Activities, in the Process Development Phase in accordance
with this Agreement, in each case, as described in the applicable Work
Order(s).
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1.40.
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“Process
Development Objectives” means the objectives to be met by the provision of the Process Development Activities, as
described in the applicable Work Order.
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1.41.
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“Process
Development Phase” means the period during which the Process Development Activities and the Analytical Testing Development Activities,
if any, will be carried out, and which period commences on the date indicated in the
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Time
Schedule in the applicable Work Order and ends upon the date that FCDI provides CENTURY with the applicable Process Development
Report.
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1.42.
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“Process
Development Report” means: the written report(s) describing in reasonable and sufficient detail the outcome of the
Process Development Activities and Analytical Testing Development Activities as
well as all conclusions made and to what extent the Process Development Objectives
and Analytical Testing Development Objectives have been met.
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1.43.
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“Product”
means: CENTURY’s product as identified in the applicable Work Order.
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1.44.
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“Project
Team” means: the joint technical team comprising members from each Party which will regularly discuss operations,
manufacturing, technical and other details appropriate to the Parties’
performance of their respective obligations under this Agreement.
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1.45.
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“QA
Review Activities” means: the quality assurance review activities, if any, to be conducted and/or provided by FCDI in
accordance with this Agreement, as described in the applicable Work Order(s) and
consistent with the Quality Agreement.
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1.46.
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“Quality
Agreement” means: the agreement referenced above between the Parties with respect to the Product(s) to allow CENTURY
and FCDI to comply with their respective regulatory obligations and to further
define quality-related responsibilities of both Parties.
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1.47.
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“Raw
Materials” means: all the raw materials to be purchased by FCDI pursuant to Work Order(s) and appropriate for use in
the Activities to be conducted by FCDI pursuant to such Work Order(s) and
described in such Work Order(s) or as otherwise determined by CENTURY.
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1.48.
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“Records”
means: all written (in any form of media) materials, data and documentation generated by or on behalf of FCDI, or obtained
from Century, in the course of FCDI’s providing of Activities hereunder.
For clarity, “Records” excludes any and all materials, data and
documentation: (a) that are generated by FCDI prior to the commencement date of
the Activities and without the aid, application or use of CENTURY’s
Confidential Information, (b) that constitute or incorporate the Licensed Patent
Rights, Licensed Know-How or Licensed Technology (as defined in the
Reprogramming License Agreement or Differentiation License Agreement, as
applicable), as to which CENTURY shall have solely the rights (if any) granted
in the Reprogramming License Agreement, the Differentiation License Agreement,
and/or the MCA, and (c) that constitute or incorporate a DMF (or any portion
thereof) that also relate to cells or similar activities provided by FCDI to one or
more third parties and as to which CENTURY has a Right of Reference under the
Reprogramming License Agreement, the Differentiation License Agreement, and/or the
MCA or correspondence or other filings to or from a regulatory authority
associated therewith (with capitalized terms used in this clause (c) but not
defined herein having the meanings ascribed to them in the Reprogramming License
Agreement); provided, however, that the exclusions listed in the foregoing clause
(a) shall not include or apply to any material, data, documentation or other
information that is not also described in clause (b) or (c) and (i) that is
generated in preparation for the Activities to be conducted pursuant to this
Agreement (e.g., aseptic qualifications), or (ii) that
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directly
relate to the quality or disposition of the Products hereunder.
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1.49.
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“Release
Specifications” means the specifications agreed by FCDI and CENTURY in writing after completion of the Engineering
Batch to which the Product manufactured in the Manufacturing Phase will have to
conform, which written agreement of the Parties shall constitute an amendment to the
applicable Work Order.
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1.50.
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“Request
for Change” or “RFC” means: the formal request by either Party for
a change to be made to the Activities, which request shall be submitted in the form as prescribed in Appendix
A.
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1.51.
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“Reprogramming
License Agreement” means that certain License Agreement dated as of September 18, 2018 and pertaining to certain patent
rights related to the reprogramming of human somatic cells by and between FCDI
and Century Therapeutics, Inc., as assigned to Century and as may be amended from
time to time.
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1.52.
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“Run”
means: the manufacture of a Batch in (a part of) the Facility.
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1.53.
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“Slot”
means: the reservation and availability of sufficient machinery and equipment, time and personnel required for a Run to be
performed by FCDI hereunder during the performance of the
Activities.
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1.54.
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“T
Cells” means: human iPSC (including TiPSC) derived T cells.
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1.55.
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“T
Cell Product” means: a Product that is being researched and developed by CENTURY
or its sublicensees (including any Affiliates) that is or is a modification of T Cells derived from human iPSC (including
TiPSC).
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1.56.
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“Technology
Transfer Activities” means: the activities, if any, to be conducted and/or provided by FCDI in the Technology Transfer
Phase in accordance with this Agreement, as described in the applicable Work
Order(s).
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1.57.
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“Technology
Transfer Objectives” means: the objectives to be met by the provision of the Technology Transfer Activities, as
described in the applicable Work Order.
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1.58.
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“Technology
Transfer Phase” means: the period during which the Technology Transfer Activities,
if any, will be carried out, and which period ends upon the date that FCDI provides CENTURY with the Technology Transfer
Report.
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1.59.
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“Technology
Transfer Report” means: the written report describing in reasonable detail the
outcome of the Technology Transfer Activities as well as to what extent the Technology Transfer Objectives have been
met.
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1.60.
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“Time
Schedule” means: the time schedule set forth in the applicable Work Order according
to which 1) the Technology Transfer Activities and/or 2) Process Development Activities
and/or 3) Analytical Testing Development Activities and/or 4) Manufacturing Activities are to be carried out.
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1.61.
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“Work
Order” means: any written addendum referring to this Agreement and containing what
is described in Articles 2.2(a) through 2.2(i) and such other provisions (including what is contemplated in Article
2.2(j) as applicable), if
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any, as may be set forth therein, and/or any
amendment to any of the foregoing, signed by the Parties and governed by this
Agreement, setting forth the specific Activities requested by CENTURY to be
conducted and/or performed by FCDI, as such addendum may be amended in writing from
time to time in accordance with the provisions of this Agreement.
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Article
2 - Work Order(s)
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2.1.
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From
time to time, pursuant to one (1) or more written Work Order(s) signed by duly authorized representatives of the Parties,
FCDI will perform Activities for CENTURY as specified in such Work Order(s) and in
accordance with the terms and conditions of this Agreement. Unless otherwise set
forth in the applicable Work Order, all manufacturing-related Activities will be
performed by FCDI at the Facility.
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2.2.
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Each
Work Order shall refer to this Agreement and contain, as applicable:
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(a)
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a
description of all the Activities to be performed under such Work Order;
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(b)
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the
Product for which FCDI will perform such Activities for CENTURY and, If applicable, the
quantities of the Product desired as a result of the performance of such Activities;
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(c)
|
a
description of the Material(s) to be transferred from CENTURY to FCDI, if any, and the Century Process Development Activities
to be conducted or provided by CENTURY, if any;
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(d)
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the
applicable Analytical Testing Development Objectives, Technology Transfer Objectives,
Process Development Objectives, and/or Release Specifications;
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(f)
|
if
the Activities pertain to the manufacture of a Product, the quantity of Product to be
manufactured by FCDI under such Work Order;
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(g)
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any
other deliverables (including the quantities thereof desired as a result of the performance of Activities) under such Work
Order;
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(h)
|
the
Time Schedule; and
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(i)
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if
the Activities pertain to the manufacture of a Batch, a description of the run cancellation fee (including the amount
thereof and when, and if, it will become payable), if any, with respect thereto (the “Run Cancellation
Fee”).
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Each
Work Order shall, upon the execution and delivery thereof by the Parties, become and form an integral part of this Agreement. Activities
and Work Order(s) shall be governed by the terms and conditions of this Agreement and the Quality Agreement entered into by the Parties.
In the event of a conflict or inconsistency between this Agreement and the Work Order(s), the terms of this Agreement will control, unless
the conflict or inconsistency is specifically identified in the Work Order(s) and the alternative provisions included in the Work Order(s)
are expressly stated to supersede conflicting or
inconsistent terms
in this Agreement. In the event of a conflict or inconsistency between any of the provisions of the Quality Agreement and this
Agreement, the provisions of the Quality Agreement will prevail on all matters related to compliance with GMP and other quality
control and quality assurance matters, and this Agreement shall prevail with respect to all other matters.
Article
3 - Technology Transfer, Process Development and Analytical Testing Activities
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3.1.
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Technology
Transfer Phase
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3.1.1.
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The
Parties will agree in writing on the Technology Transfer Objectives, in each case, at least [***] prior to the start
of the Technology Transfer Activities. The Parties agree that they will use
their good faith and commercially reasonable efforts to reach agreement on such
Technology Transfer Objectives and the other items to be contained in the
applicable Work Order containing such Technology Transfer Objectives. Century
acknowledges and agrees that the provision by FCDI of Technology Transfer
Activities hereunder constitutes partial performance of FCDI’s obligations
pursuant to Section 2.4(a) of the Reprogramming License Agreement and Section 2.7(a)
of the Differentiation License Agreement to provide certain technical support
and/or transfer Licensed Know-How to Century.
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3.1.2.
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FCDI
agrees to use its commercially reasonable efforts to perform the Technology Transfer
Activities, in accordance with the Time Schedule, in each case as described in the applicable Work Order.
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3.1.3.
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When
performing the Technology Transfer Activities, FCDI will use its commercially reasonable
efforts to meet the Technology Transfer Objectives, Draft Procedures, and Current Best Practice. In case the Technology
Transfer Objectives or Draft Procedures are not met, then FCDI will not perform any
further Activities described in the applicable Work Order unless and until such
Activities are authorized by CENTURY in writing (which may be via
email).
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3.1.4.
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For
the avoidance of doubt, nothing in this Article 3.1 is intended to or shall be construed
to obligate FCDI to perform any activities other than Technology Transfer Activities described in the applicable Work Order
in order to attempt to meet the Technology Transfer Objectives described in the
applicable Work Order, Draft Procedures and/or Current Best Practices or to
undertake more than one effort, i.e., attempt (or such greater number of
attempts as is expressly set forth in the applicable Work Order) to perform the
Technology Transfer Activities described in the applicable Work Order and to
meet the Technology Transfer Objectives described in the applicable Work Order,
Draft Procedures and Current Best Practices.
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3.1.5.
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In
the event FCDI performs the Technology Transfer Activities more expeditiously than indicated
in the applicable Time Schedule, no changes will be made to the Financial Terms as described
in the applicable Work Order, provided FCDI will remain entitled to the full amount payable
under such Work Order concerning such Technology Transfer Activities.
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3.1.6.
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Within
thirty (30) days after completion of the Technology Transfer Activities, FCDI shall provide CENTURY with a draft Technology
Transfer Report for CENTURY’s review and comment.
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3.2.
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Process
Development Phase
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3.2.1.
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The
Parties will agree in writing on the Process Development Objectives and/or Analytical
Testing Development Objectives, in each case at least six (6) weeks prior to the start of the Process Development Activities
and Analytical Testing Development Activities, respectively. The Parties agree that
they will use their good faith and commercially reasonable efforts to reach
agreement on such Process Development Objectives and Analytical Testing
Development Objectives and the other items to be contained in the applicable
Work Order containing such Process Development Objectives and/or Analytical Testing
Development Objectives.
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3.2.2.
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FCDI
agrees to use its commercially reasonable efforts to perform the Process Development
Activities and Analytical Testing Development Activities, if any, in accordance with
the Time Schedule, in each case as described in the applicable Work Order.
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3.2.3.
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When
performing the Process Development Activities and/or Analytical Testing Development Activities,
FCDI will use its commercially reasonable efforts to satisfy the Process Development
Objectives and/or Analytical Testing Development Objectives, if any.
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3.2.4.
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For
the avoidance of doubt, nothing in this Article 3.2 is intended to or shall be
construed to obligate FCDI to perform any activities other than the Process Development
Activities and/or Analytical Testing Development Activities described in the applicable
Work Order in order to attempt to meet the Process Development Objectives and/or Analytical Testing Development
Objectives described in the applicable Work Order, Draft Procedures and Current
Best Practices or to undertake more than one effort, i.e., attempt (or such
greater number of attempts as is expressly set forth in the applicable Work
Order) to perform the Process Development Activities and/or Analytical
Testing Development Activities described in the applicable Work Order and to
meet the Process Development Objectives and/or Analytical Testing Development
Objectives described in the applicable Work Order, Draft Procedures and Current Best Practices.
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3.2.5.
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In
the event FCDI performs the Process Development Activities and/or Analytical Testing
Development Activities more expeditiously than indicated in the applicable Time Schedule,
no changes will be made to the Financial Terms as described in the applicable Work Order(s), provided FCDI will remain
entitled to the full amounts payable under such Work Order(s) concerning such
Process Development Activities and/or Analytical Testing Development
Activities.
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3.2.6.
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If
at any time during the Process Development Phase, FCDI reasonably concludes on
the basis of the results of the Process Development Activities and/or Analytical Testing
Development Activities performed to date and consideration(s) of scientific or technical infeasibility, that, despite
FCDI’s using its commercially reasonable efforts, the Process Development
Activities and/or Analytical Testing Development Activities cannot be completed or
the completion of the Process Development Activities and/or Analytical Testing
Development Activities will not result in the achievement of the Process Development
Objectives and/or Analytical Testing Development Objectives as necessary for a process
to manufacture clinical supplies of Product then FCDI will notify CENTURY
thereof in writing, including a
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detailed
description of FCDI’s efforts undertaken prior to the notice date that form the basis for FCDI’s conclusion. A sixty (60)
day period shall then be allowed for good faith discussion and attempts to achieve resolution of the relevant issues including discussion
of proposed modification(s) of such Process Development Objectives, such Analytical Testing Development Objectives, such Process Development
Activities and/or such Analytical Testing Development Activities in accordance with Article 4 (Articles 4.5 through 4.11) of this
Agreement and any issues related to scientific or technical feasibility identified by either Party. If the Parties fail to agree that
FCDI using its commercially reasonable efforts may meet such Process Development Objectives and/or such Analytical Testing Development
Objectives, by using its commercially reasonable efforts to perform such Process Development Activities and/or such Analytical Testing
Development Activities, in each case as may be modified in writing by Parties based on such discussion, each Party shall have the right
to terminate the applicable Work Order(s) for such Process Development Objectives, such Analytical Testing Development Objectives, such
Process Development Activities and/or such Analytical Testing Development Activities with immediate effect by notice in writing, in which
event the Parties shall use their good faith and commercially reasonable efforts to reach agreement on a Work Order for any Activities
to be provided or conducted by FCDI to support CENTURY’s establishment of alternative development and manufacturing arrangements
and the Financial Terms related to these activities. Article 11.8 shall remain applicable. CENTURY shall in such event be released
from its future payment obligations in respect of the Manufacturing Activities and/or Activities for any work not yet performed by FCDI
as a consequence of such termination. Notwithstanding the previous full sentence, Articles 11.6 and 11.7 shall remain applicable.
If FCDI, in such event, elects to not make use of its right to terminate this Agreement and Century requests FCDI to continue with the
Process Development Activities and/or Analytical Testing Development Activities, FCDI shall use its commercially reasonable efforts to
so continue again in accordance with the terms of this Agreement and the applicable Work Order.
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3.2.7.
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Upon
completion of the Process Development Activities and/or Analytical Testing Development
Activities, FCDI shall provide CENTURY with the corresponding Process Development Report
within forty-five (45) days after the completion of such Process Development Activities.
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3.3.
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Further
stipulations
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3.3.1.
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The
obligations of FCDI during the Technology Transfer Phase and the Process Development
Phase are subject to:
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(a)
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CENTURY
providing FCDI timely with the transfer information as agreed between the Parties at
the start of the Technology Transfer Activities as indicated in the Time Schedule and
with the required process information and any and all other Material(s) as described in the applicable Work Order;
and
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(b)
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CENTURY
providing FCDI timely with any relevant additional information FCDI reasonably may request
from CENTURY from time to time that are necessary for FCDI to perform its obligations
hereunder.
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3.3.2.
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Although
any material produced in the Technology Transfer Phase and Process
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Development Phase
will be properly documented, such material will not be produced under GMP nor will such
material be released by a Quality Unit. FCDI shall use its commercially reasonable efforts
in order to achieve that any material produced after agreement is reached between the
Parties on the Technology Transfer Objectives, the Process Development Objectives and/or
the Analytical Testing Development Objectives (but prior to agreement being reached on
the Release Specifications) will meet the applicable Technology Transfer Objectives,
the Process Development Objectives and/or Analytical Testing Development Objectives,
respectively. Any such material shall primarily be used to verify the manufacturing process
for the Product developed by FCDI hereunder and shall not be used by CENTURY or any other
party for Clinical Trials. For clarity, CENTURY shall pay the amount(s) specified in
the Financial Terms in the applicable Work Order (without regard to whether the Technology
Transfer Objectives, Process Development Objectives, or Analytical Testing Development
Objectives, as applicable, are met so long as FCDI used its commercially reasonable efforts
to perform the Activities, which shall be FCDI’s sole obligation or liability with
respect thereto).
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3.3.3.
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CENTURY
shall use commercially reasonable efforts to timely provide FCDI with all information, Materials, etc. and Century Process
Development Activities, as applicable, for each Work Order as are necessary for
FCDI
to perform its obligations under this Agreement and such Work Order. In the
event of a dispute with respect to whether Century’s failure to perform or
delay in performance has delayed FCDI’s performance of its affected
obligations hereunder, such dispute shall be escalated to the JSC. If the JSC is
unable to unanimously resolve such dispute within thirty (30) days, then such
dispute shall be escalated to the Parties’ Chief Executive Officers for
resolution in accordance with Section 10.11(a) of the Differentiation License
Agreement. To the extent that it is determined by the JSC, or if applicable, the
Chief Executive Officers, that FCDI’s performance has been delayed by
Century’s failure or delay, then, in such event, FCDI’s period for
performance of such obligations will be tolled, and it shall be permitted to delay its performance of such affected
obligations, as applicable, but only to the extent and for the period of time such delay is actually caused by CENTURY. In
such event, the Parties shall make appropriate, mutually agreed adjustments to the applicable
Work Order (e.g., the affected Activities and Time Schedule) in accordance with Article
4 (Articles 4.5 through 4.11) of this Agreement.
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Article
4 - Changes to the Activities and Time Schedule
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4.1.
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The
Activities to be performed by FCDI as set forth in the applicable Work Order, including
the Time Schedule, will be discussed on a regular (as frequently as weekly) basis as agreed by the Project Team by
teleconference. Minutes of each Project Team meeting will be circulated promptly
(within 72 hours) after each meeting. FCDI will prepare and circulate the
minutes of the Project Team meetings between the Parties. The Project Team will
act by unanimous consensus (with the members of the Project Team from each Party
collectively being able to give or withhold a single consent). The Project Team
will not have the authority to act on behalf of or bind either Party, and each
Party retains the sole authority to act on its own behalf.
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4.2.
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With
respect to this Agreement, the JSC (as defined in the Differentiation License Agreement)
shall oversee and provide support to the Project Team and coordinate the Parties’
joint activities with respect to the development and/or production of
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the
Product. In addition to the other responsibilities of the JSC otherwise set forth in the Differentiation License Agreement, with respect
to this Agreement, the JSC shall be responsible for:
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(a)
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reviewing
CENTURY’s forecasts and FCDI’s capacity to manufacture and supply the Product
consistent therewith,
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(b)
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considering
any RFCs (Requests For Changes) in accordance with this Agreement,
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(c)
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performing
such other coordination functions, as appropriate, to further the purposes of this Agreement, and
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(d)
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supporting
and coordinating any further changes to the Activities as set forth in an amendment to the applicable Work Order that has
been signed by the Parties.
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4.3.
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The
Project Team or JSC can independently call on ad-hoc expertise from either Party or from a third party to participate in the
Project Team or JSC meetings when appropriate. In the event the ad hoc expertise
is a third party, such third party will, as a condition to its participation, be
subject to appropriate confidentiality obligations at least as stringent as
those contained in Article 7 of the MCA and subject to CENTURY’s or
FCDI’s, as the case may be, express prior written approval. For clarity,
neither the Project Team nor the JSC will have the power to (a) amend, modify or
waive a Party’s compliance with this Agreement or a Work Order, (b) alter,
increase or expand the Parties’ respective rights or obligations under this
Agreement, including any Work Order, (c) determine that a Party has fulfilled
any obligations, or that a Party has breached any obligations, under this
Agreement, including any Work Order, or (d) make a decision that is expressly stated
to require the mutual agreement of the Parties.
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4.4.
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The
Project Team will provide CENTURY and FCDI with regular technical progress updates (as
frequently as weekly) on the project status, progress of the Technology Transfer Activities, Process Development Activities,
Analytical Testing Development Activities, Analytical Test, Engineering Batch and
Manufacturing Activities, and any deviations or corrective actions of the
Manufacturing Activities, performed or to be performed hereunder (or pursuant to any
Work Order). FCDI will provide access to all Product-related data generated in
the course of FCDI’s providing of any such Activities hereunder (excluding,
however, any such data expressly excluded from Records) to CENTURY as from time to
time requested by Century at all times during the term of this Agreement and any
Work Order.
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4.5.
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Each
of the Parties may submit to the other Party, with a copy to the members of the Project Team, an RFC if it is of the opinion
that a change to the agreed Activities is appropriate. Such RFC also shall
include any change(s) to the Time Schedule and/or Financial Terms that the
submitting Party then believes are appropriate should the requested change to the
Activities be made. The RFC may be sent to the other Party and the Project Team
by e-mail for review.
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4.6.
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If
a RFC is submitted by a Party, the Project Team will advise the JSC, in the manner provided in the following paragraphs of this Article
4, regarding what the consequences are of the requested change (including any associated change(s) to the Time Schedule and/or Financial
Terms) and whether that
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request
for change is necessary from a regulatory, technical or contractual point of view.
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4.7.
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In
its first meeting after the RFC is submitted in accordance with Article 4.5 of this Agreement, the Project Team shall
discuss whether it is necessary that the requested change to the Activities is made
and, if such requested change would be made, whether any associated change(s) to
the Time Schedule and/or Financial Terms would be necessary.
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4.8.
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The
Project Team will fill out the relevant section of the RFC in conformity with the unanimous consensus required consistent
with Article 4.1 as to an outcome of their discussions on the requested
change. If there was no unanimous consensus as to an outcome of the discussions,
it will so be indicated on the RFC. The Project Team shall thereupon submit the
RFC to the JSC, which shall advise the respective Parties whether the requested
change can and should, in the opinion of the JSC, be accepted and implemented
and, if such requested change would be made, whether any associated change(s) to
the Time Schedule and/or Financial Terms can and should, in the opinion of the JSC,
also be accepted and implemented.
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4.9.
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To
become effective, the RFC containing the requested change needs to be signed by authorized representatives of both Parties,
which execution and delivery by a Party of an RFC shall evidence such
Party’s acceptance of such RFC (and the requested change set forth
therein) is accepted. Each Party may accept or reject an RFC (and the requested
change set forth therein) in its discretion subject, however, to what is
provided in Article 4.11.
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4.10.
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As
from the signing of the RFC by both Parties in accordance with Article 4.9 or such other effective date of the
requested change as is expressly set forth in such RFC, the requested change
shall form part of this Agreement and the applicable Work Order.
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4.11.
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Nothing
contained in this Article 4 or in any other provision of this Agreement can or will be interpreted as either Party
having an obligation to accept any RFC submitted by the other Party. However, each
Party shall act in good faith and use commercially reasonable efforts to reach
agreement on any RFC submitted to a Party by the other Party in good faith.
Neither Party shall be obligated to consider or accept any RFC that is not in
accordance with or would obligate such Party to violate GMP and/or Applicable
Law.
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Article
5 - Draft Release Specifications, Release Specifications, Delivery and Slot
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5.1.
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The
Parties will agree in writing on the Draft Release Specifications prior to the start of an Engineering Batch. The Parties
agree that they will use their good faith commercially reasonable efforts to reach
an agreement on the Draft Release Specifications.
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5.2.
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The
Parties will agree in writing on the Release Specifications at the latest two (2) weeks prior to the start of a GMP Batch.
The Parties agree that they will use their good faith commercially reasonable
efforts to reach an agreement on the Release Specifications.
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5.3.
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The
Parties agree that, in the event CENTURY wishes to postpone or cancel any of the Runs (for clarification a Run can be an
Engineering Batch or GMP Batch), CENTURY shall notify FCDI thereof in writing as soon as reasonably practicable. If the Slot
is already scheduled at the time CENTURY notifies FCDI of its desire to postpone (any of) the Runs, FCDI shall advise CENTURY
in writing within two (2) weeks after having received the notification for postponement whether one or more alternative dates
are available. CENTURY and FCDI jointly shall agree in writing on an alternative Slot. The Run Cancellation Fee, if any is
applicable (for clarity, in no event will a Run Cancellation Fee be applicable solely if Century and FCDI fail to agree upon
the Draft Release Specification or Release Specification, as applicable), will be payable, as described in the applicable
Work Order, with respect to a postponement or cancellation pursuant to notice from Century as contemplated above in this Article
5.3 or otherwise solely caused by Century. Further, in the event no agreement is reached pursuant to Article 5.1 or
5.2 regarding the Draft Release Specification or Release Specification required for any of the Runs, any Slot reserved or
scheduled for Century may be released by FCDI for other manufacturing activities.
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5.4.
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All
Products shall be shipped by FCDI and delivery thereof will be made Ex-Works the Facility as defined in Incoterms 2020 upon
which delivery risk in the Products shall pass to CENTURY. FCDI shall notify CENTURY in writing that such Products are
available for shipping, i.e., that FCDI has tendered delivery thereof. Such notification is to be given upon release of the
Product by FCDI’s Quality Assurance Department in the form of a signed CoA. Notwithstanding the foregoing, FCDI may not
tender delivery of a Batch dispositioned by FCDI until CENTURY has authorized the release of the applicable Batch in
accordance with Article 9.1(f) and Article 10.9, i.e., has accepted or is deemed to have accepted such Batch in
accordance with Article 7. For clarity, final release of Product is CENTURY’s sole and exclusive responsibility (per Article
9.1(f) and Article 10.9 of this Agreement) unless otherwise agreed by the Parties or unless otherwise provided in
an applicable Work Order.
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5.5.
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Packaging,
shipping, and storage conditions for the Products will be specified by Century in the
applicable Work Order(s). Except as may be expressly otherwise set forth in the applicable Work Order, FCDI will arrange,
prepaid by FCDI for CENTURY’s account, for shipment of Product(s) to
CENTURY’s site or to clinical sites designated by CENTURY in accordance with
such instructions.
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5.6.
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Title
with respect to the Products passes to CENTURY upon CENTURY’s acceptance or deemed acceptance thereof in accordance with Article
7 for use, further transfer, and other exploitation thereof, subject to the terms and conditions of the Reprogramming License Agreement
and WARF License Agreement and under the Licensed Patent Rights to Exploit the Licensed Products within the Field in the Territory. Notwithstanding
any term or implication herein to the contrary and for the sake of clarity, the foregoing excludes any license or right under the Licensed
Patent Rights (I) to manufacture, have manufactured, sell, have sold, offer for sale or have offered for sale any product or service
to any Third Party in furtherance of any research or development of a Licensed Product other than a Licensed Product that is being researched,
developed or Commercialized by or on behalf of Century or its Affiliates or Sublicensees, or (ii) to grant any sublicense to any Third
Party to manufacture, have manufactured, sell, have sold, offer for sale or have offered for sale any product or service to any other
Third Party in furtherance of any research or development
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of a Licensed Product other than a Licensed
Product that is being researched, developed or commercialized by or on behalf of
Century or its Affiliates or Sublicensees. For clarity, the foregoing shall not be
deemed to transfer title of Reprogrammed iPS Cells or pluripotent Reprogrammed iPS
Cell Derivative Materials that are Controlled by FCDI (in each case, as defined
in the Reprogramming License Agreement) that have not been genetically modified
or otherwise modified by Century or on Century’s request or direction
pursuant
to any Work Order. Capitalized terms used but not defined in this Article
5.6 have the meanings assigned to them in the Reprogramming License
Agreement.
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Article
6 - Engineering Batch Activities
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6.1.
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CENTURY
and FCDI shall agree on the Draft Release Specifications, according to Article 5.1
and the Draft Procedures prior to undertaking Engineering Batch Activities. The Parties
agree that they will use their good faith commercially reasonable efforts to reach an
agreement on the Draft Procedures.
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6.2.
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FCDI
agrees to perform the number of Engineering Batches indicated in the applicable Work Order, or as many additional Engineering
Batches as may be necessary to proceed to manufacturing of the Product under GMP (per Article 6.3), as described in
the applicable Work Order (including by amendment to such Work Order). The Engineering Batches are used for confirmation
purposes only (regarding the capability to perform such successful manufacturing), but not, by way of example and not in
limitation of the immediately preceding clause, for Clinical Studies (or any other use in humans) and/or commercial use. For
clarity, an Engineering Batch can never be a GMP Batch or a Batch that was manufactured to be such, but that failed to be, a
GMP Batch, and for each Engineering Batch, CENTURY shall pay the amount(s) specified in the Financial Terms in the applicable
Work Order (without regard to whether the Draft Release Specifications are met so long as FCDI used its commercially
reasonable efforts to perform the Engineering Batch Activities, which shall be FCDI’s sole obligation or liability with
respect thereto).
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6.3.
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Upon
completion of the Engineering Batch Activities, the Parties will agree in writing upon the Release Specifications as
described in Article 5.2 and the GMP Procedures. The Parties agree that they
will use their good faith commercially reasonable efforts to reach such agreement on
the Release Specifications and GMP Procedures. FCDI will promptly prepare a
written “Manufacturing Assessment and Readiness” report to document
the technical and logistical readiness to move to GMP manufacturing following
completion of the applicable Engineering Batch Activities, and CENTURY will
communicate in writing to FCDI its authorization or non-authorization to proceed or
to not proceed to GMP manufacturing after reviewing the data from the Engineering
Run(s). This decision will be referred as the “Go/No Go” decision
point.
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6.4.
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In
the event that either Party believes that an additional Engineering Batch is required, such Party may submit an RFC for such
a requested change to the applicable Work Order and such requested change will
be discussed and may be agreed between the Parties, including at the JSC, in
accordance with Article 4 (Articles 4.5 through 4.11) of this
Agreement.
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Article
7 - Manufacturing Activities
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7.1.
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CENTURY
and FCDI shall agree on the Release Specifications for the Products and the GMP Procedures
prior to undertaking Manufacturing Activities for the Products, according to Article 6.3.
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7.2.
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FCDI
agrees as part of its performance of Manufacturing Activities hereunder to perform the
number of Runs indicated in the applicable Work Order, which Runs shall be undertaken in order to produce Product
manufactured under GMP, in all material respects, which may be used in Clinical
Studies, but not for commercial use. In accordance with the Quality Agreement
and Article 10.6 of this Agreement, CENTURY personnel may be allowed by
FCDI to observe, and also to participate in, the execution of Engineering Batches
and/or GMP Batches; provided, that all such CENTURY personnel have been
appropriately trained in accordance with the requirements applicable to FCDI
employees who would enter FCDI’s facility where such Manufacturing Activities
are to be performed and perform such Manufacturing Activities, as reasonably
determined by FCDI, and all potential risks are evaluated in advance by FCDI and
Century (e.g., for any impact of any such observation or participation by
Century on the quality of the Batch, the ability of FCDI to manufacture
according to the GMP Procedures and under GMP and/or the safety of manufacture)
and FCDI and Century agree that such risks are acceptable and provided, further,
that all such CENTURY personnel shall, at all times when observing or participating
in such Activities, comply with all safety, emergency and third party visitor
procedures (e.g., confidentiality) adopted by FCDI in such facility.
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7.3.
|
Any
GMP Batches manufactured during the Manufacturing Phase shall on the date of delivery (as described in Article 5.4)
to
CENTURY or to a clinical site designated by Century conform to the Release
Specifications, as described in the applicable Work Order in all material respects,
and FCDI’s manufacture thereof shall have conformed to the GMP procedures,
as described in the applicable Work Order in all material respects.
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7.4.
|
Provision
for quality control re-testing: FCDI shall take and retain, for such period as may be required by Applicable Law, samples
of the Product sufficient to perform at least full quality control re-testing
and shall specify the dates of manufacture and packaging thereof. Further, FCDI
shall submit to Century, upon Century’s written request, such samples and
manufacturing and quality control records as Century may reasonably request in
order to implement analytical or other controls required by FDA or other
Applicable Law.
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7.5.
|
Disposition
of GMP Batches of Products:
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(a)
|
Acceptance
or Rejection: CENTURY will review Batch disposition documentation for accuracy and completeness, and will notify FCDI in writing
of its acceptance or rejection of such Batch(es) within [***] (as defined in the Quality Agreement) after receipt of the complete package
from FCDI as further described in this Article 7.5(a). CENTURY will give, prior to the expiration of such [***] period, FCDI written
notice either of (i) batch approval as CENTURY will generate the final product Certificate of Release (CoR), which will evidence CENTURY’s
approval of such Batch, and Certificate of Analysis (CoA) or (ii) the reason(s) why the Batch(es)/Product(s) are non-conforming, i.e.,
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they do not meet the Release Specifications, in all
material respects, if applicable, and/or they were not manufactured under GMP, in all material respects. Century has no obligation
to accept such Batch(es)/Product(s) if they do not meet the Release Specifications in all material respects, if applicable, and/or
were not manufactured in all material respects under GMP, if applicable. If CENTURY fails to timely give FCDI any such written
notice of non-conformance as described above in this Article 7.5(a) with respect to any Batch/Product, then such
Batch/Product shall be deemed to conform and be accepted by CENTURY. Notwithstanding the foregoing, until delivery (as contemplated Article
5.4) of such Batch/Product to CENTURY’s site or to clinical sites designated by CENTURY, FCDI shall retain full control
and title to the relevant Batch/Product and shall store such Batch/Product under appropriate and controlled conditions compliant
with GMP requirements and according to the agreed storage instructions as communicated to FCDI. Notwithstanding anything to the
contrary contained herein, CENTURY maintains the ability, in its discretion, to determine whether to timely (as provided above in
this Article 7.5(a)) accept or reject any Batch/Product, and any disputes with regard to such rejection shall be subject to Article
7.6.
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|
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(b)
|
Failed
Batches: If FCDI, during the Manufacturing Phase, fails to manufacture a Batch that
meets the Release Specifications, and/or a Batch is not manufactured under GMP, FCDI shall notify Century in writing of such
non-conformity as soon as reasonably practicable and thereafter FCDI shall use its
commercially reasonable efforts to manufacture a replacement Batch
according to GMP Procedures, which conforms to the Release Specifications. In the event
that FCDI performs a Run according to the GMP Procedures but nevertheless fails
to manufacture a replacement Batch which conforms to the Release
Specifications,
FCDI shall have no further responsibility or liability, and CENTURY shall have
no further rights and remedies, with respect to such non-conforming Product except
as may be expressly otherwise provided in Article 7.7. The responsibility
for
the cost and expense of the replacement Batch will be as set forth in Article
7.7.
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(c)
|
Non-conforming
Products: In the event that FCDI determines that Products do not meet the Release Specifications (i) FCDI shall notify
CENTURY thereof within [***] after such FCDI determination, (ii) FCDI shall not
deliver (as contemplated Article 5.4) such Product, (iii) within [***] after
FCDI has given CENTURY such notification, FCDI shall provide CENTURY
with a written progress report summarizing results of FCDI’s investigation of the
cause of such failure, and (iv) the Parties shall thereafter discuss in good
faith which optimization or correction, if any, shall be implemented by FCDI in
order to perform another batch of the Product (per Article 7.7).
Notwithstanding the foregoing, CENTURY shall have the unfettered right to decide in
its discretion not to perform an additional production Service and to proceed
at
its own risk with the Activities as agreed herein.
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7.6.
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Disputed
GMP Batches of Products:
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|
(a)
|
Failure
to meet Specifications: If the interpretation of quality control data required to release a Batch is in dispute, the dispute will
be escalated to
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the Project Team, who will attempt in good faith to
resolve any such dispute. If the Project Team is unable to resolve such dispute within ten (10) Business Days, the dispute shall be
submitted to a manufacturing review board (the “Manufacturing Review Board”) which shall be comprised of an equal
number of representatives from each Party with the relevant expertise, experience and seniority within their respective Party to
make decisions on behalf of such Party with respect to whether the Batch conforms to the Release Specifications. The Manufacturing
Review Board, at its option, may jointly devise and supervise such additional testing as might be required to resolve the dispute,
using as necessary, the product specific assay qualified procedures, instruments and reagents, which procedures, instruments and
reagents will be made available by the Parties, as necessary.
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(b)
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Failure
to meet GMP compliance: If there is any dispute concerning whether a Product was manufactured under GMP, if applicable,
including in relation to or in connection with the Quality Agreement and/or the
documents produced and delivered in accordance with the Quality Agreement or Article
10, FCDI and CENTURY shall discuss in good faith to
attempt to resolve such dispute. If FCDI and CENTURY fail to reach agreement in due
time, such dispute shall be resolved according to Section 3 of the Quality
Agreement between the Parties.
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(c)
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Dispute
Resolution: The Parties shall cooperate in good faith to determine whether a rejection
of Product by CENTURY pursuant to Article 7.5(a) is appropriate. If the Parties
disagree, a sample of the rejected Product and a sample retained by FCDI as set forth in Article 7.4 shall be
exchanged between CENTURY and FCDI for a counter-check. If such counter-check does
not resolve the dispute, such dispute shall be submitted to the Manufacturing Review
Board, who shall determine if the Batch met the Release Specifications at the time
of delivery by FCDI.
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If
the Parties have agreed, or if the Manufacturing Review Board determines, that the Product conforms in all respects with the Release
Specifications, then such Product shall be deemed to have been accepted by CENTURY and CENTURY shall pay the price therefor in
accordance with the terms under Article 11.
If
the Parties have agreed, or if the Manufacturing Review Board determines, that the Product is not conforming to the Release
Specifications, then such Product shall be deemed to have been rejected by CENTURY.
In
the event that (i) notwithstanding the good faith efforts to resolve any dispute submitted to it as provided in Article 7.6(a) or
Article 7.6(c), the Manufacturing Review Board is unable to reach a consensus with respect to whether a Batch/Product conforms
to the Release Specifications, or, (ii) despite a determination by the Manufacturing Review Board that the Batch/Product conforms to
the Release Specifications, CENTURY determines not to release or accept such Batch/Product, then, in either case, provided that such
Batch/Product was manufactured in accordance with GMP and FCDI was not negligent in the performance of the Manufacturing Activities,
CENTURY shall pay the price
therefor in accordance with the
terms under Article 11, and may request that FCDI use its commercially reasonable efforts to manufacture a replacement Batch
according to GMP Procedures, which conforms to the Release Specifications); provided, however, that any such efforts by FCDI will be
used only if the Parties sign a new Work Order for such manufacture of a replacement Batch.
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7.7.
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Remediation:
If a Product has not been accepted or deemed hereunder to have been accepted by Century and does not conform to the Release
Specifications, or was not manufactured under GMP, if applicable, FCDI and
CENTURY shall meet promptly to discuss, evaluate and analyze the reasons for and
implications of such failure (to the extent that such discussion, evaluation and
analysis has not been carried out pursuant to Article 7.6). In the event
such failure demonstrably results from FCDI’s negligence or willful
misconduct (or failure to manufacture under GMP), FCDI shall, upon
CENTURY’s request, and provided that CENTURY delivers to FCDI all Materials
necessary for FCDI to perform (i) or (ii) in this provision below,
either:
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i)
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obtain
the Materials from Century and obtain any other Raw Materials from a third party, in either case at FCDI’s sole cost
and expense, as required in order to produce a new batch of the Product as soon
as reasonably possible;
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ii)
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rework,
at FCDI’s cost and expense, the Product in such a way that the Product can be deemed to have been manufactured under
GMP, if applicable; and/or
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iii)
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proceed
with discussions with Century regarding a possible amendment of this Agreement to overcome
the failure.
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Replacement
of non-conforming Product by FCDI pursuant to this Article 7.7 as applicable shall be the sole responsibility of FCDI
with respect to non-conforming Product and the sole remedy of CENTURY in lieu of all other rights and remedies that might
otherwise be available to CENTURY; and, for clarity, FCDI’s performance of a Run according to the GMP Procedures
and under GMP, if applicable, and without any negligence or willful misconduct on its part, shall constitute full
performance by FCDI and fully discharge all responsibility and liability of FCDI with respect to non-conforming Product
resulting therefrom. With respect to any new batch of Product to be made pursuant to (i) in the immediately preceding
provision or Product to be reworked pursuant to (ii) in the immediately preceding provision, CENTURY and FCDI shall agree on
the Release Specifications for the Products and the GMP Procedures prior to undertaking Manufacturing Activities for the
Products, in accordance with Article 6.3 of this Agreement.
In
the event that the non-conformity is not the result of FCDI’s negligence or willful misconduct or failure to
manufacture under GMP, and the Parties sign a new Work Order for the manufacture of a replacement Batch, then
such replacement Batch produced pursuant to Article 7.5(b) shall be produced at Century’s cost and
expense.
Article
8 - Exclusivity for Manufacturing of Certain Clinical Supplies
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8.1.
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The
Parties acknowledge and agree that, subject to and on the terms of this
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Article 8, FCDI will be the preferred clinical
supplier to CENTURY for certain NK Cell Products and CENTURY (or a third party selected by CENTURY) will be the preferred supplier
to CENTURY of T Cell Products developed by CENTURY during the Exclusivity Term; provided that, except as set forth below, the
exclusive supplier as to each Product will be selected by CENTURY.
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(a)
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During
the Exclusivity Term, subject to the terms of Articles 8.2 and 8.3, FCDI
shall be the exclusive clinical supplier to CENTURY for the first NK Cell Product for
which CENTURY submits an IND. CENTURY shall purchase from FCDI, and FCDI shall supply
to CENTURY, all of CENTURY’s (and its Affiliates’ and sublicensees’)
requirements for clinical supply of such NK Cell Product.
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8.2.
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Exclusions.
For the avoidance of doubt, FCDI is given no right under this Article 8 to be CENTURY’s (a) clinical suppler,
exclusive or otherwise, of NK Cell Products or T Cell Products outside of the scenarios described in this Article 8,
or (b) commercial supplier, preferred or otherwise, of NK Cell Products or T Cell Products, and CENTURY shall retain full
rights to manufacture and supply NK Cell Products and T Cell Products in commercial form itself or through a third party
contracting manufacturing organization. However, it is understood by the Parties that CENTURY will in good faith consider
FCDI as either a preferred supplier or secondary source for any such other supply arrangements if FCDI has such clinical or
commercial manufacturing capabilities as would meet CENTURY’s needs.
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8.3.
|
Reservation
of CENTURY’s Right to Secondary Source. Nothing in this Article shall limit (i) CENTURY’s ability to manufacture and
supply, by itself or through its Affiliate, or to grant to any third party manufacturer, unless such third party manufacturer is explicitly
identified in Schedule 3.7 of the Differentiation License Agreement, the right to manufacture, on CENTURY’s behalf, any NK Cell
Products and/or T Cell Products for which FCDI is the exclusive clinical supplier hereunder in such minimal quantities as are necessary
to prevent a supply interruption if there is a Non-Supply Event, or (ii) FCDI’s obligation to transfer the Licensed Technology
(as defined in the Differentiation License Agreement) to CENTURY or its Affiliate or such third party manufacturer pursuant to the Differentiation
License Agreement upon CENTURY’s request to the extent not already effected pursuant to the MCA, this Agreement or the Differentiation
License Agreement (including pursuant to the exercise by Century of its rights
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pursuant to the Differentiation License Agreement),
provided that (a) such transfer is made pursuant to a technology transfer agreement that provides protection of the Licensed
Technology and confidentiality protection for the benefit of FCDI and that becomes effective during the Exclusivity Term, and is
reasonably acceptable to FCDI and (b) Century shall pay for all such technology transfer activities.
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8.4.
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Century
will retain full rights to manufacture and supply all commercial product itself or through a third party contract
manufacturing organization but will in good faith consider FCDI as a contract
manufacturing organization if FCDI has such commercial manufacturing capabilities
that would meet Century’s needs.
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8.5.
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The
provisions of this Article 8, except the proviso in the first sentence of Article 8.1(f) and the last sentence
of Article 8.1(f) (each of which shall survive such expiration), will expire at the expiration of the Exclusivity
Term.
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Article
9 - Further obligations of the Parties
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9.1.
|
Further
obligations of CENTURY. CENTURY shall, at CENTURY’s cost and expense:
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(a)
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timely
provide FCDI, free of charge, with the Material(s) in sufficient quantities as described
in the applicable Work Order or as otherwise necessary for FCDI to perform its obligations under this Agreement. FCDI will
not transfer the Material(s) to any third party or use such Materials for any
purpose outside of this Agreement, unless otherwise agreed in writing in
advance with/by CENTURY. The Materials will be released by the quality assurance
officer of CENTURY and shall be accompanied by a certificate of analysis;
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(b)
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reimburse
FCDI for the cost of the Raw Materials upon receipt of invoice and pay such other amounts (e.g., pass-through markup) as may
be set forth in the applicable Work Order;
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(c)
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timely
supply FCDI with all additional information necessary for FCDI to fulfill its obligations
hereunder and that are then available to CENTURY;
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(d)
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perform
evaluation in a timely manner as defined in the Quality Agreement for release by FCDI to CENTURY of each GMP
Batch;
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(e)
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review
and when acceptable to CENTURY notify FCDI of CENTURY’s approval of all documents
and changes thereto written by FCDI specifically for the manufacturing process of/for
the Product in accordance with the Quality Agreement; and
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(f)
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per
Article 10.10 of this Agreement, be responsible for the final release of all Product.
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9.2.
|
Further
obligations of FCDI. FCDI shall, at FCDI’s cost and expense:
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(a)
|
at
the request of CENTURY, return to CENTURY or destroy any unused quantities of the Materials provided by CENTURY and/or Raw Materials
paid for by CENTURY upon the expiration or termination of this Agreement
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or upon CENTURY’s earlier request (with written
confirmation of destruction provided to CENTURY);
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(b)
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maintain
records of usage of the Material(s) and the Raw Materials, and inform CENTURY of needs
for additional quantities of same in a timely manner;
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(c)
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purchase
the Raw Materials required for the manufacture of the Product other than the Material(s) -the purchase price of which shall
be reimbursed by CENTURY as set forth in Article 9.1(b) and Article
11.2;
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(d)
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perform
quality control and assurance release procedures, both in-process and for the release of the Product to CENTURY in accordance
with Article 10 of this Agreement;
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(e)
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perform
and complete the manufacturing of the Batches in accordance with the provisions of this Agreement and Applicable Law in all
material respects;
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(f)
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prepare,
maintain, and provide scanned copies to CENTURY of the Batch Production Records related
to the Batches manufactured by FCDI hereunder;
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(g)
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write
all Product related documentation in the English language;
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(h)
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not
carry on activities in the Facility which will, in the reasonable judgment of the quality
assurance department of FCDI, likely prevent the Product from being manufactured in accordance with this Agreement;
and
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(i)
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Permit
CENTURY and CENTURY’s third-party representatives and consultants to conduct comprehensive
quality audits of the Facility (or such other FCDI facility where Activities are performed) on dates and times as agreed to
by the Parties, in accordance with the Quality Agreement.
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Article
10 - Regulatory Affairs and Quality Assurance
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10.1.
|
FCDI
will exercise all reasonable skill, care, and diligence in the performance of its duties under this Agreement and carry out
all responsibilities within and in accordance with all recognized professional and
industry standards and Applicable Law. FCDI shall take all necessary actions to
obtain and maintain in full force and effect all permits, licensures, approvals
and authorizations that allow FCDI to carry out its obligations under this
Agreement, including any licenses for the Facility or other FCDI facilities
where Activities are to be performed. FCDI shall operate and maintain the
Facility and all equipment used in the manufacture of Products in compliance
with GMP, Applicable Law, and the then-current Quality Agreement.
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10.2.
|
FCDI
will not subcontract any part of its obligations under this Agreement to any third party without prior written approval by
CENTURY.
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10.3.
|
Quality
Control Program: FCDI shall maintain a quality control program as described in the
Quality Agreement.
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10.4.
|
In
carrying out any obligations under this Agreement, FCDI shall comply with all applicable
environmental and health and safety laws. Except as expressly set forth in this Agreement, FCDI shall be solely responsible
for determining how to carry out these obligations.
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10.5.
|
CENTURY
shall provide to FCDI in writing the release tests to be performed on the Product and FCDI will perform such release
tests.
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10.6.
|
FCDI
will write and maintain all Records relating to the manufacture of the Product supplied hereunder.
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10.7.
|
In
accordance with the Quality Agreement, CENTURY’s designated representatives may inspect those portions of the Facility
that are used in the manufacturing of the Product at reasonable times during the
manufacturing campaign of/for the Product, observing confidentiality obligations
with respect to third parties, for the purpose of determining compliance with
the terms of this Agreement. FCDI will provide full cooperation for and during these
inspections.
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10.8.
|
FCDI’s
quality assurance department will review and approve all BPRs and will investigate all
deviations on such BPRs. Within ten (10) FCDI working days after completion of manufacture
of each Batch, FCDI will supply CENTURY with a Certificate of Compliance for such Batch
stating that the BPRs and related documentation have been reviewed and, if applicable,
found to be in compliance with GMP in all material respects. In the event additional activities (like method qualifications
or other activities) are agreed between the Parties to be performed in parallel with the release of a Batch, the batch
disposition timeframe of within ten (10) FCDI working days might not be
feasible. In this case, the Parties shall agree upon a revised batch disposition
timeline in the applicable Work Order.
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|
10.9.
|
CENTURY
will inspect Product released by FCDI and review all BPRs within ten (10) days after its receipt.
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|
10.10.
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Notwithstanding
the other provisions of this Agreement, CENTURY shall have final responsibility and decision-making
authority as it relates to (a) any aspect of the conduct of the technology transfer described
herein, the performance of process and analytical development activities
hereunder, GMP manufacturing activities where the applicable Work Order or the Quality Agreement expressly provides that
such
aspect is to be decided by or as solely the responsibility of Century and (b) the release of Product manufactured by FCDI or
any product comprising the Product
manufactured by FCDI.
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|
10.11.
|
FCDI
will notify CENTURY by no more than thirty (30) days in advance of any proposed modifications
to the Facility (including but not limited to the equipment) insofar as such modifications
are in the reasonable judgment of the Quality Assurance department of FCDI relevant to the manufacturing processes for
the Product or any other obligations of FCDI hereunder.
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10.12.
|
FCDI
will retain and CENTURY shall allow FCDI to retain manufacturing data, test records generated by FCDI’s performance of Activities
hereunder and Raw Material samples as required to satisfy GMP, if and to the extent Product is to be manufactured under GMP. FCDI will
provide CENTURY, free of charge, with copies of all manufacturing data and test records, as well as copies of other documents resulting
from work under this Agreement required by CENTURY for regulatory
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|
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purposes in accordance with Article 4 of the MCA (the
provisions of which shall apply to this Agreement, mutatis mutandis) and the Quality Agreement. Such documents to be provided
to CENTURY are not copyright protected, and CENTURY may use these documents for regulatory and due diligence purposes and such other
purposes as are set forth in this Agreement or the MCA.
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|
|
10.13.
|
In
accordance with the Quality Agreement, FCDI shall promptly (but in any event within [***]
notify Century about any regulatory inspection and shall share the observations made (if any) by the regulatory agency
related to the Products during the inspection.
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|
|
10.14.
|
The
Quality Agreement sets forth the responsibilities of both Parties relating to quality affairs and contains specific
provisions agreed to by the Parties in mitigation of any audit findings. The
Quality Agreement shall not be construed or interpreted in such manner as to augment
or increase the responsibilities, liabilities or warranties of either Party
under this Agreement.
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Article
11 - Financial Terms
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|
11.1.
|
As
payment in full for the performance by FCDI of the Activities as described in the applicable Work Order, CENTURY shall pay
to FCDI all amounts set forth in the Financial Terms (such Financial Terms may be amended by written agreement between the
Parties as an amendment to the applicable Work Order in connection with any other change to such Work Order made effective
pursuant to Article 4.10 of this Agreement or other written agreement signed by the Parties) and that are undisputed
by Century in accordance herewith.
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|
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11.2.
|
Raw
Materials will be invoiced as follows;
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(a)
|
As
used during the Technology Transfer Phase, Process Development Phase, Engineering Phase and/or Analytical Test Phase, or for
any other activity not described in this Article 11.2, as agreed in writing
between the Parties at such time;
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(b)
|
As
a per Batch up-front Raw Material fee. Upon completion of the manufacture of each Batch,
any potential excess use will be calculated and invoiced to CENTURY. The upfront Raw Material fee amount and due date for
payment is as indicated in the applicable Work Order. The Parties will also agree if
back-up Raw Materials are to be ordered; and
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(c)
|
Where
multiple Batches are manufactured, unconsumed Raw Materials paid for upfront for a previous Batch will be maintained in
appropriate GMP storage by FCDI. FCDI will make good faith efforts to apply these
Raw Materials to subsequent Batches and to plan Raw Material acquisition efficiently
across all Batches to which CENTURY has committed to execution pursuant to Work
Order(s) or as otherwise provided herein.
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|
11.3.
|
All
invoiced amounts are to be denominated in US dollars.
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|
11.4.
|
FCDI
will issue an invoice to CENTURY for each amount due under the Financial Terms as specified in the applicable Work Order and for any
other amounts to be reimbursed or otherwise paid by CENTURY hereunder. Payment shall be made by CENTURY into the bank account indicated
on such invoice on or before (i) [***]
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|
|
|
after the date the applicable invoice is received by
CENTURY, or (ii) the date specified in the Financial Terms, whichever is earlier.
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|
11.5.
|
FCDI
will submit invoices, in the form of a portable document format (‘pdf’), referencing the applicable Work Order by email
to CENTURY at the following email address: [***]. FCDI will also provide CENTURY with its finance factsheet covering the finance
account details of FCDI upon signature of this Agreement.
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|
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11.6.
|
Termination
of this Agreement shall, unless explicitly provided otherwise in this Agreement, not
release CENTURY from any liability for payment accrued or accruing to FCDI prior to the termination date.
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|
11.7.
|
Subject
to Article 11.1 and the Financial Terms, each Party shall bear its own travel costs and other expenses related to this
Agreement, unless otherwise agreed in writing in advance.
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|
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11.8.
|
The
Parties agree that the amount(s) mentioned in the Financial Terms in this Agreement in
respect of the Manufacturing Activities as specified in each applicable Work Order are based on the current assumptions (as
of the applicable Work Order) of the manufacturing process for the Product to
be developed/transferred under this Agreement. Since such manufacturing
process may be modified during the performance of the requested Activities and
the assumptions may not be correct, the Parties agree that the amounts may need to
be adjusted in order to reflect changes to the then current assumptions of/for the manufacturing process resulting in the
actual manufacturing process. Any such changes to the Financial Terms will follow the mechanism outlined above concerning
Requests for Change, and will become effective, in accordance with Article 4 (Articles
4.5 through 4.11) of this Agreement.
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|
|
11.9.
|
Provisions
of Section 5.1 (the last three sentences only) and Section 5.4 of the MCA shall apply to this Agreement, mutatis
mutandis.
|
Article
12 - Intellectual property and Proprietary Rights
|
|
12.1.
|
The
provisions of Article 6 of the MCA shall apply to this Agreement, mutatis mutandis.
|
Article
13 - Representations, Warranties, Liability, Indemnities and Insurance
|
|
13.1.
|
FCDI
shall secure and maintain in full force and effect throughout the term of the Agreement
policies of insurance for (a) workers’ compensation in accordance with applicable
statutory requirements; employer’s liability in an amount not less than [***];
and automobile liability in an amount not less than [***], (b) commercial general liability
in an amount not less than [***] per occurrence and [***] in the aggregate, and (c) products liability in an amount not less
than [***] per occurrence and [***] in the aggregate.
|
The
provisions of Sections 3.1, 3.2 and 3.5 and Article 8 (excluding the last sentence of Section 8.4 thereof) of the MCA shall apply to
this Agreement, mutatis mutandis; provided, however, that notwithstanding anything to the contrary in Article 8 of the MCA: (a)
FCDI shall be obligated to indemnify Century Indemnitees (as defined in Section 8.1
of the MCA) pursuant to
clause (a) of Section 8.1 of the MCA with respect to only material breaches of this Agreement by FCDI (subject to what is provided
in clause (c) of this proviso); (b) Century shall be obligated to indemnify FCDI Indemnitees (as defined in Section 8.2 of the MCA)
pursuant to clause (c) of Section 8.2 of the MCA with respect to only material breaches of this Agreement by Century; (c) FCDI shall
have no obligation pursuant to Article 8 of the MCA as applicable hereto with respect to a Batch the release of which CENTURY has
authorized in accordance with Article 9.1(f) and Article 10.9, i.e., has accepted or is deemed to have accepted such Batch in
accordance with Article 7, whether the basis upon which a Century Indemnitee otherwise would be entitled to be indemnified pursuant
to Article 8 of the MCA as applicable hereto would arise in contract or otherwise; and (d) FCDI’s aggregate liability under
this Agreement pursuant to pursuant to clause (a) of Section 8.1 of the MCA as applicable hereto shall be limited by the Cap (as
defined in the MCA) except for FCDI’s liability for a material breach of this Agreement that constitutes a failure to
manufacture Product according to the GMP Procedures and under GMP (to which the Cap shall not apply).
Article
14 - Confidentiality
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|
14.1.
|
The
provisions of Article 7 of the MCA shall apply to this Agreement, mutatis mutandis.
The Parties agree that, for all purposes, Article 7 of the MCA obligates each Party to not use the Confidential
Information of the other Party for any purpose except those purposes expressly
permitted by the MCA or, as such Article 7 is applicable with respect hereto,
those purposes expressly permitted by this Agreement.
|
Article
15 - Term and Termination
|
|
15.1.
|
If
it becomes apparent to either FCDI or CENTURY at any stage in the provision of Process Development Activities, Analytical
Testing Development Activities, or Engineering Batch Activities, as applicable,
that
it will not be possible to complete such Activities for scientific or technical
reasons, such Party shall give the other Party written notice of such fact and
during the sixty (60) day period commencing on the date of the other
Party’s receipt of such notice, the Parties shall discuss in good faith the
commercially reasonable efforts or other measures that might be undertaken
to resolve such problems. If such problems are not resolved within such 60-day
period, each Party shall have the right to terminate such Activities and this
Agreement, including the applicable Work Order(s), with respect to such Activities
forthwith by notice to the other Party in writing.
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Delivery
of Records: Upon termination of this Agreement in accordance with the provisions of this Agreement, including the first paragraph
of this Article 15.1 or upon written request by Century, FCDI will deliver or return, as applicable, to CENTURY, at CENTURY’s
cost, all Product related information generated by or on behalf of FCDI, or obtained from Century, in the course of FCDI’s providing
of Activities hereunder, Records, and unused Materials related to the Process Development Activities, the Manufacturing Activities, the
Analytical Testing Development Activities and the Engineering Batch Activities. For clarity, such Product related information or Records
include, e.g., analytical methods, batch records, certificates of analysis, process or analytical validation reports, etc., and Materials
include, e.g., reference standards, products, in-process samples, stability samples, product retain samples, work-in-progress, etc.;
provided, however, that FCDI shall be permitted to retain one (1) copy of all Product related information and Records for archival and
regulatory purposes, which copy will
remain subject to the provisions
of Article 12 and Article 14 hereof. FCDI agrees to cooperate with the transfer of such Product related information,
Records and Materials to Century in an expeditious and collaborative fashion for as long as they remain in FCDI’s possession
or control.
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15.2.
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This
Agreement shall be valid and in full force and effect until terminated by either Party
pursuant to the terms hereof. Although the provisions for Termination of the MCA included in Sections 9.2, 9.3 and 9.4 of the
MCA shall also apply to this Agreement, mutatis mutandis, and provided, that
(i) this Agreement may be terminated by mutual agreement between the Parties
independently of the MCA and (ii) Century shall not terminate this Agreement for
convenience (pursuant to Section 9.2(b) of the MCA) until after the expiration of
the Exclusivity Term.
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Article
16 - Additional
The
provisions of Articles 4 and 10 of the MCA shall apply to this Agreement, mutatis mutandis; provided, however, that
in the event of a conflict or inconsistency between any provision of the MCA as made applicable to this Agreement pursuant to
the foregoing provision and another provision of this Agreement, the provision of this Agreement will control, unless the
conflict or inconsistency is specifically identified in the applicable Work Order(s) and the provision of the MCA as made
applicable hereto is expressly stated in the applicable Work Order(s) to supersede such conflicting or inconsistent
provision in this Agreement.
IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered as of the Effective Date by their duly authorized
representatives:
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Century Therapeutics, Inc.
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FUJIFILM Cellular Dynamics, Inc.
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By:
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/s/ Gregory
Russotti
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By:
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/s/ Takeshi
Yamamoto
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Name: Gregory Russotti, Ph.D.
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Name: Takeshi Yamamoto
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Title: Chief Technology Officer
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Title: President and Chief Executive
Officer
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Appendix
A
REQUEST
FOR CHANGE FORM
[***]
Exhibit 10.26
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is
not material and the registrant customarily and actually treats as private and confidential.
LOAN
AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT
is made and dated as of September 14, 2020 and is entered into by and among CENTURY THERAPEUTICS, LLC, a Delaware limited liability
company, and each of its Subsidiaries (hereinafter collectively referred to as the “Borrower”), the several banks and
other financial institutions or entities from time to time parties to this Agreement (collectively, referred to as the “Lenders”)
and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for itself and
the Lenders (in such capacity, the “Agent”).
RECITALS
A.
Borrower has requested the Lenders make available to Borrower a loan in an aggregate principal amount of up to Thirty Million
Dollars ($30,000,000) (the “Term Loan”); and
B.
The Lenders are willing to make the Term Loan on the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, Borrower, Agent and the Lenders agree
as follows:
SECTION
1. DEFINITIONS AND RULES OF CONSTRUCTION
1.1
Unless otherwise defined herein, the following capitalized terms shall have the following meanings:
“Account Control Agreement(s)”
means any agreement entered into by and among the Agent, Borrower and a third party bank or other institution (including a Securities
Intermediary) in which Borrower maintains a Deposit Account or an account holding Investment Property and which perfects Agent’s
first priority security interest in the subject account or accounts.
“ACH
Authorization” means the ACH Debit Authorization Agreement in substantially the form of Exhibit H, which account numbers
shall be redacted for security purposes if and when filed publicly by the Borrower.
“Acquisition” means
any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a Person, or of any business, line of business or division or other unit of operation
of a Person, (b) the acquisition of fifty percent (50%) or more of the Equity Interests of any Person, whether or not involving
a merger, consolidation or similar transaction with such other Person, or otherwise causing any Person to become a Subsidiary of
Borrower, or (c) the acquisition of, or the right to use, develop or sell (in each case, including through licensing (other than
“off-the-shelf” licenses)), any product, product line or intellectual property of or from any other Person.
“Advance(s)” means a Term Loan Advance.
“Advance Date” means the funding date of
any Advance.
“Advance Request” means
a request for an Advance submitted by Borrower to Agent in substantially the form of Exhibit A, which account numbers shall be
redacted for security purposes if and when filed publicly by the Borrower.
“Affiliate”
means (a) any Person that directly or indirectly controls, is controlled by, or is under common control with the Person in
question, (b) any Person directly or indirectly owning, controlling or holding with power to vote twenty percent (20%) or
more of the outstanding voting securities of another Person, (c) any Person twenty percent (20%) or more of whose outstanding
voting securities are directly or indirectly owned, controlled or held by another Person with power to vote such securities,
or (d) any Person related by blood or marriage to any Person described in subsection (a), (b) or (c) of this paragraph. As
used in the definition of “Affiliate,” (i) the term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise; and (ii) neither Bayer, Versant Ventures Capital VI, L.P., nor
Fujifilm Cellular Dynamics, Inc., nor their respective affiliates, shall be considered “Affiliates” of Borrower
or its Subsidiaries.
“Agreement”
means this Loan and Security Agreement, as amended from time to time. “All Source Proceeds” means unrestricted
(including, not subject to any redemption, clawback, escrow or similar encumbrance or restriction) net cash proceeds from one
or more bona fide equity financings and/or upfront proceeds from strategic partnerships and/or new business development
transactions permitted under this Agreement, in each case after the Closing Date and subject to verification by Agent
(including supporting documentation reasonably requested by Agent); provided that any remaining portion of the Bayer First
Tranche received by Borrower after the Closing Date will count as All Source Proceeds.
“Amortization Date”
means November 1, 2022; provided however, if the Interest Only Extension Conditions are satisfied, then May 1, 2023.
“Anti-Corruption Laws”
means all laws, rules, and regulations of any jurisdiction applicable to Borrower or any of its controlled Affiliates from time
to time concerning or relating to bribery or corruption, including without limitation the United States Foreign Corrupt Practices
Act of 1977, as amended, the UK Bribery Act 2010 and other similar legislation in any other jurisdictions.
“Anti-Terrorism Laws”
means any laws, rules, regulations or orders relating to terrorism or money laundering, including without limitation Executive
Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act,
and the laws administered by OFAC.
“Bayer” means Bayer HealthCare LLC, a Delaware
limited liability company.
“Bayer First Tranche”
means the “First Tranche Commitment Amount” as defined in the Commitment Agreement; and means an amount equal to One
Hundred Forty-Five Million Dollars ($145,000,000) (of which $75,000,000 has funded prior to the Closing Date and, for the avoidance
of doubt, does not count as All Source Proceeds).
“Blocked
Person” means any Person: (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No.
13224, (b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is
otherwise subject to the provisions of, Executive Order No. 13224, (c) a Person with which any Lender is prohibited from
dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person that commits, threatens or conspires
to commit or
supports “terrorism” as defined in Executive Order No. 13224, or (e) a Person that is named a
“specially designated national” or “blocked person” on the most current list published by OFAC or
other similar list.
“Borrower Products” means
all products, software, service offerings, technical data or technology currently being designed, manufactured or sold by Borrower
or which Borrower intends to sell, license, or distribute in the future including any products or service offerings under development,
collectively, together with all products, software, service offerings, technical data or technology that have been sold, licensed
or distributed by Borrower since its formation.
“Borrower’s Books”
means Borrower’s or any of its Subsidiaries’ books and records including ledgers, federal, state, local and foreign
tax returns, records regarding Borrower’s or its Subsidiaries’ assets or liabilities, the Collateral, business operations
or financial condition, and all computer programs or storage or any equipment containing such information.
“Business Day” means any
day other than Saturday, Sunday and any other day on which banking institutions in the State of California are closed for business.
“Cash” means all cash, cash equivalents
and liquid funds.
“Century” means Century Therapeutics, Inc.,
a Delaware corporation.
“Century
Canada” means Century Therapeutics Canada ULC, an unlimited liability company organized under the laws of British Columbia,
Canada, and a wholly-owned Subsidiary of Borrower.
“Change in Control”
means any reorganization, recapitalization, consolidation or merger (or similar transaction or series of related transactions)
of Borrower, sale or exchange of outstanding Equity Interests (or similar transaction or series of related transactions; other
than a sale of Borrower’s Equity Interests in a bona fide venture financing (or series of financings) in the ordinary course
of business) of Borrower in which the holders of Borrower’s outstanding Equity Interests immediately before consummation
of such transaction or series of related transactions do not, immediately after consummation of such transaction or series of related
transactions, retain Equity Interests representing more than fifty percent (50%) of the voting power of the surviving entity of
such transaction or series of related transactions (or the parent of such surviving entity if such surviving entity is wholly owned
by such parent), in each case without regard to whether Borrower is the surviving entity; or any other transaction pursuant to
which Bayer (together with its Affiliates) owns at least eighty percent (80%) of Borrower’s Equity Interests on a Fully Diluted
Basis (as defined in the Operating Agreement) after giving effect to such transaction or series of related transactions.
“Closing Date” means the date of this
Agreement.
“Code” means the Internal Revenue Code of
1986, as amended.
“Commitment Agreement”
means that certain Commitment Agreement dated as of June 21, 2019, by and among Borrower, Century Therapeutics, Inc. and Bayer;
as amended by the First Amendment, and in the form delivered to Agent prior to the Closing Date, as amended from time to time;
provided that such amendments are provided to Agent in accordance with Section 7.1(g).
“Contingent Obligation”
means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i)
any Indebtedness, lease, dividend, letter of credit or other obligation of another, including any such obligation directly or indirectly
guaranteed, endorsed,
co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations
arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement,
or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates
or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection
or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed
to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such
Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement.
“Copyright License” means
any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.
“Copyrights”
means all copyrights, whether registered or unregistered, and any applications in connection therewith, held pursuant to the laws
of the United States of America, any State thereof, or of any other country.
“Default” means any
event, circumstance or condition that has occurred or exists, that would, with the passage of time or the requirement that notice
be given or both, become an Event of Default.
“Deposit Accounts”
means any “deposit accounts,” as such term is defined in the UCC, and includes any checking account, savings account,
or certificate of deposit.
“Domestic Subsidiary”
means any Subsidiary organized under the laws of the United States of America, any State thereof, the District of Columbia, or
any other jurisdiction within the United States of America.
“Due Diligence Fee”
means Thirty Thousand Dollars ($30,000), which fee has been paid to the Lenders prior to the Closing Date, and shall be deemed
fully earned on such date regardless of the early termination of this Agreement.
“Empirica Promissory
Note” means the unsecured Promissory Note dated June 9, 2020, by and among Century Canada and Empirica Therapeutics, Inc.;
in the form delivered to Agent prior to the Closing Date; and with a principal amount equal to Two Million Canadian Dollars (CAN
$2,000,000).
“Equity Interests”
means, with respect to any Person, the capital stock, partnership or limited liability company interest, or other equity securities
or equity ownership interests of such Person.
“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“Excluded Accounts”
means (a) Deposit Accounts exclusively used for payroll, payroll taxes, and other employee wage and benefit payments to or for
the benefit of Borrower’s employees holding an aggregate amount across all such accounts of not more than amounts needed
for the then-next two (2) payroll cycles and (b) deposit, securities, commodity or similar accounts with financial
institutions within the United States, so long
as no more than $50,000 in the aggregate is maintained in such accounts at any time.
“FDA”
means the U.S. Food and Drug Administration or any successor thereto. “Foreign Subsidiary” means any Subsidiary
other than a Domestic Subsidiary. “GAAP” means generally accepted accounting principles in the United States of
America, as in effect from time to time.
“Governmental Authority”
is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions
of or pertaining to government, any securities exchange and any self-regulatory organization.
“IND” means an Investigational
New Drug Application submitted to the FDA pursuant to 21 C.F.R. § 312 (or its successor regulation) requesting authorization
to initiate clinical trials in human subjects.
“Indebtedness” means
indebtedness of any kind, including (a) all indebtedness for borrowed money or the deferred purchase price of property or services
(excluding trade credit entered into in the ordinary course of business due within ninety (90) days), including reimbursement and
other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures
or similar instruments, (c) all capital lease obligations, (d) equity securities of any Person subject to repurchase or redemption
other than at the sole option of such Person, (e) “earnouts”, purchase price adjustments, profit sharing arrangements,
deferred purchase money amounts and similar payment obligations or continuing obligations of any nature arising out of purchase
and sale contracts, (f) obligations arising under bonus, deferred compensation, incentive compensation or similar arrangements
(other than those arising in the ordinary course of business or otherwise reflected in Board-approved plans disclosed to Agent
from time to time), (g) non-contingent obligations to reimburse any bank or Person in respect of amounts paid under a letter of
credit, banker’s acceptance or similar instrument, and (h) all Contingent Obligations.
“Initial Facility Charge”
means Two Hundred Thousand Dollars ($200,000), which is payable to the Lenders in accordance with Section 4.1(f).
“Insolvency Proceeding”
means any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other similar relief.
“Intellectual Property”
means all of Borrower’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask works; Borrower’s
applications therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill associated with any of the foregoing,
together with Borrower’s rights to sue for past, present and future infringement of Intellectual Property and the goodwill
associated therewith.
“Interest Only Extension
Conditions” shall mean satisfaction of each of the following events: (a) no Default or Event of Default shall have occurred
and be continuing; and (b) Borrower’s achievement of Performance Milestone III on or prior to August 31, 2022.
“Investment”
means (a) any beneficial ownership (including stock, partnership, limited liability company interests, or other securities) of
or in any Person, (b) any loan, advance or capital contribution to any Person or (c) any Acquisition.
“IRS” means the United States Internal Revenue
Service.
“Joinder Agreements” means
for each Subsidiary, a completed and executed Joinder Agreement in substantially the form attached hereto as Exhibit F.
“License” means
any Copyright License, Patent License, Trademark License or other license of rights or interests.
“Lien” means any mortgage,
deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title
retention agreement, and any lease in the nature of a security interest.
“Loan” means the Advances made under this
Agreement.
“Loan Documents” means
this Agreement, the promissory notes (if any), the ACH Authorization, the Account Control Agreements, the Joinder Agreements, all
UCC Financing Statements, the Warrant, the Pledge Agreement, and any other documents executed in connection with the Secured Obligations
or the transactions contemplated hereby, as the same may from time to time be amended, modified, supplemented or restated.
“Material Adverse Effect”
means a material adverse effect upon: (i) the business, operations, properties, assets or financial condition of Borrower and its
Subsidiaries taken as a whole; or
(ii)
the ability of Borrower to perform or pay the Secured Obligations in accordance with the terms of the Loan Documents, or
the ability of Agent or the Lenders to enforce any of its rights or remedies with respect to the Secured Obligations; or (iii)
the Collateral or Agent’s Liens on the Collateral or the priority of such Liens.
“Maximum Term Loan Amount” means Thirty
Million and No/100 Dollars
($30,000,000).
“Non-Disclosure
Agreement” means that certain Non-Disclosure Agreement by and between Hercules Capital, Inc. and Borrower dated as of May
3, 2020.
“OFAC” is the
U.S. Department of Treasury Office of Foreign Assets Control.
“OFAC Lists” are,
collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224,
66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained pursuant to any
of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.
“Operating Agreement”
means the Amended and Restated Limited Liability Company Agreement of Borrower dated as of June 21, 2019 as amended by that certain
First Amendment dated as of the Effective Date in the form provided to Agent as of the Closing Date, as the same may be amended
from time to time; provided that such amendments are provided to Agent in accordance with Section 7.1(g).
“Option Agreement”
means that certain Option Agreement dated as of June 21, 2019, by and among Borrower, Century Therapeutics, Inc., and Bayer; in
the form delivered to Agent prior to the Closing Date, as the same may be amended from time to time; provided that such amendments
are provided to Agent in accordance with Section 7.1(g).
“Patent License” means
any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patent application
is pending, in which agreement Borrower now holds or hereafter acquires any interest.
“Patents”
means all letters patent of, or rights corresponding thereto, in the United States of America or in any other country, all registrations
and recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States of America
or any other country.
“Performance Milestone I”
means (a) no Default or Event of Default shall have occurred and be continuing and (b) Borrower has (i) demonstrated pre-clinical
proof-of-concept for all allogeneic iNK cell therapy; (ii) received at least Sixty-Five Million Dollars ($65,000,000) in All Source
Proceeds; provided that Agent may, in its sole discretion, reduce such amount of minimum All Source Proceeds consistent with adjustments
to Borrower’s projections and the anticipated timing of various events/initiatives, as reviewed and approved by Agent; and
(iii) demonstrated pre-clinical proof-of- concept for an allogeneic iT cell therapy product, in each case of the foregoing clauses
(i) through (iii), subject to verification by Agent in its reasonable discretion (including supporting documentation reasonably
requested by Agent).
“Performance Milestone
II” means (a) no Default or Event of Default shall have occurred and be continuing and (b) Borrower has (i) achieved Performance
Milestone I and (ii) received at least One Hundred Twenty Million Dollars ($120,000,000) in cumulative All Source Proceeds (including
amounts raised or received in connection with satisfaction of Performance Milestone I), which must include the completion of a
bona fide equity financing, which financing shall include an institutional investor reasonably acceptable to Agent which was not
an investor in Borrower as of the Closing Date, subject to verification by Agent (including supporting documentation reasonably
requested by Agent); provided that Agent may, in its sole discretion, reduce such amount of minimum All Source Proceeds consistent
with adjustments to Borrower’s projections and the anticipated timing of various events/initiatives, as reviewed and approved
by Agent.
“Performance Milestone
III” means (a) no Default or Event of Default shall have occurred and be continuing and (b) Borrower has (i) achieved Performance
Milestone II and (ii) in Agent’s reasonable discretion, demonstrated satisfactory progress towards the filing of an IND of
an allogeneic cell therapy product.
“Permitted
Acquisition” means any Acquisition, in each case located entirely within the United States of America, which is conducted
in accordance with the following requirements:
(a)
of a business or Person or product engaged in a line of business related to that of the Borrower or its Subsidiaries;
(b)
if such Acquisition is structured as a stock acquisition, then the Person so acquired shall either (i) become a wholly-owned
Subsidiary of Borrower or of a Subsidiary and the Borrower shall comply, or cause such Subsidiary to comply, with Section 7.13
hereof or (ii) such Person shall be merged with and into Borrower (with the Borrower being the surviving entity);
(c)
if such Acquisition is structured as the acquisition or in-licensing of assets, such assets shall be acquired by Borrower
or a Subsidiary of Borrower that has executed a Joinder Agreement, shall be related to or complementary to Borrower’s core
technology or required for specific product candidate constructs (i.e. cell therapy design, delivery technology, target-specific
IP, etc.), and shall be free and clear of Liens other than Permitted Liens;
(d)
the Borrower shall have delivered to the Lenders not less than fifteen (15) nor more than forty five (45) days prior to
the date of such Acquisition, notice of such Acquisition together with pro forma projected financial information, copies of all
material documents relating to such acquisition, and historical financial statements for such acquired entity, division or line
of business, in each case in form and substance satisfactory to the Lenders and demonstrating compliance with the covenants set
forth in Section 7.20 hereof on a pro forma basis as if the Acquisition occurred on the first day of the most recent measurement
period;
(e)
both immediately before and after such Acquisition no Default or Event of Default shall have occurred and be continuing;
and
(f)
the sum of the purchase price of all such proposed new Acquisitions, in the aggregate, computed on the basis of total acquisition
consideration paid or incurred, or to be paid or incurred, by Borrower with respect thereto, including any contingent or deferred
acquisition consideration due and/or payable during the term of this Agreement, and including the amount of Permitted Indebtedness
assumed or to which such assets, businesses or business or ownership interest or shares, or any Person so acquired, is subject,
shall not be greater than (i) $4,000,000 for any single acquisition or group of related acquisitions or (ii) $6,000,000 for all
such acquisitions during the term of this Agreement.
“Permitted Indebtedness” means:
(i)
Indebtedness of Borrower in favor of the Lenders or Agent arising under this Agreement or any other Loan Document;
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(ii)
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Indebtedness existing on the Closing Date which is disclosed in Schedule 1A;
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(iii)
Indebtedness of up to $1,500,000 outstanding at any time secured by a Lien described in clause (vii) of the defined term
“Permitted Liens,” provided such Indebtedness does not exceed the cost of the Equipment financed with such Indebtedness;
(iv)
Indebtedness to trade creditors incurred in the ordinary course of business, including such Indebtedness incurred in the
ordinary course of business with corporate credit cards in an amount not to exceed $500,000 at any time outstanding;
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(v)
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Indebtedness that also constitutes a Permitted Investment;
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(vi)
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Subordinated Indebtedness;
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(vii)
reimbursement obligations in connection with letters of credit that are secured by Cash and issued on behalf of the Borrower
or a Subsidiary thereof in an amount not to exceed
$250,000 at any time outstanding,
(viii)
Indebtedness arising from honoring by a bank or other financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of
business, provided that such Indebtedness is extinguished
within ten (10) days of Borrower or its Subsidiaries obtaining notice or knowledge of its incurrence;
(ix)
Indebtedness of Borrower and its Subsidiaries incurred in connection with financing of insurance premiums in the ordinary
course of business;
(x)
Indebtedness incurred in connection with netting services incurred in the ordinary course of business;
(xi)
Indebtedness arising out of currency or commodity swap agreements, interest rate cap agreements, interest rate collar agreements
or other similar agreements entered into in the ordinary course of business and not for speculation
(xii)
other unsecured Indebtedness in an amount not to exceed $250,000 at any time outstanding,
(xiii)
intercompany Indebtedness as long as either (A) each of the Subsidiary obligor and the Subsidiary obligee under such Indebtedness
is a Subsidiary that has executed a Joinder Agreement; and
(xiv)
extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not
increased or the terms modified to impose materially more burdensome terms upon Borrower or its Subsidiary, as the case may be.
“Permitted Investment” means:
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(i)
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Investments existing on the Closing Date which are disclosed in Schedule 1B;
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(ii)
(a) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or
any State thereof maturing within one year from the date of acquisition thereof currently having a rating of at least A-2 or P-2
from either Standard & Poor’s Corporation or Moody’s Investors Services, (b) commercial paper maturing no more
than one year from the date of creation thereof and currently having a rating of at least A-2 or P-2 from either Standard &
Poor’s Corporation or Moody’s Investors Service, (c) certificates of deposit issued by any bank with assets of at least
$500,000,000 maturing no more than one year from the date of investment therein, (d) money market accounts and (e) any other investments
permitted under the Investment Policy Statement of the Borrower dated as of November 12, 2018, as updated from time to time to
the extent a copy of such updates have been provided to, and reviewed by, Agent;
(iii)
repurchases of stock from former employees, directors, or consultants of Century, Borrower or its Subsidiaries under the
terms of applicable repurchase agreements at the original issuance price of such securities in an aggregate amount not to exceed
$250,000 in any fiscal year, provided that no Event of Default has occurred, is continuing or could exist after giving effect to
the repurchases;
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(iv)
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Investments accepted in connection with Permitted Transfers;
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(v)
Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers
and in settlement of delinquent obligations
of, and other disputes with, customers or suppliers
arising in the ordinary course of Borrower’s business;
(vi)
Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers
who are not Affiliates, in the ordinary course of business, provided that this subparagraph (vi) shall not apply to Investments
of Borrower in any Subsidiary;
(vii)
Investments consisting of loans not involving the net transfer on a substantially contemporaneous basis of cash proceeds
to employees, officers, managers or directors relating to the purchase of capital stock of Century, Borrower or its Subsidiaries
pursuant to employee stock purchase plans or other similar agreements approved by Century’s, Borrower’s or a Subsidiary’s
Board of Directors or similar governing body;
(viii)
Investments consisting of (i) travel advances and employee relocation loans in the ordinary course of business, and (ii)
loans to employees, officers, managers or directors relating to the purchase of equity securities of Century, Borrower or its Subsidiaries
pursuant to employee stock purchase plans or agreements approved by Century’s, Borrower’s or its Subsidiary’s
Board of Directors or similar governing body; not to exceed $250,000 in the aggregate for (i) and (ii) during the term of this
Agreement;
(ix)
Investments in newly-formed Subsidiaries, provided that each such Subsidiary enters into a Joinder Agreement promptly after
its formation by Borrower and execute such other documents as shall be reasonably requested by Agent;
(x)
Investments in (i) Foreign Subsidiaries approved in advance in writing by Agent; and (ii) Century Canada, not to exceed
$200,000 in the aggregate in any fiscal year, provided however up to CAN $2,000,000 may be invested in Century Canada solely for
the purposes of paying the amounts due under the Empirica Promissory Note as such amounts come due in accordance with the terms
of the Empirica Promissory Note in effect as of the Closing Date;
(xi)
joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the nonexclusive
licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments
by Borrower do not exceed
$250,000 in the aggregate in any fiscal year;
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(xii)
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Investments consisting of Permitted Acquisitions; and
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(xiii)
additional Investments that do not exceed $250,000 in the aggregate.
“Permitted Liens” means:
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(i)
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Liens in favor of Agent or the Lenders;
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(ii)
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Liens existing on the Closing Date which are disclosed in Schedule 1C;
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(iii)
Liens for taxes, fees, assessments or other governmental charges or levies, either not yet due or being contested in good
faith by appropriate proceedings diligently conducted; provided, that Borrower maintains adequate reserves therefor on Borrower’s
Books in accordance with GAAP;
(iv)
Liens securing claims or demands of materialmen, artisans, mechanics, carriers, warehousemen, landlords and other like Persons
arising in the ordinary course of Borrower’s business and imposed without action of such parties; provided, that the payment
thereof is not yet required;
(v)
Liens arising from judgments, decrees or attachments in circumstances which do not constitute an Event of Default hereunder;
(vi)
the following deposits, to the extent made in the ordinary course of business: deposits under worker’s compensation,
unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other
than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than Liens arising
under ERISA or environmental Liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds;
(vii)
Liens on Equipment or software or other intellectual property constituting purchase money Liens and other Liens in connection
with capital leases securing Indebtedness permitted in clause (iii) of “Permitted Indebtedness”;
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(viii)
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Liens incurred in connection with Subordinated Indebtedness;
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(ix)
leasehold interests in leases or subleases and licenses granted in the ordinary course of business and not interfering in
any material respect with the business of the licensor;
(x)
Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties that are
promptly paid on or before the date they become due;
(xi)
Liens on insurance proceeds securing the payment of financed insurance premiums that are promptly paid on or before the
date they become due (provided that such Liens extend only to such insurance proceeds and not to any other property or assets);
(xii)
statutory and common law rights of set-off and other similar rights as to deposits of cash and securities in favor of banks,
other depository institutions and brokerage firms;
(xiii)
easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the
ordinary course of business so long as they do not materially impair the value or marketability of the related property;
(xiv)
(A) Liens on Cash securing obligations permitted under clause (vii) of the definition of Permitted Indebtedness and (B)
security deposits in connection with real property leases, the combination of (A) and (B) in an aggregate amount not to exceed
$250,000 at any time;
(xv)
Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type
described in clauses (i) through (xi) above; provided, that any extension, renewal or replacement Lien shall be limited to the
property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced (as
may have been reduced by any payment thereon) does not increase; and
(xvi)
Other Liens, provided that the aggregate outstanding amount of Indebtedness secured thereby shall not exceed $150,000 at
any time.
“Permitted Transfers” means:
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(i)
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sales of Inventory in the ordinary course of business,
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(ii)
licenses of, and similar arrangements for, Intellectual Property pursuant to the Option Agreement;
(iii)
licenses and similar arrangements for the use of Intellectual Property in the ordinary course of business that could not
result in a legal transfer of title of the licensed property that may be exclusive in respects other than territory or may be exclusive
as to territory but only as to discreet geographical areas outside of the United States of America in the ordinary course of business,
(iv)
dispositions of worn-out, obsolete or surplus Equipment at fair market value in the ordinary course of business,
(v)
transfers of assets made by Borrower or any of its Subsidiaries to another Borrower or any Subsidiary that is a Borrower
or guarantor hereunder;
(vi)
other transfers of assets having a fair market value of not more than $500,000 in the aggregate in any fiscal year, and
(vii)
Transfers which are Permitted Liens, Permitted Investments or distributions permitted under Section 7.7 of this Agreement.
“Person” means any
individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, other entity or government.
“Pledge Agreement”
means the Pledge Agreement dated as of the Closing Date between Borrower and Agent, as the same may from time to time be amended,
restated, modified or otherwise supplemented.
“Receivables”
means (i) all of Borrower’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds
of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto.
“Register” has the meaning specified in
Section 11.7.
“Required Lenders”
means at any time, the holders of more than 50% of the aggregate unpaid principal amount of the Term Loans then outstanding.
“Restricted License”
means any material License or other material agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise
restricts Borrower from granting a security interest in Borrower’s interest in such License or agreement or any other property,
or (b) for which a default under or termination of could interfere with the Agent’s right to sell any Collateral.
“Sanctioned Country”
means, at any time, a country or territory which is the subject or target of any Sanctions.
“Sanctioned Person”
means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign
Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or by the United Nations Security Council,
the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person
controlled by any such Person.
“Sanctions” means
economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government,
including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department
of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.
“Secured Obligations”
means Borrower’s obligations under this Agreement and any Loan Document (other than the Warrant), including any obligation
to pay any amount now owing or later arising.
“Subordinated Indebtedness”
means Indebtedness subordinated to the Secured Obligations in amounts and on terms and conditions satisfactory to Agent in its
reasonable discretion and subject to a subordination agreement in form and substance satisfactory to Agent in its reasonable discretion.
“Subsequent Financing”
means the closing of any Borrower financing which becomes effective after the Closing Date broadly marketed to multiple investors.
“Subsidiary” means
an entity, whether a corporation, partnership, limited liability company, joint venture or otherwise, in which Borrower owns or
controls 50% or more of the outstanding voting securities, including each entity listed on Schedule 1 hereto.
“Taxes” means all present
or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Commitment” means
as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a principal amount not
to exceed the amount set forth under the heading “Term Commitment” opposite such Lender’s name on Schedule 1.1.
“Term Loan Advance”
means each Tranche 1 Advance, Tranche 2 Advance, Tranche 3 Advance and any other Term Loan funds advanced under this Agreement.
“Term
Loan Interest Rate” means for any day a per annum rate of interest equal to the greater of either (i) the sum of (x) the
prime rate as reported in The Wall Street Journal, and (y) Six and Thirty One Hundredths Percent (6.30%); or (ii) Nine and Fifty-Five
One Hundredths Percent (9.55%).
“Term Loan Maturity Date”
means April 1, 2024; provided that if such day is not a Business Day, the Term Loan Maturity Date shall be the immediately preceding
Business Day.
“Trademark License”
means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest.
“Trademarks” means all
trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations, recordings
and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States of America,
any State thereof or any other country or any political subdivision thereof.
“Tranche 3 Facility
Charge” means one percent (1.00%) of the Tranche 3 Advance, which is payable to the Lenders in accordance with Section 4.2(d).
“UCC” means the
Uniform Commercial Code as the same is, from time to time, in effect in the State of California; provided, that in the event that,
by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to,
Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as the same is, from time to time, in effect in
a jurisdiction other than the State of California, then the term “UCC” shall mean the Uniform Commercial Code as in
effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such provisions.
“U.S. Person” means any
Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.
“Warrant” means any
warrant entered into in connection with the Loan, as may be amended, restated or modified from time to time.
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1.2
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The following terms are defined in the Sections or subsections referenced opposite such
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terms:
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Defined Term
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Section
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Agent
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Preamble
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Assignee
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11.14
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Borrower
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Preamble
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Claims
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11.11
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Collateral
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3.1
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Confidential Information
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11.13
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End of Term Charge
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2.6
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Event of Default
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9
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Financial Statements
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7.1
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Indemnified Person
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6.3
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Lenders
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Preamble
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Liabilities
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6.3
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Maximum Rate
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2.3
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Open Source License
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5.10
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Participant Register
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11.8
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Prepayment Charge
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2.5
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Publicity Materials
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11.19
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Register
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11.7
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Rights to Payment
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3.1
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Tranche 1 Advance
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2.2(a)
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Tranche 2 Advance
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2.2(a)
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Tranche 3 Advance
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2.2(a)
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1.3
Unless otherwise specified, all references in this Agreement or any Annex or Schedule hereto to a “Section,”
“subsection,” “Exhibit,” “Annex,” or “Schedule” shall refer to the corresponding
Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement. Unless otherwise specifically provided herein, any accounting
term used in this Agreement or the other Loan Documents shall have the meaning customarily given such term in accordance with GAAP
as in effect on the date hereof, and all financial computations hereunder shall be computed in accordance with GAAP as in effect
on the date hereof, consistently applied. Unless otherwise defined herein or in the other Loan Documents, terms that are used herein
or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC. For all purposes under
the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different
jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation
or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent
Person and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date
of its existence by the holders of its Equity Interests at such time.
1.4
If at any time any change in GAAP would affect the computation of any financial requirement set forth in any Loan Document,
and either the Borrower or the Required Lenders shall so request, Agent, Lenders and the Borrower shall negotiate in good faith
to amend such requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended,
such requirement shall continue to be computed in accordance with GAAP prior to such change.
SECTION
2. THE LOAN
(a)
Advances. Subject to the terms and conditions of this Agreement, the Lenders will severally (and not jointly) make in an
amount not to exceed its respective Term Commitment, and Borrower agrees to draw, a Term Loan Advance of Ten Million Dollars ($10,000,000)
on the Closing Date (the “Tranche 1 Advance”). Subject to the terms and conditions of this Agreement, beginning on
the later of (i) January 1, 2021 and (ii) the achievement of Performance Milestone I, and continuing through September 30, 2021
(as such date may be extended in Agent’s sole discretion), Borrower may request and the Lenders shall severally (and not
jointly) make an additional Term Loan Advance in a principal amount of Ten Million Dollars ($10,000,000) (the “Tranche 2
Advance”). Subject to the terms and conditions of this Agreement, and conditioned on approval by the Lenders’ investment
committee in its sole and unfettered discretion, Borrower may request additional Term Loan Advances in an aggregate principal amount
up to Ten Million Dollars ($10,000,000), in minimum increments of Two
Million Five Hundred Thousand Dollars ($2,500,000)
(each, a “Tranche 3 Advance”). The aggregate outstanding Term Loan Advances may be up to the Maximum Term Loan Amount.
(b)
Advance Request. To obtain a Term Loan Advance, Borrower shall complete, sign and deliver an Advance Request (at least five
(5) Business Days before the Advance Date other than the Closing Date, which shall be at least one (1) Business Day) to Agent.
The Lenders shall fund the Term Loan Advance in the manner requested by the Advance Request provided that each of the conditions
precedent to such Term Loan Advance is satisfied as of the requested Advance Date.
(c)
Interest. Term Loan Interest Rate. The unpaid principal balance of each Term Loan Advance shall bear interest thereon from
such Advance Date until paid in full at the Term Loan Interest Rate based on a year consisting of 360 days, based on the actual
number of days elapsed. The Term Loan Interest Rate will float and change on the day the prime rate changes from time to time.
(d)
Payment. Borrower will pay interest on each Term Loan Advance on the first Business Day of each month, beginning the month
after the Advance Date. Borrower shall repay the aggregate Term Loan principal balance that is outstanding on the day immediately
preceding the Amortization Date, in equal monthly installments of principal and interest (mortgage style) beginning on the Amortization
Date and continuing on the first Business Day of each month thereafter until the Secured Obligations (other than inchoate indemnity
obligations) are repaid. The entire Term Loan principal balance and all accrued but unpaid interest hereunder, shall be due and
payable on the Term Loan Maturity Date. Subject to Addendum 1, Borrower shall make all payments under this Agreement without setoff,
recoupment or deduction and regardless of any counterclaim or defense. If a payment hereunder becomes due and payable on a day
that is not a Business Day, the due date thereof shall be the immediately preceding Business Day. The Lenders will initiate debit
entries to the Borrower’s account as authorized on the ACH Authorization (i) on each payment date of all periodic obligations
payable to the Lenders under each Term Loan Advance and (ii) out-of-pocket legal fees and costs incurred by Agent or the Lenders
in connection with Section 11.12 of this Agreement; provided that, with respect to clause
(i)
above, in the event that the Lenders or Agent informs Borrower that the Lenders will not initiate a debit entry to Borrower’s
account for a certain amount of the periodic obligations due on a specific payment date, Borrower shall pay to the Lenders such
amount of periodic obligations in full in immediately available funds on such payment date; provided, further, that, with respect
to clause (i) above, if the Lenders or Agent informs Borrower that the Lenders will not initiate a debit entry as described above
later than the date that is three (3) Business Days prior to such payment date, Borrower shall pay to the Lenders such amount of
periodic obligations in full in immediately available funds on the date that is three (3) Business Days after the date on which
the Lenders or Agent notifies Borrower of such; provided, further, that, with respect to clause (ii) above, (x) in the event that
the Lenders or Agent informs Borrower that the Lenders will not initiate a debit entry to Borrower’s account for certain
amount of such out-of-pocket legal fees and costs incurred by Agent or the Lenders, Borrower shall pay to the Lenders such amount
in full in immediately available funds within three (3) Business Days; and (y) except with respect to Agent’s and the Lenders’
fees and expenses necessary to finalize the loan documentation, and due and payable on the Closing Date, Agent shall provide Borrower
prior written notice before initiating a debit entry for payment of Agent’s and the Lenders’ fees and expenses due
after the Closing Date.
2.3
Maximum Interest. Notwithstanding any provision in this Agreement or any other Loan Document, it is the parties’ intent
not to contract for, charge or receive interest at a rate that
is greater than the maximum rate permissible
by law that a court of competent jurisdiction shall deem applicable hereto (which under the laws of the State of California shall
be deemed to be the laws relating to permissible rates of interest on commercial loans) (the “Maximum Rate”). If a
court of competent jurisdiction shall finally determine that Borrower has actually paid to the Lenders an amount of interest in
excess of the amount that would have been payable if all of the Secured Obligations had at all times borne interest at the Maximum
Rate, then such excess interest actually paid by Borrower shall be applied as follows: first, to the payment of the Secured Obligations
consisting of the outstanding principal; second, after all principal is repaid, to the payment of the Lenders’ accrued interest,
costs, expenses, professional fees and any other Secured Obligations; and third, after all Secured Obligations are repaid, the
excess (if any) shall be refunded to Borrower.
2.4
Default Interest. In the event any payment is not paid on the scheduled payment date, an amount equal to four percent (4%)
of the past due amount shall be payable on demand made by Agent in writing. In addition, upon the occurrence and during the continuation
of an Event of Default hereunder, all Secured Obligations, including principal, interest, compounded interest, and professional
fees, shall bear interest at a rate per annum equal to the rate set forth in Section 2.2(c), plus four percent (4%) per annum.
In the event any interest is not paid when due hereunder, delinquent interest shall be added to principal and shall bear interest
on interest, compounded at the rate set forth in Section 2.2(c) or this Section 2.4, as applicable.
2.5
Prepayment. At its option, upon at least seven (7) Business Days prior written notice to Agent, Borrower may at any time
prepay all or a portion of the outstanding Advances by paying the entire principal balance (or such portion thereof), all accrued
and unpaid interest thereon, together with a prepayment charge equal to the following percentage of the principal amount of the
Advance being prepaid: with respect to each Advance, if such Advance amounts are prepaid prior to the Amortization Date, two percent
(2.00%); and thereafter, one percent (1.00%) (each, a “Prepayment Charge”); provided that any partial prepayment shall
be in minimum increments of principal in the amount $5,000,000 (or such lesser amount as is then outstanding). Borrower agrees
that the Prepayment Charge is a reasonable calculation of the Lenders’ lost profits in view of the difficulties and impracticality
of determining actual damages resulting from an early repayment of the Advances. Borrower shall prepay the outstanding amount of
all principal and accrued interest through the prepayment date and the Prepayment Charge upon the occurrence of a Change in Control
or any other prepayment hereunder. Notwithstanding the foregoing, Agent and the Lenders agree to waive the Prepayment Charge if
Agent and the Lenders (in their sole and absolute discretion) agree in writing to refinance the Advances prior to the Term Loan
Maturity Date. Any amounts paid under this Section shall be applied by Agent to the then unpaid amount of any Secured Obligations
(including principal and interest) in such order and priority as Agent may choose in its sole discretion. For the avoidance of
doubt, if a payment hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately
preceding Business Day.
(a)
On any date that Borrower partially prepays the outstanding Secured Obligations pursuant to Section 2.5, Borrower shall
pay the Lenders a charge of Three and Ninety-Five Hundredths Percent (3.95%) of such Term Loan Advances being repaid.
(b)
On the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that Borrower prepays the outstanding Secured
Obligations (other than any inchoate indemnity
obligations and any other obligations which,
by their terms, are to survive the termination of this Agreement) in full, or (iii) the date that the Secured Obligations become
due and payable, Borrower shall pay the Lenders a charge equal to (x) Three and Ninety-Five Hundredths Percent (3.95%) of the aggregate
Term Loan Advances minus (y) the aggregate amount of payments made pursuant to Section 2.6(a) (collectively with any charge made
pursuant to Section 2.6(a), the “End of Term Charge”).
(c)
Notwithstanding the required payment date of such End of Term Charge, the applicable pro rata portion of the End of Term
Charge shall be deemed earned by the Lenders as of each date a Term Loan Advance is made. For the avoidance of doubt, if a payment
hereunder becomes due and payable on a day that is not a Business Day, the due date thereof shall be the immediately preceding
Business Day.
2.7
Pro Rata Treatment. Each payment (including any prepayment) on account of any fee and any reduction of the Term Loans shall
be made pro rata according to the Term Commitments of the relevant Lender.
2.8
Taxes; Increased Costs. The Borrower, the Agent and the Lenders each hereby agree to the terms and conditions set forth
on Addendum 1 attached hereto.
2.9
Treatment of Prepayment Charge and End of Term Charge. Borrower agrees that any Prepayment Charge and any End of Term Charge
payable shall be presumed to be the liquidated damages sustained by each Lender as the result of the early termination, and Borrower
agrees that it is reasonable under the circumstances currently existing and existing as of the Closing Date. The Prepayment Charge
and the End of Term Charge shall also be payable in the event the Secured Obligations (and/or this Agreement) are satisfied or
released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure, or by any other means. Borrower
expressly waives (to the fullest extent it may lawfully do so) the provisions of any present or future statute or law that prohibits
or may prohibit the collection of the foregoing Prepayment Charge and End of Term Charge in connection with any such acceleration.
Borrower agrees (to the fullest extent that each may lawfully do so): (a) each of the Prepayment Charge and the End of Term Charge
is reasonable and is the product of an arm’s length transaction between sophisticated business people, ably represented by
counsel; (b) each of the Prepayment Charge and the End of Term Charge shall be payable notwithstanding the then prevailing market
rates at the time payment is made; (c) there has been a course of conduct between the Lenders and Borrower giving specific consideration
in this transaction for such agreement to pay the Prepayment Charge and the End of Term Charge as a charge (and not interest) in
the event of prepayment or acceleration; (d) Borrower shall be estopped from claiming differently than as agreed to in this paragraph.
Borrower expressly acknowledges that their agreement to pay each of the Prepayment Charge and the End of Term Charge to the Lenders
as herein described was on the Closing Date and continues to be a material inducement to the Lenders to provide the Term Loans.
SECTION
3. SECURITY INTEREST
3.1
As security for the prompt and complete payment when due (whether on the payment dates or otherwise) of all the Secured
Obligations, Borrower grants to Agent a security interest in all of Borrower’s right, title, and interest in, to and under
all of Borrower’s personal property and other assets including without limitation the following (except as set forth herein)
whether now owned or hereafter acquired (collectively, the “Collateral”): (a) Receivables; (b) Equipment; (c) Fixtures;
(d) General Intangibles (other than Intellectual Property); (e) Inventory; (f)
Investment Property; (g) Deposit Accounts;
(h) Cash; (i) Goods; and all other tangible and intangible personal property of Borrower whether now or hereafter owned or existing,
leased, consigned by or to, or acquired by, Borrower and wherever located, and any of Borrower’s property in the possession
or under the control of Agent; and, to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions
to, substitutions and replacements for, and rents, profits and products of each of the foregoing; provided, however, that
the Collateral shall include all Accounts and General Intangibles that consist of rights to payment and proceeds from the sale,
licensing or disposition of all or any part, or rights in, the Intellectual Property (the “Rights to Payment”). Notwithstanding
the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual
Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective
as of the date of this Agreement, include the Intellectual Property to the extent necessary to permit perfection of Agent’s
security interest in the Rights to Payment.
3.2
Notwithstanding the broad grant of the security interest set forth in Section 3.1, above, the Collateral shall not include
(a) nonassignable licenses or contracts, which by their terms require the consent of the licensor thereof or another party (but
only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, Sections 9406,
9407 and 9408 of the UCC), provided further, that upon the termination of such prohibition or such consent being provided with
respect to any license or contract, such license or contract shall automatically be included in the Collateral; (b) property for
which the granting of a security interest therein is contrary to applicable law, provided that upon the cessation of any such restriction
or prohibition, such property shall automatically be included in the Collateral; (c) any property subject to a Permitted Lien hereunder,
if the grant of a security interest with respect to such property pursuant to this Agreement would be prohibited by the agreement
creating such Permitted Lien or would otherwise constitute a default thereunder or create a right of termination by a party thereto
(other than Borrower), provided that upon the termination and release of such Lien or prohibition, such property shall automatically
be included in the Collateral; and (d) any Excluded Account.
SECTION
4. CONDITIONS PRECEDENT TO LOAN
The obligations of the Lenders
to make the Loan hereunder are subject to the satisfaction by Borrower of the following conditions:
4.1
Initial Advance. On or prior to the Closing Date, Borrower shall have delivered to Agent the following:
(a)
executed copies of the Loan Documents (other than the Warrant, which shall be an original), Account Control Agreements,
and all other documents and instruments reasonably required by Agent to effectuate the transactions contemplated hereby or to create
and perfect the Liens of Agent with respect to all Collateral, in all cases in form and substance reasonably acceptable to Agent;
(b)
a legal opinion of Borrower’s counsel in form and substance reasonably acceptable to Agent,
(c)
certified copy of resolutions of Borrower’s Board of Managers evidencing approval of (i) the Loan and other transactions
evidenced by the Loan Documents; and (ii) the Warrant and transactions evidenced thereby;
(d)
certified copies of the Certificate of Formation Operating Agreement, as amended through the Closing Date, of Borrower;
(e)
a certificate of good standing for Borrower from its state of formation and similar certificates from all other jurisdictions
in which it does business and where the failure to be qualified could have a Material Adverse Effect;
(f)
payment of the Due Diligence Fee, Initial Facility Charge and reimbursement of Agent’s and the Lenders’ current
expenses reimbursable pursuant to this Agreement, which amounts may be deducted from the initial Advance;
(g)
all certificates of insurance and copies of each insurance policy required hereunder; and
(h)
such other documents as Agent may reasonably request.
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4.2
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All Advances. On each Advance Date:
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(a)
Agent shall have received (i) an Advance Request for the relevant Advance as required by Section 2.2(b), each duly executed
by Borrower’s Chief Executive Officer or Chief Financial Officer, and (ii) any other documents Agent may reasonably request.
(b)
The representations and warranties set forth in this Agreement shall be true and correct in all material respects (or, in
the case of any representation and warranty qualified by materiality, in all respects) on and as of the Advance Date with the same
effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties shall be true and correct in all material respects as of such earlier date,
or, in the case of any representation and warranty qualified by materiality, in all respects as of such earlier date).
(c)
Borrower shall be in compliance in all material respects with all the terms and provisions set forth herein and in each
other Loan Document on its part to be observed or performed, and at the time of and immediately after such Advance no Event of
Default shall have occurred and be continuing.
(d)
With respect to any Tranche 3 Advance, the Loan Parties shall have paid the Tranche 3 Facility Charge.
(e)
Each Advance Request shall be deemed to constitute a representation and warranty by Borrower on the relevant Advance Date
as to the matters specified in paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in the Advance Request.
4.3
No Default. As of the Closing Date and each Advance Date, (i) no fact or condition exists that could (or could, with the
passage of time, the giving of notice, or both) constitute an Event of Default and (ii) no event that has had or could reasonably
be expected to have a Material Adverse Effect has occurred and is continuing.
SECTION
5. REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower represents and warrants that:
5.1
Status. Borrower is a limited liability company duly organized, legally existing and in good standing under the laws its
state of formation, and is duly qualified as a foreign corporation in all jurisdictions in which the nature of its business or
location of its properties require such qualifications and where the failure to be qualified could reasonably be expected to have
a Material Adverse Effect. Borrower’s present name, former names (if any), locations, place of formation, Tax identification
number, organizational identification number and other information are correctly set forth in Exhibit B, as may be updated by Borrower
in a written notice (including any Compliance Certificate) provided to Agent after the Closing Date.
5.2
Collateral. Borrower owns or otherwise has the rights to use the Collateral and owns, or has rights to, the Intellectual
Property, free of all Liens, except for Permitted Liens. Borrower has the power and authority to grant to Agent a Lien in the Collateral
as security for the Secured Obligations.
5.3
Consents. Borrower’s execution, delivery and performance of this Agreement and all other Loan Documents, and Borrower’s
execution of the Warrant, (i) have been duly authorized by all necessary corporate action of Borrower, (ii) will not result in
the creation or imposition of any Lien upon the Collateral, other than Permitted Liens and the Liens created by this Agreement
and the other Loan Documents, (iii) do not violate any provisions of Borrower’s Certificate of Formation, Operating Agreement,
or any, law, regulation, order, injunction, judgment, decree or writ to which Borrower is subject, which could not reasonably be
expected to result in a Material Adverse Effect and (iv) except as described on Schedule 5.3, do not violate any material contract
or agreement or require the consent or approval of any other Person which has not already been obtained. The individual or individuals
executing the Loan Documents and the Warrant are duly authorized to do so.
5.4
Material Adverse Effect. No event that has had or could reasonably be expected to have a Material Adverse Effect has occurred
and is continuing. Borrower is not aware of any event likely to occur that is reasonably expected to result in a Material Adverse
Effect.
5.5
Actions Before Governmental Authorities. There are no actions, suits or proceedings at law or in equity or by or before
any Governmental Authority now pending or, to the knowledge of Borrower, threatened against or affecting Borrower or its property,
that is reasonably expected to result in a Material Adverse Effect.
(a)
Neither Borrower nor any of its Subsidiaries is in violation of any law, rule or regulation, or in default with respect
to any judgment, writ, injunction or decree of any Governmental Authority, where such violation or default could reasonably be
expected to result in a Material Adverse Effect. Borrower is not in default in any manner under any provision of any agreement
or instrument evidencing material Indebtedness, or any other material agreement to which it is a party or by which it is bound.
(b)
Neither Borrower nor any of its Subsidiaries is an “investment company” or a company “controlled”
by an “investment company” under the Investment Company Act of 1940, as amended. Neither Borrower nor any of its Subsidiaries
is engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal
Reserve Board of Governors). Borrower and each of its Subsidiaries has complied in all material respects with the Federal Fair
Labor Standards Act. Neither Borrower nor any of its Subsidiaries
is a “holding company” or an “affiliate”
of a “holding company” or a “subsidiary company” of a “holding company” as each term is defined
and used in the Public Utility Holding Company Act of 2005. Neither Borrower’s nor any of its Subsidiaries’ properties
or assets has been used by Borrower or such Subsidiary or, to Borrower’s Knowledge, by previous Persons, in disposing, producing,
storing, treating, or transporting any hazardous substance other than in material compliance with applicable laws. Borrower and
each of its Subsidiaries has obtained all consents, approvals and authorizations of, made all declarations or filings with, and
given all notices to, all Governmental Authorities that are necessary to continue their respective businesses as currently conducted.
(c)
None of Borrower, any of its Subsidiaries, or to their knowledge, any of Borrower’s or its Subsidiaries’ respective
controlled Affiliates or any of their respective agents acting or benefiting in any capacity in connection with the transactions
contemplated by this Agreement is (i) in violation of any Anti-Terrorism Law, (ii) engaging in or conspiring to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law, or (iii) is a Blocked Person. None of Borrower, any of its Subsidiaries, or to the knowledge of Borrower and
any of their controlled Affiliates or agents, acting or benefiting in any capacity in connection with the transactions contemplated
by this Agreement, (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to
or for the benefit of any Blocked Person, or (y) deals in, or otherwise engages in any transaction relating to, any property or
interest in property blocked pursuant to Executive Order No. 13224, any similar executive order or other Anti-Terrorism Law. None
of the funds to be provided under this Agreement will be used, directly or indirectly, (a) for any activities in violation of any
applicable anti-money laundering, economic sanctions and anti-bribery laws and regulations laws and regulations or (b) for any
payment to any governmental official or employee, political party, official of a political party, candidate for political office,
or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage,
in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
5.7
Information Correct and Current. No information, report, Advance Request, financial statement, exhibit or schedule furnished,
by or on behalf of Borrower to Agent in connection with any Loan Document or included therein or delivered pursuant thereto contained,
or, when taken as a whole, contains or will contain any material misstatement of fact or, when taken together with all other such
information or documents, omitted, omits or will omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were, are or will be made, not materially misleading at the time such statement was
made or deemed made. Additionally, any and all financial or business projections provided by Borrower to Agent, whether prior to
or after the Closing Date, shall be (i) provided in good faith and based on the most current data and information available to
Borrower, and (ii) the most current of such projections provided to Borrower’s Board of Managers.
5.8
Tax Matters. Except as described on Schedule 5.8, (a) Borrower and its Subsidiaries have filed all federal and state income
Tax returns and other material Tax returns that they are required to file (taking into account any timely filed extensions), (b)
Borrower and its Subsidiaries have duly paid all federal and state income Taxes and other material Taxes or installments thereof
that they are required to pay, except Taxes being contested in good faith by appropriate proceedings and for which Borrower and
its Subsidiaries maintain adequate reserves in accordance with GAAP, and (c) to the best of Borrower’s knowledge, no proposed
or pending Tax assessments, deficiencies, audits or other proceedings with respect to Borrower or any Subsidiary
have had, or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
5.9
Intellectual Property Claims. Borrower owns, or otherwise has the right to use, the Intellectual Property material to Borrower’s
business. Except as described on Schedule 5.9, (i) to the knowledge of Borrower, each of the material Copyrights, Trademarks and
Patents is valid and enforceable, (ii) no material part of the Intellectual Property has been judged invalid or unenforceable,
in whole or in part, and (iii) no claim has been made to Borrower that any material part of the Intellectual Property violates
the rights of any third party. Exhibit C is a true, correct and complete list of each of Borrower’s Patents, registered Trademarks,
registered Copyrights, and material agreements under which Borrower licenses Intellectual Property from third parties (other than
shrink-wrap software licenses), together with application or registration numbers, as applicable, owned by Borrower or any Subsidiary,
in each case as of the Closing Date. Borrower is not in material breach of, nor has Borrower failed to perform any material obligations
under, any of the foregoing contracts, licenses or agreements and, to Borrower’s knowledge, no third party to any such contract,
license or agreement is in material breach thereof or has failed to perform any material obligations thereunder.
5.10
Intellectual Property. Except as described on Schedule 5.10, Borrower has all material rights with respect to Intellectual
Property necessary or material in the operation or conduct of Borrower’s business as currently conducted and proposed to
be conducted by Borrower. Without limiting the generality of the foregoing, and in the case of Licenses, except for restrictions
that are unenforceable under Division 9 of the UCC, Borrower has the right, to the extent required to operate Borrower’s
business, to freely transfer, license or assign Intellectual Property necessary or material in the operation or conduct of Borrower’s
business as currently conducted and proposed to be conducted by Borrower, without condition, restriction or payment of any kind
(other than license payments in the ordinary course of business) to any third party, and Borrower owns or has the right to use,
pursuant to valid licenses, all software development tools, library functions, compilers and all other third-party software and
other items that are necessary or material in the operation or conduct of Borrower’s business and used in the design, development,
promotion, sale, license, manufacture, import, export, use or distribution of Borrower Products except customary covenants in inbound
license agreements and equipment leases where Borrower is the licensee or lessee. Except as set forth on Schedule 5.10, Borrower
is not a party to, nor is it bound by, any Restricted License.
No
material software or other materials used by Borrower or any of its Subsidiaries (or used in any Borrower Products or any Subsidiaries’
products) are subject to an open-source or similar license (including but not limited to the General Public License, Lesser General
Public License, Mozilla Public License, or Affero License) (collectively, “Open Source Licenses”) in a manner that
would cause such software or other materials to have to be (i) distributed to third parties at no charge or a minimal charge (royalty-free
basis); (ii) licensed to third parties to modify, make derivative works based on, decompile, disassemble, or reverse engineer;
or (iii) used in a manner that could require disclosure or distribution in source code form.
5.11
Borrower Products. Except as described on Schedule 5.11, no Intellectual Property owned by Borrower or Borrower Product
has been or is subject to any actual or, to the knowledge of Borrower, threatened litigation, proceeding (including any proceeding
in the United States Patent and Trademark Office or any corresponding foreign office or agency, except for routine prosecution
of such Intellectual Property in the United States Patent and Trademark Office or any corresponding foreign office or agency) or
outstanding decree, order, judgment, settlement
agreement or stipulation that restricts in
any material manner Borrower’s use, transfer or licensing thereof or that may affect the validity, use or enforceability
thereof. There is no decree, order, judgment, agreement, stipulation, arbitral award or other provision entered into in connection
with any litigation or proceeding that obligates Borrower to grant licenses or ownership interest in any future Intellectual Property
related to the operation or conduct of the business of Borrower or Borrower Products. Borrower has not received any written notice
or claim, or, to the knowledge of Borrower, oral notice or claim, challenging or questioning Borrower’s ownership in any
Intellectual Property material to Borrower’s business (or written notice of any claim challenging or questioning the ownership
in any licensed Intellectual Property of the owner thereof) or suggesting that any third party has any claim of legal or beneficial
ownership with respect thereto nor, to Borrower’s knowledge, is there a reasonable basis for any such claim. To the best
knowledge of Borrower, neither Borrower’s use of its Intellectual Property nor the production and sale of Borrower Products
infringes the intellectual property or other rights of others.
5.12
Financial Accounts. Exhibit D, as may be updated by the Borrower in a written notice provided to Agent after the Closing
Date, is a true, correct and complete list of (a) all banks and other financial institutions at which Borrower or any Subsidiary
maintains Deposit Accounts and (b) all institutions at which Borrower or any Subsidiary maintains an account holding Investment
Property, and such exhibit correctly identifies the name, address and telephone number of each bank or other institution, the name
in which the account is held, a description of the purpose of the account, and the complete account number therefor.
5.13
Employee Loans. Except as described on Schedule 5.13, Borrower has no outstanding loans to any employee, officer or director
of the Borrower nor has Borrower guaranteed the payment of any loan made to an employee, officer or director of the Borrower by
a third party.
5.14
Capitalization and Subsidiaries. Borrower’s capitalization as of the Closing Date is set forth on Schedule 5.14 annexed
hereto. Borrower does not own any stock, partnership interest or other securities of any Person, except for Permitted Investments.
Attached as Schedule 5.14, as may be updated by Borrower in a written notice provided after the Closing Date, is a true, correct
and complete list of each Subsidiary.
SECTION
6. INSURANCE; INDEMNIFICATION
6.1
Coverage. Borrower shall cause to be carried and maintained commercial general liability insurance, on an occurrence form,
against risks and in such amounts customarily insured against in Borrower’s line of business; provided that such policies
of insurance shall be provided to and reviewed and approved by Agent in its reasonable discretion. Such risks shall include the
risks of bodily injury, including death, property damage, personal injury, advertising injury, and contractual liability per the
terms of the indemnification agreement found in Section 6.3. So long as there are any Secured Obligations outstanding, Borrower
shall also cause to be carried and maintained insurance upon the Collateral, insuring against all risks of physical loss or damage
howsoever caused, in an amount not less than the full replacement cost of the Collateral, provided that such insurance may be subject
to standard exceptions and deductibles. If Borrower fails to obtain the insurance called for by this Section 6.1, suffers or causes
any reduction in coverage amounts from that in existence as of the Closing Date or fails to pay any premium thereon or fails to
pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan Document or which may be required
to preserve the Collateral, Agent may obtain such insurance or make such payment, and all amounts so paid by Agent are immediately
due and
payable, bearing interest at the then highest
rate applicable to the Secured Obligations, and secured by the Collateral. Agent will make reasonable efforts to provide Borrower
with notice of Agent obtaining such insurance at the time it is obtained or within a reasonable time thereafter. No payments by
Agent are deemed an agreement to make similar payments in the future or Agent’s waiver of any Event of Default.
6.2
Certificates. Borrower shall deliver to Agent certificates of insurance that evidence Borrower’s compliance with its
insurance obligations in Section 6.1 and the obligations contained in this Section 6.2. Borrower’s insurance certificate
shall state Agent (shown as “Hercules Capital, Inc., as Agent”) is an additional insured for commercial general liability,
a lenders loss payable for all risk property damage insurance, subject to the insurer’s approval, and a lenders loss payable
for property insurance and additional insured for liability insurance for any future insurance that Borrower may acquire from such
insurer. Attached to the certificates of insurance will be additional insured endorsements for liability and lender’s loss
payable endorsements for all risk property damage insurance. All certificates of insurance will provide for a minimum of thirty
(30) days advance written notice to Agent of cancellation (other than cancellation for non-payment of premiums, for which ten (10)
days’ advance written notice shall be sufficient) or any other change adverse to Agent’s interests. Any failure of
Agent to scrutinize such insurance certificates for compliance is not a waiver of any of Agent’s rights, all of which are
reserved. Upon written request of Agent, Borrower shall provide Agent with copies of each insurance policy. Upon entering or amending
any insurance policy required hereunder, Borrower shall provide Agent with copies of such policies and shall promptly deliver to
Agent updated insurance certificates with respect to such policies.
6.3
Indemnity. Borrower agrees to indemnify and hold Agent, the Lenders and their officers, directors, employees, agents, in-house
attorneys, representatives and shareholders (each, an “Indemnified Person”) harmless from and against any and all claims,
costs, expenses, damages and liabilities (including such claims, costs, expenses, damages and liabilities based on liability in
tort, including strict liability in tort), including reasonable and documented attorneys’ fees and disbursements and other
costs of investigation or defense (including those incurred upon any appeal) (collectively, “Liabilities”), that may
be instituted or asserted against or incurred by such Indemnified Person as the result of credit having been extended, suspended
or terminated under this Agreement and the other Loan Documents or the administration of such credit, or in connection with or
arising out of the transactions contemplated hereunder and thereunder, or any actions or failures to act in connection therewith,
or arising out of the disposition or utilization of the Collateral. Notwithstanding anything contained herein to the contrary,
in no event shall Borrower be required to indemnify any Indemnified Person for any Liabilities to the extent such Liabilities arise
solely out of gross negligence or willful misconduct of any Indemnified Person. This Section 6.3 shall not apply with respect to
Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim. In no event shall any Indemnified
Person be liable on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of
profits, business or anticipated savings). This Section 6.3 shall survive the repayment of indebtedness under, and otherwise shall
survive the expiration or other termination of, this Agreement.
SECTION
7. COVENANTS OF BORROWER
Borrower agrees as follows:
7.1
Financial Reports. Borrower shall furnish to Agent the financial statements and reports listed hereinafter (the “Financial
Statements”):
(a)
as soon as practicable (and in any event within thirty (30) days) after the end of each month, unaudited interim and year-to-date
financial statements as of the end of such month (prepared on a consolidated basis), including balance sheet and related statements
of income and cash flows accompanied by a report detailing any material contingencies (including the commencement of any material
litigation by or against Borrower) or any other occurrence that could reasonably be expected to have a Material Adverse Effect,
all certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared
in accordance with GAAP, except (i) for the absence of footnotes, (ii) that they are subject to normal year-end adjustments, and
(iii) they do not contain certain non-cash items that are customarily included in quarterly and annual financial statements;
(b)
as soon as practicable (and in any event within forty-five (45) days) after the end of each calendar quarter, unaudited
interim and year-to-date financial statements as of the end of such calendar quarter (prepared on a consolidated basis), including
balance sheet and related statements of income and cash flows accompanied by a report detailing any material contingencies (including
the commencement of any material litigation by or against Borrower) or any other occurrence that could reasonably be expected to
have a Material Adverse Effect, certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect
that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, and (ii) that they are subject to
normal year-end adjustments, as well as the most recent capitalization table for Borrower;
(c)
as soon as practicable (and in any event within one hundred eighty (180) days (or, if Borrower becomes subject to reporting
rules of the United States Securities and Exchange Commission, ninety (90) days) after the end of each fiscal year, unqualified
audited financial statements as of the end of such year (prepared on a consolidated basis), including balance sheet and related
statements of income and cash flows, and setting forth in comparative form the corresponding figures for the preceding fiscal year,
certified by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Agent, accompanied
by any management report from such accountants;
(d)
together with the financial statements delivered as required by Sections 7.1(a) through (c), a Compliance Certificate in
the form of Exhibit E;
(e)
as soon as practicable (and in any event within 7 days) after the end of each month, a report showing agings of accounts
receivable and accounts payable;
(f)
promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or
reports that Borrower has made available to holders of its units and copies of any regular, periodic and special reports or registration
statements that Borrower files with the United States Securities and Exchange Commission or any Governmental Authority that may
be substituted therefor, or any national securities exchange;
(g)
promptly following execution thereof, copies of any material amendments or modifications to (i) the Commitment Agreement,
(ii) the Operating Agreement and/or (iii) the Option Agreement;
(h)
financial and business projections promptly following their approval by Borrower’s Board of Managers, and in any event,
within thirty (30) days after to the end of Borrower’s fiscal year, as well as budgets, operating plans and other financial
information reasonably requested by Agent;
(i)
a copy of Century’s, Borrower’s and their Subsidiaries’ annual 409A valuation report as soon as practicable
(and in any event, within ten (10) days after such report becomes available); and
(j)
Immediate notice if Borrower or any Subsidiary has knowledge that Borrower, or any Subsidiary or Affiliate of Borrower,
is listed on the OFAC Lists or (a) is convicted on,
(b) pleads nolo contendere to, (c) is indicted
on, or (d) is arraigned and held over on charges involving money laundering or predicate crimes to money laundering.
Borrower shall not make any change in its (a) accounting
policies or reporting practices, except as required by GAAP or (b) fiscal years or fiscal quarters. The fiscal year of Borrower
shall end on December 31.
The executed Compliance Certificate, and all Financial
Statements required to be delivered pursuant to clauses (a), (b), (c) and (d) shall be sent via e-mail to financialstatements@htgc.com
with a copy to legal@htgc.com, bjadot@htgc.com, mdutra@htgc.com and ksegien@htgc.com provided,
that if e- mail is not available or sending such Financial Statements via e-mail is not possible, they shall be faxed to Agent
at: (650) 473-9194, attention Account Manager: Century Therapeutics, LLC.
Notwithstanding the foregoing, documents
required to be delivered under Sections 7.1(a), (b), (c) or (f) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on
the date on which Borrower emails a link thereto to Agent; provided that Borrower shall directly provide Agent all Financial
Statements required to be delivered pursuant to Section 7.1(b) and (c) hereunder.
7.2
Management Rights. Borrower shall permit any representative that Agent or the Lenders authorizes, including their attorneys
and accountants, to inspect the Collateral and examine and make copies and abstracts of the books of account and records of Borrower
at reasonable times and upon reasonable notice during normal business hours; provided, however, that so long as no Event
of Default has occurred and is continuing, such examinations shall be limited to no more often than once per fiscal year. In addition,
any such representative shall have the right to meet with management and officers of Borrower to discuss such books of account
and records. In addition, Agent or the Lenders shall be entitled at reasonable times and intervals to consult with and advise the
management and officers of Borrower concerning significant business issues affecting Borrower. Such consultations shall not unreasonably
interfere with Borrower’s business operations. The parties intend that the rights granted Agent and the Lenders shall constitute
“management rights” within the meaning of 29 C.F.R. Section 2510.3-101(d)(3)(ii), but that any advice, recommendations
or participation by Agent or the Lenders with respect to any business issues shall not be deemed to give Agent or the Lenders,
nor be deemed an exercise by Agent or the Lenders of, control over Borrower’s management or policies.
7.3
Further Assurances. Borrower shall from time to time execute, deliver and file, alone or with Agent, any financing statements,
security agreements, collateral assignments, notices, control agreements, promissory notes or other documents to perfect, give
the highest priority to Agent’s Lien on the Collateral or otherwise evidence Agent’s rights herein. Borrower shall
from time to time procure any instruments or documents as may be reasonably requested by
Agent, and take all further action that may be
necessary, or that Agent may reasonably request, to perfect and protect the Liens granted hereby and thereby. In addition, and
for such purposes only, Borrower hereby authorizes Agent to execute and deliver on behalf of Borrower and to file such financing
statements (including an indication that the financing statement covers “all assets or all personal property” of Borrower
in accordance with Section 9-504 of the UCC), collateral assignments, notices, control agreements, security agreements and other
documents without the signature of Borrower either in Agent’s name or in the name of Agent as agent and attorney-in-fact
for Borrower. Borrower shall protect and defend Borrower’s title to the Collateral and Agent’s Lien thereon against
all Persons claiming any interest adverse to Borrower or Agent other than Permitted Liens.
7.4 Indebtedness.
Borrower shall not create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any
Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on
Borrower an obligation to prepay any Indebtedness, except for (a) the conversion of Indebtedness into equity securities and
the payment of cash in lieu of fractional units in connection with such conversion, (b) purchase money Indebtedness pursuant
to its then applicable payment schedule, (c) prepayment by any Subsidiary of (i) inter-company Indebtedness owed by such
Subsidiary to any Borrower, or (ii) if
such Subsidiary is not a Borrower, intercompany Indebtedness owed by such Subsidiary to another Subsidiary that is not a
Borrower, (d) payments made on Subordinated Indebtedness made in accordance with the terms of the relevant Subordination
Agreement, (e) scheduled payments on Permitted Indebtedness in accordance with the terms thereof or (f) as otherwise
permitted hereunder or approved in writing by Agent.
7.5
Collateral. Borrower shall at all times keep the Collateral, the Intellectual Property and all other property and assets
used in Borrower’s business or in which Borrower now or hereafter holds any interest free and clear from any legal process
or Liens whatsoever (except for Permitted Liens), and shall give Agent prompt written notice of any legal process that is reasonably
likely to result in damages, expenses or liabilities in excess of $250,000, affecting the Collateral, the Intellectual Property,
such other property and assets, or any Liens thereon, provided however, that the Collateral and such other property and assets
may be subject to Permitted Liens except that there shall be no Liens whatsoever on Intellectual Property. Borrower shall not agree
with any Person other than Agent or the Lenders not to encumber its property. Borrower shall not enter into or suffer to exist
or become effective any agreement that prohibits or limits the ability of any Borrower to create, incur, assume or suffer to exist
any Lien upon any of its property (including Intellectual Property), whether now owned or hereafter acquired, to secure its obligations
under the Loan Documents to which it is a party other than (a) this Agreement and the other Loan Documents, (b) any agreements
governing any purchase money Liens or capital lease obligations otherwise permitted hereby (in which case, any prohibition or limitation
shall only be effective against the assets financed thereby) and (c) customary restrictions on the assignment of leases, licenses
and other agreements. Borrower shall cause its Subsidiaries to protect and defend such Subsidiary’s title to its assets from
and against all Persons claiming any interest adverse to such Subsidiary, and Borrower shall cause its Subsidiaries at all times
to keep such Subsidiary’s property and assets free and clear from any legal process or Liens whatsoever (except for Permitted
Liens, provided however, that there shall be no Liens whatsoever on Intellectual Property), and shall give Agent prompt written
notice of any legal process affecting such Subsidiary’s assets.
7.6
Investments. Borrower shall not directly or indirectly acquire or own, or make any Investment in or to any Person, or permit
any of its Subsidiaries to do so, other than Permitted Investments.
7.7 Distributions.
Borrower shall not, and shall not allow any Subsidiary to, (a) repurchase or redeem any class of stock or other Equity
Interest other than pursuant to employee, director, manager or consultant repurchase plans or other similar agreements,
provided, however, in each case the repurchase or redemption price does not exceed the original consideration paid for such
stock or Equity Interest, or (b) declare or pay any cash dividend or make any other cash distribution on any class of stock
or other Equity Interest, except that (x) a Subsidiary may pay dividends or make other distributions to Borrower or any
Subsidiary of Borrower and (y) Borrower may make distributions to its members in accordance with Section 7.03 of the
Operating Agreement on account of such members’ tax liability (including any required estimated tax payments) resulting
from such members’ membership interests in Borrower, in accordance with the terms of the Operating Agreement, or (c)
lend money to any employees, officers, managers or directors or guarantee the payment of any such loans granted by a third
party in excess of $100,000 in the aggregate or (d) waive, release or forgive any Indebtedness owed by any employees,
officers, managers or directors in excess of $100,000 in the aggregate.
7.8
Transfers. Except for Permitted Transfers, Borrower shall not, and shall not allow any Subsidiary to, voluntarily or involuntarily
transfer, sell, lease, license, lend or in any other manner convey any equitable, beneficial or legal interest in any material
portion of its assets.
7.9
Mergers and Consolidations. Borrower shall not merge or consolidate, or permit any of its Subsidiaries to merge or consolidate,
with or into any other business organization (other than mergers or consolidations of (a) a Subsidiary which is not a Borrower
into another Subsidiary or into Borrower or (b) a Borrower into another Borrower).
7.10
Taxes. Borrower shall, and shall cause each of its Subsidiaries to, pay when due (subject to any properly obtained extensions)
all material Taxes of any nature whatsoever now or hereafter imposed or assessed against Borrower or the Collateral or upon Borrower’s
ownership, possession, use, operation or disposition thereof or upon Borrower’s rents, receipts or earnings arising therefrom.
Borrower shall, and shall cause each of its Subsidiaries to, accurately file on or before the due date therefor (taking into account
proper extensions) all federal and state income Tax returns and other material Tax returns required to be filed. Notwithstanding
the foregoing, Borrower and its Subsidiaries may contest, in good faith and by appropriate proceedings diligently conducted, Taxes
for which Borrower and its Subsidiaries maintain adequate reserves in accordance with GAAP.
7.11 Organizational
Changes. Neither Borrower nor any Subsidiary shall change its name, legal form or jurisdiction of formation without twenty
(20) days’ prior written notice to Agent. Neither Borrower nor any Subsidiary shall suffer a Change in Control. Neither
Borrower nor any Subsidiary shall relocate its chief executive office or its principal place of business unless: (i) it has
provided prior written notice to Agent; and (ii) such relocation, except with respect to Century Canada, shall be within the
continental United States of America. Neither Borrower nor any Subsidiary shall relocate any item of Collateral (other than
(x) sales of Inventory in the ordinary course of business, (y) relocations of Equipment having an aggregate value of up to
$150,000 in any fiscal year, and (z) relocations of Collateral from a location described on Exhibit B to another location
described on Exhibit B) unless (i) it has provided prompt written notice to Agent, (ii) such relocation is within the
continental United States of America (except with respect to Century Canada) and, (iii) if such relocation is to a third
party bailee, it has delivered a bailee agreement in form and substance reasonably acceptable to Agent.
7.12
Deposit Accounts. Neither Borrower nor any Subsidiary shall maintain any Deposit Accounts, or accounts holding Investment
Property, except with respect to which Agent has an Account Control Agreement; provided that no Account Control Agreement shall
be required for any Excluded Account.
7.13
Borrower shall notify Agent of each Subsidiary formed subsequent to the Closing Date and, within 15 days of formation (or
such later date as Agent may agree in its sole discretion), shall cause any such Subsidiary to execute and deliver to Agent a Joinder
Agreement.
7.14
Century Canada. Borrower shall not cause or permit Cash or other assets held by Century Canada to exceed $500,000 in the
aggregate at any time. Borrower shall not cause or permit Century Canada to incur any Indebtedness other than the Empirica Promissory
Note.
7.15
Notification of Event of Default. Borrower shall notify Agent promptly, any in any event within three (3) Business Days,
of the occurrence of any Event of Default.
7.17
Use of Proceeds. Borrower agrees that the proceeds of the Loans shall be used solely to pay related fees and expenses in
connection with this Agreement and for working capital and general corporate purposes, including to fund any Permitted Investments.
The proceeds of the Loans Credit will not be used in violation of Anti-Corruption Laws or applicable Sanctions.
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7.19
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Compliance with Laws.
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Borrower
shall maintain, and shall cause its Subsidiaries to maintain, compliance in all material respects with all applicable laws, rules
or regulations (including any law, rule or regulation with respect to the making or brokering of loans or financial accommodations),
and shall, or cause its Subsidiaries to, obtain and maintain all required governmental authorizations, approvals, licenses, franchises,
permits or registrations reasonably necessary in connection with the conduct of Borrower’s business.
Neither
Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of its Subsidiaries permit any controlled Affiliate to, directly
or indirectly, knowingly enter into any documents, instruments, agreements or contracts with any Person listed on the OFAC Lists.
Neither Borrower nor any of its Subsidiaries shall,
nor shall Borrower or any of its Subsidiaries, permit any controlled Affiliate to, directly or indirectly, (i) conduct any business
or engage in any transaction or dealing with any Blocked Person, including, without limitation, the making or receiving of any
contribution of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any
transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 or any similar executive
order or other Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or other
Anti-Terrorism Law.
Borrower
will, within 90 days of the Closing Date, implement and at all times thereafter maintain in effect policies and procedures designed
to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-
Corruption Laws and applicable Sanctions, and Borrower, its Subsidiaries and their respective
officers and employees and to the knowledge of
Borrower its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.
None
of Borrower, any of its Subsidiaries or any of their respective managers, officers or employees, or to the knowledge of Borrower,
any agent for Borrower or its Subsidiaries that will act in any capacity in connection with or benefit from the credit facility
established hereby, is a Sanctioned Person. No Loan, use of proceeds or other transaction contemplated by this Agreement will violate
Anti-Corruption Laws or applicable Sanctions.
7.20
Minimum Cash. If and only if Borrower has both: (a) drawn the Tranche 2 Advance and (b) not achieved Performance
Milestone II by September 30, 2021, then at all times after September 30, 2021, Borrower shall maintain minimum unrestricted Cash
of at least Eight Million Five Hundred Thousand Dollars ($8,500,000) plus the amount of Borrower’s accounts payable not paid
after the 90th day following the invoice date for such accounts payable, in an account subject to an Account Control Agreement
in favor of Agent, until Performance Milestone II has been achieved. For the avoidance of doubt, if the Tranche 2 Advance is not
drawn or Borrower has achieved Performance Milestone II by September 30, 2021, then there shall be no minimum cash requirement.
7.21
Intellectual Property. Borrower shall (i) protect, defend and maintain the validity and enforceability of its Intellectual
Property; (ii) promptly advise Agent in writing of material infringements of its Intellectual Property; and (iii) not allow any
Intellectual Property material to Borrowers’ business to be abandoned, forfeited or dedicated to the public without Agent’s
written consent.
7.22
Transactions with Affiliates. Except as described on Schedule 7.22, Borrower shall not and shall not permit any Subsidiary
to, directly or indirectly, enter into or permit to exist any transaction of any kind with any Affiliate of Borrower or such Subsidiary
on terms that are less favorable to Borrower or such Subsidiary, as the case may be, than those that might be obtained in an arm’s
length transaction from a Person who is not an Affiliate of Borrower or such Subsidiary.
SECTION
8. RIGHT TO INVEST
8.1 Borrower
shall use commercially reasonable efforts to notify the Lenders of each Subsequent Financing, and the Lenders or their assignee
or nominee shall have the right, in their discretion, to indicate their interest to participate in any Subsequent Financing on
the same terms, conditions and pricing afforded to investors participating in any such Subsequent Financing (excluding Bayer and
Century Therapeutics, Inc.). This Section 8.1, and all rights and obligations hereunder, shall expire upon termination of this
Agreement.
SECTION
9. EVENTS OF DEFAULT
The occurrence of any one or more of the following events
shall be an Event of Default:
9.1
Payments. Borrower fails to pay any amount due under this Agreement or any of the other Loan Documents on the due date;
provided, however, that an Event of Default shall not occur on account of a failure to pay due solely to an administrative or operational
error of Agent or the Lenders or Borrower’s bank if Borrower had the funds to make the payment when due and makes the payment
within three (3) Business Days following Borrower’s knowledge of such failure to pay; or
9.2
Covenants. Borrower breaches or defaults in the performance of any covenant or Secured Obligation under this Agreement,
or any of the other Loan Documents or any other agreement among Borrower, Agent and the Lenders, and (a) with respect to a default
under any covenant under this Agreement (other than under Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.15, 7.17, 7.19, 7.20, 7.21,
and 7.22), any other Loan Document, or any other agreement among Borrower, Agent and the Lenders, such default continues for more
than ten (10) Business Days after the earlier of the date on which (i) Agent or the Lenders has given notice of such default to
Borrower and (ii) Borrower has actual knowledge of such default or (b) with respect to a default under any of Sections 6, 7.4,
7.5, 7.6, 7.7, 7.8, 7.9, 7.15, 7.17, 7.19, 7.20, 7.21, and 7.22, the occurrence of such default; or
9.3
Material Adverse Effect. A circumstance has occurred that could reasonably be expected to have a Material Adverse Effect;
or
9.4
Representations. Any representation or warranty made by Borrower in any Loan Document or in the Warrant shall have been
false or misleading in any material respect when made or when deemed made; or
9.5
Insolvency. Borrower (A) (i) shall make an assignment for the benefit of creditors; or (ii) shall be unable to pay its debts
as they become due, or be unable to pay or perform under the Loan Documents, or shall become insolvent; or (iii) shall file a voluntary
petition in bankruptcy; or (iv) shall file any petition, answer, or document seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation pertinent
to such circumstances; or (v) shall seek or consent to or acquiesce in the appointment of any trustee, receiver, or liquidator
of Borrower or of all or any substantial part of the assets or property of Borrower; or (vi) shall cease operations of its business
as its business has normally been conducted, or terminate substantially all of its employees; or (vii) Borrower or its directors
or majority shareholders shall take any action initiating any of the foregoing actions described in clauses (i) through (vi); or
(B) either
(i) forty-five (45) days shall have expired after
the commencement of an involuntary action against Borrower seeking reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or regulation, without such action being dismissed or all
orders or proceedings thereunder affecting the operations or the business of Borrower being stayed; or (ii) a stay of any such
order or proceedings shall thereafter be set aside and the action setting it aside shall not be timely appealed; or (iii) Borrower
shall file any answer admitting or not contesting the material allegations of a petition filed against Borrower in any such proceedings;
or (iv) the court in which such proceedings are pending shall enter a decree or order granting the relief sought in any such proceedings;
or (v) forty-five (45) days shall have expired after the appointment, without the consent or acquiescence of Borrower, of any trustee,
receiver or liquidator of Borrower or of all or any substantial part of the properties of Borrower without such appointment being
vacated; or
9.6
Attachments; Judgments. Any portion of Borrower’s assets is attached or seized, or a levy is filed against any such
assets, or a judgment or judgments is/are entered for the payment of money (not covered by independent third party insurance as
to which liability has not been rejected by such insurance carrier), individually or in the aggregate, of at least $100,000, or
Borrower is enjoined or in any way prevented by court order from conducting any part of its business; or
9.7
Other Obligations. The occurrence of any default under any agreement or obligation of Borrower involving any Indebtedness
in excess of $100,000, or any other material agreement or obligation, in each case if a Material Adverse Effect could reasonably
be expected to result from such default.
SECTION
10. REMEDIES
10.1 General.
Upon the occurrence of any one or more Events of Default, Agent may, and at the direction of the Required Lenders shall,
accelerate and demand payment of all or any part of the Secured Obligations together with a Prepayment Charge and declare
them to be immediately due and payable (provided, that upon the occurrence of an Event of Default of the type described in
Section 9.5, all of the Secured Obligations (including, without limitation, the Prepayment Charge and the End of Term Charge)
shall automatically be accelerated and made due and payable, in each case without any further notice or act). Borrower hereby
irrevocably appoints Agent as its lawful attorney-in-fact to: (a) exercisable following the occurrence of an Event of
Default, (i) sign Borrower’s name on any invoice or bill of lading for any account or drafts against account debtors;
(ii) demand, collect, sue, and give releases to any account debtor for monies due, settle and adjust disputes and claims
about the accounts directly with account debtors, and compromise, prosecute, or defend any action, claim, case, or proceeding
about any Collateral (including filing a claim or voting a claim in any bankruptcy case in Agent’s or Borrower’s
name, as Agent may elect); (iii) make, settle, and adjust all claims under Borrower’s insurance policies; (iv) pay,
contest or settle any Lien, charge, encumbrance, security interest, or other claim in or to the Collateral, or any judgment
based thereon, or otherwise take any action to terminate or discharge the same; (v) transfer the Collateral into the name of
Agent or a third party as the UCC permits; and (vi) receive, open and dispose of mail addressed to Borrower; and (b)
regardless of whether an Event of Default has occurred, (i) endorse Borrower’s name on any checks, payment instruments,
or other forms of payment or security; and (ii) notify all account debtors to pay Agent directly. Borrower hereby appoints
Agent as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue the
perfection of Agent’s security interest in the Collateral regardless of whether an Event of Default has occurred until
all Secured Obligations have been satisfied in full and the Loan Documents have been terminated. Agent’s foregoing
appointment as Borrower’s attorney in fact, and all of Agent’s rights and powers, coupled with an interest, are
irrevocable until all Secured Obligations have been fully repaid and performed and the Loan Documents have been terminated.
Agent may, and at the direction of the Required Lenders shall, exercise all rights and remedies with respect to the
Collateral under the Loan Documents or otherwise available to it under the UCC and other applicable law, including the right
to release, hold, sell, lease, liquidate, collect, realize upon, or otherwise dispose of all or any part of the Collateral
and the right to occupy, utilize, process and commingle the Collateral. All Agent’s rights and remedies shall be
cumulative and not exclusive.
10.2
Collection; Foreclosure. Upon the occurrence and during the continuance of any Event of Default, Agent may, and at the direction
of the Required Lenders shall, at any time or from time to time, apply, collect, liquidate, sell in one or more sales, lease or
otherwise dispose of, any or all of the Collateral, in its then condition or following any commercially reasonable preparation
or processing, in such order as Agent may elect. Any such sale may be made either at public or private sale at its place of business
or elsewhere. Borrower agrees that any such public or private sale may occur upon ten (10) calendar days’ prior written notice
to Borrower. Agent may require Borrower to assemble the Collateral and make it available to Agent at a place designated by Agent
that is reasonably convenient to Agent and Borrower. The proceeds of any
sale, disposition or other realization upon
all or any part of the Collateral shall be applied by Agent in the following order of priorities:
First, to Agent and the Lenders in an amount sufficient
to pay in full Agent’s and the Lenders’ reasonable costs and professionals’ and advisors’ fees and expenses
as described in Section 11.12;
Second, to the Lenders in an amount equal to
the then unpaid amount of the Secured Obligations (including principal, interest, and the Default Rate interest), in such order
and priority as Agent may choose in its sole discretion; and
Finally, after the full and
final payment in Cash of all of the Secured Obligations (other than inchoate obligations), to any creditor holding a junior Lien
on the Collateral, or to Borrower or its representatives or as a court of competent jurisdiction may direct.
Agent shall be deemed to
have acted reasonably in the custody, preservation and disposition of any of the Collateral if it complies with the obligations
of a secured party under the UCC.
10.3
No Waiver. Agent shall be under no obligation to marshal any of the Collateral for the benefit of Borrower or any other
Person, and Borrower expressly waives all rights, if any, to require Agent to marshal any Collateral.
10.4
Cumulative Remedies. The rights, powers and remedies of Agent hereunder shall be in addition to all rights, powers and remedies
given by statute or rule of law and are cumulative. The exercise of any one or more of the rights, powers and remedies provided
herein shall not be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of Agent.
SECTION
11. MISCELLANEOUS
11.1
Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision
shall be ineffective only to the extent and duration of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
11.2
Notice. Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process
or other communication (including the delivery of Financial Statements) that is required, contemplated, or permitted under the
Loan Documents or with respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served,
given, delivered, and received upon the earlier of: (i) the day of transmission by electronic mail or hand delivery or delivery
by an overnight express service or overnight mail delivery service; or (ii) the third calendar day after deposit in the United
States of America mails, with proper first class postage prepaid, in each case addressed to the party to be notified as follows:
HERCULES CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer and R. Bryan
Jadot
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
email: legal@htgc.com; bjadot@htgc.com;
mdutra@htgc.com and ksegien@htgc.com
Telephone: 650-289-3060
(b)
If to the Lenders:
HERCULES CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer and R. Bryan
Jadot
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
email: legal@htgc.com; bjadot@htgc.com; mdutra@htgc.com
and ksegien@htgc.com
Telephone: 650-289-3060
CENTURY THERAPEUTICS, LLC
Attention: Douglas Carr
3675
Market Street
Philadelphia, PA 19104
email: doug@centurytx.com
Telephone:
With a copy (which shall not constitute notice) to:
Troutman Pepper Hamilton Sanders LLP
Attention:
Rachael Bushey and Kathryn Nordick
3000 Two Logan Square
Philadelphia, PA 19103-2799
email: rachael.bushey@troutman.com; kathryn.nordick@troutman.com
or to such other address as each party may designate
for itself by like notice.
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11.3
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Entire Agreement; Amendments.
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(a)
This Agreement and the other Loan Documents constitute the entire agreement and understanding of the parties hereto in respect
of the subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals, term sheets, non-disclosure
or confidentiality agreements, letters, negotiations or other documents or agreements, whether written or oral, with respect to
the subject matter hereof or thereof (including Agent’s revised proposal letter dated June 23, 2020 and the Non-Disclosure
Agreement).
(b) Neither
this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in
accordance with the provisions of this Section 11.3(b). The Required Lenders and Borrower party to the relevant Loan Document
may, or, with the written consent of the Required Lenders, the Agent and the Borrower party to the relevant Loan Document
may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner
the
rights of the Lenders or of the Borrower hereunder or thereunder or (ii) waive, on such terms and conditions as the
Required Lenders or the Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement
or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall (A) forgive the principal amount or extend the final scheduled date
of maturity of any Loan, extend the scheduled date of any amortization payment in respect of any Term Loan, reduce the stated
rate of any interest (or fee payable hereunder) or extend the scheduled date of any payment thereof, in each case without the
written consent of each Lender directly affected thereby; (B) eliminate or reduce the voting rights of any Lender under this
Section 11.3(b) without the written consent of such Lender; (C) reduce any percentage specified in the definition of Required
Lenders, consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and
the other Loan Documents, release all or substantially all of the Collateral or release a Borrower from its obligations under
the Loan Documents, in each case without the written consent of all Lenders; or (D) amend, modify or waive any provision of
Section 11.18 or Addendum 3 without the written consent of the Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each Lender and shall be binding upon Borrower, the Lender, the Agent and all future
holders of the Loans.
11.4
No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement.
In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
11.5
No Waiver. The powers conferred upon Agent and the Lenders by this Agreement are solely to protect its rights hereunder
and under the other Loan Documents and its interest in the Collateral and shall not impose any duty upon Agent or the Lenders to
exercise any such powers. No omission or delay by Agent or the Lenders at any time to enforce any right or remedy reserved to it,
or to require performance of any of the terms, covenants or provisions hereof by Borrower at any time designated, shall be a waiver
of any such right or remedy to which Agent or the Lenders is entitled, nor shall it in any way affect the right of Agent or the
Lenders to enforce such provisions thereafter.
11.6
Survival. All agreements, representations and warranties contained in this Agreement and the other Loan Documents or in
any document delivered pursuant hereto or thereto shall be for the benefit of Agent and the Lenders and shall survive the execution
and delivery of this Agreement. Sections 6.3, 11.14, 11.15 and 11.18 shall survive the termination of this Agreement.
11.7
Successors and Assigns. The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and
be binding on Borrower and its permitted assigns (if any). Borrower shall not assign its obligations under this Agreement or any
of the other Loan Documents without Agent’s express prior written consent, and any such attempted assignment shall be void
and of no effect. Agent and the Lenders may assign, transfer, or endorse its rights hereunder and under the other Loan Documents
with prior notice to Borrower (as long as no Event of Default has occurred and is continuing), and all of such rights shall inure
to the benefit of Agent’s and the Lenders’ successors and assigns; provided that as long as no Event of Default has
occurred and is continuing, neither Agent nor any Lender may assign, transfer or endorse its rights hereunder or under the Loan
Documents to any party that is a direct competitor of Borrower (as
identified in writing by Borrower to Agent or
otherwise reasonably determined by Agent), it being acknowledged that in all cases, any transfer to an Affiliate of any Lender
or Agent shall be allowed. Notwithstanding the foregoing, (x) in connection with any assignment by a Lender as a result of a forced
divestiture at the request of any regulatory agency, the restrictions set forth herein shall not apply and Agent and the Lenders
may assign, transfer or indorse its rights hereunder and under the other Loan Documents to any Person or party, (y) in connection
with any assignment by a Lender the assigning Lender and the assignee Lender must provide the Agent with an information reasonably
required by the Agent in order to maintain the Register and (z) in connection with a Lender’s own financing or securitization
transactions, the restrictions set forth herein shall not apply and Agent and the Lenders may assign, transfer or indorse its rights
hereunder and under the other Loan Documents to any Person or party providing such financing or formed to undertake such securitization
transaction and any transferee of such Person or party upon the occurrence of a default, event of default or similar occurrence
with respect to such financing or securitization transaction; provided that no such sale, transfer, pledge or assignment under
this clause (z) shall release such Lender from any of its obligations hereunder or substitute any such Person or party for such
Lender as a party hereto until Agent shall have received and accepted an effective assignment agreement from such Person or party
in form satisfactory to Agent executed, delivered and fully completed by the applicable parties thereto, and shall have received
such other information regarding such assignee as Agent reasonably shall require. The Agent, acting solely for this purpose as
an agent of the Borrower, shall maintain at one of its offices in the United States a register for the recordation of the names
and addresses of the Lender(s), and the Term Commitments of, and principal amounts (and stated interest) of the Loans owing to,
each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive
absent manifest error, and the Borrower, the Agent and the Lender(s) shall treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection
by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
11.8
Participations. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of
the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated
interest) of each participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant
Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register
(including the identity of any participant or any information relating to a participant's interest in any commitments, loans, its
other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that
such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall
treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Agent (in its capacity as Agent) shall have
no responsibility for maintaining a Participant Register. Borrower agrees that each participant shall be entitled to the benefits
of the provisions in Addendum 1 attached hereto (subject to the requirements and limitations therein, including the requirements
under Section 7 of Addendum 1 attached hereto (it being understood that the documentation required under Section 7 of Addendum
1 attached hereto shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to Section 11.7; provided that such participant shall not be entitled to receive any greater payment
under Addendum 1 attached hereto, with respect to any participation, than its participating Lender would have been
entitled to receive, except to the extent such
entitlement to receive a greater payment results from a change in law that occurs after the participant acquired the applicable
participation.
11.9
Governing Law. This Agreement and the other Loan Documents have been negotiated and delivered to Agent and the Lenders in
the State of California, and shall have been accepted by Agent and the Lenders in the State of California. Payment to Agent and
the Lenders by Borrower of the Secured Obligations is due in the State of California. This Agreement and the other Loan Documents
(other than the Warrant) shall be governed by, and construed and enforced in accordance with, the laws of the State of California,
excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.
11.10
Consent to Jurisdiction and Venue. All judicial proceedings (to the extent that the reference requirement of Section 11.11
is not applicable) arising in or under or related to this Agreement or any of the other Loan Documents may be brought in any state
or federal court located in the State of California. By execution and delivery of this Agreement, each party hereto generally and
unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa Clara County, State of California; (b) waives any
objection as to jurisdiction or venue in Santa Clara County, State of California; (c) agrees not to assert any defense based on
lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby
in connection with this Agreement or the other Loan Documents. Service of process on any party hereto in any action arising out
of or relating to this Agreement shall be effective if given in accordance with the requirements for notice set forth in Section
11.2, and shall be deemed effective and received as set forth in Section 11.2. Nothing herein shall affect the right to serve process
in any other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.
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11.11
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Mutual Waiver of Jury Trial / Judicial Reference.
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(a)
Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by
an experienced and expert Person and the parties wish applicable state and federal laws to apply (rather than arbitration rules),
the parties desire that their disputes be resolved by a judge applying such applicable laws. EACH OF BORROWER, AGENT AND THE LENDERS
SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY
CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT, THE LENDERS OR THEIR RESPECTIVE
ASSIGNEE OR BY AGENT, THE LENDERS OR THEIR RESPECTIVE ASSIGNEE AGAINST BORROWER. This waiver extends to all such Claims, including
Claims that involve Persons other than Agent, Borrower and the Lenders; Claims that arise out of or are in any way connected to
the relationship among Borrower, Agent and the Lenders; and any Claims for damages, breach of contract, tort, specific performance,
or any equitable or legal relief of any kind, arising out of this Agreement, any other Loan Document.
(b)
If the waiver of jury trial set forth in Section 11.11(a) is ineffective or unenforceable, the parties agree that all Claims
shall be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before
a mutually acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of the Santa Clara County,
California. Such proceeding shall be conducted in Santa Clara County, California, with California rules of evidence and discovery
applicable to such proceeding.
(c)
In the event Claims are to be resolved by judicial reference, either party may seek from a court identified in Section 11.10,
any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent
permitted by law notwithstanding that all Claims are otherwise subject to resolution by judicial reference.
11.12
Professional Fees. Borrower promises to pay Agent’s and the Lenders’ fees and expenses necessary to finalize
the loan documentation, including but not limited to reasonable and documented attorneys’ fees, UCC searches, filing costs,
and other miscellaneous expenses; provided that in no event shall such attorneys’ fees be in excess of $85,000. In addition,
Borrower promises to pay any and all reasonable and documented attorneys’ and other professionals’ fees and expenses
incurred by Agent and the Lenders after the Closing Date in connection with or related to: (a) the Loan; (b) the administration,
collection, or enforcement of the Loan; (c) the amendment or modification of the Loan Documents; (d) any waiver, consent, release,
or termination under the Loan Documents; (e) in conjunction with exercising rights and remedies after the occurrence and during
the continuance of an Event of Default; (f) the protection, preservation, audit, field exam, sale, lease, liquidation, or disposition
of Collateral or the exercise of remedies with respect to the Collateral; (g) any legal, litigation, administrative, arbitration,
or out of court proceeding in connection with or related to Borrower or the Collateral, and any appeal or review thereof; and (h)
any bankruptcy, restructuring, reorganization, assignment for the benefit of creditors, workout, foreclosure, or other action related
to Borrower, the Collateral, the Loan Documents, including representing Agent or the Lenders in any adversary proceeding or contested
matter commenced or continued by or on behalf of Borrower’s estate, and any appeal or review thereof.
11.13
Confidentiality. Agent and the Lenders acknowledge that certain items of Collateral and information provided to Agent and
the Lenders by Borrower are confidential and proprietary information of Borrower, if and to the extent such information either
(x) is marked as confidential by Borrower at the time of disclosure, or (y) should reasonably be understood to be confidential
(the “Confidential Information”). Accordingly, Agent and the Lenders agree that any Confidential Information it may
obtain in the course of acquiring, administering, or perfecting Agent’s security interest in the Collateral shall not be
disclosed to any other Person or entity in any manner whatsoever, in whole or in part, without the prior written consent of Borrower,
except that Agent and the Lenders may disclose any such information: (a) to its Affiliates and its partners, investors, lenders,
directors, officers, employees, agents, advisors, counsel, accountants, counsel, representative and other professional advisors
if Agent or the Lenders in their sole discretion determines that any such party should have access to such information in connection
with such party’s responsibilities in connection with the Loan or this Agreement and, provided that such recipient of such
Confidential Information either (i) agrees to be bound by the confidentiality provisions of this paragraph or (ii) is otherwise
subject to confidentiality restrictions that reasonably protect against the disclosure of Confidential Information; (b) if such
information is generally available to the public or to the extent such information becomes publicly available other than as a result
of a breach of this Section or becomes available to Agent or any Lender, or any of their respective Affiliates on a non-confidential
basis from a source other than the Borrower; (c) if required or appropriate in any report, statement or testimony submitted to
any Governmental Authority having or claiming to have jurisdiction over Agent or the Lenders and any rating agency; (d) if required
or appropriate in response to any summons or subpoena or in connection with any litigation, to the extent permitted or deemed advisable
by Agent’s or the Lenders’ counsel; (e) to comply with any legal requirement or law applicable to Agent or the Lenders
or demanded by any Governmental Authority; (f) to the extent reasonably necessary in connection with the exercise of, or preparing
to exercise, or the enforcement of, or preparing to enforce, any
right or remedy under any Loan Document (including
Agent’s sale, lease, or other disposition of Collateral after default), or any action or proceeding relating to any Loan
Document; (g) to any participant or assignee of Agent or the Lenders or any prospective participant or assignee, provided, that
such participant or assignee or prospective participant or assignee is subject to confidentiality restrictions that reasonably
protect against the disclosure of Confidential Information; (h) otherwise to the extent consisting of general portfolio information
that does not identify Borrower; or (i) otherwise with the prior consent of Borrower; provided, that any disclosure made in violation
of this Agreement shall not affect the obligations of Borrower or any of its Affiliates or any guarantor under this Agreement or
the other Loan Documents. Agent’s and the Lenders’ obligations under this Section 11.13 shall supersede all of their
respective obligations under the Non-Disclosure Agreement.
11.14
Assignment of Rights. Borrower acknowledges and understands that Agent or the Lenders may, subject to Section 11.7, sell
and assign all or part of its interest hereunder and under the Loan Documents to any Person or entity (an “Assignee”).
After such assignment the term “Agent” or “Lender” as used in the Loan Documents shall mean and include
such Assignee, and such Assignee shall be vested with all rights, powers and remedies of Agent and the Lenders hereunder with respect
to the interest so assigned; but with respect to any such interest not so transferred, Agent and the Lenders shall retain all rights,
powers and remedies hereby given. No such assignment by Agent or the Lenders shall relieve Borrower of any of its obligations hereunder.
11.15
Revival of Secured Obligations. This Agreement and the Loan Documents shall remain in full force and effect and continue
to be effective if any petition is filed by or against Borrower for liquidation or reorganization, if Borrower becomes insolvent
or makes an assignment for the benefit of creditors, if a receiver or trustee is appointed for all or any significant part of Borrower’s
assets, or if any payment or transfer of Collateral is recovered from Agent or the Lenders. The Loan Documents and the Secured
Obligations and Collateral security shall continue to be effective, or shall be revived or reinstated, as the case may be, if at
any time payment and performance of the Secured Obligations or any transfer of Collateral to Agent, or any part thereof is rescinded,
avoided or avoidable, reduced in amount, or must otherwise be restored or returned by, or is recovered from, Agent, the Lenders
or by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,”
or otherwise, all as though such payment, performance, or transfer of Collateral had not been made. In the event that any payment,
or any part thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or recovered, the Loan Documents and the Secured
Obligations shall be deemed, without any further action or documentation, to have been revived and reinstated except to the extent
of the full, final, and indefeasible payment to Agent or the Lenders in Cash.
11.16
Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of
counterparts, and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original,
but all of which counterparts shall constitute but one and the same instrument.
11.17
No Third Party Beneficiaries. No provisions of the Loan Documents are intended, nor will be interpreted, to provide or create
any third-party beneficiary rights or any other rights of any kind in any Person other than Agent, the Lenders and Borrower unless
specifically provided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will be personal
and solely among Agent, the Lenders and the Borrower.
11.18
Agency. Agent and each Lender hereby agree to the terms and conditions set forth on Addendum 3 attached hereto. Borrower
acknowledges and agrees to the terms and conditions set forth on Addendum 3 attached hereto.
11.19
Publicity. None of the parties hereto nor any of its respective member businesses and Affiliates shall, without the other
parties’ prior written consent (which shall not be unreasonably withheld or delayed), publicize or use (a) the other party's
name (including a brief description of the relationship among the parties hereto), logo or hyperlink to such other parties’
web site, separately or together, in written and oral presentations, advertising, promotional and marketing materials, client lists,
public relations materials or on its web site (together, the "Publicity Materials"); (b) the names of officers of such
other parties in the Publicity Materials; and (c) such other parties’ name, trademarks, servicemarks in any news or press
release concerning such party; provided however, notwithstanding anything to the contrary herein, no such consent shall be required
(i) to the extent necessary to comply with the requests of any regulators, legal requirements or laws applicable to such party,
pursuant to any listing agreement with any national securities exchange (so long as such party provides prior notice to the other
party hereto to the extent reasonably practicable) and (ii) to comply with Section 11.13.
11.20
Electronic Execution of Certain Other Documents. The words “execution,” “execute”, “signed,”
“signature,” and words of like import in or related to any document to be signed in connection with this Agreement
and the transactions contemplated hereby (including without limitation assignments, assumptions, amendments, waivers and consents)
shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic
platforms approved by the Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect,
validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be,
to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce
Act, the California Uniform Electronic Transaction Act, or any other similar state laws based on the Uniform Electronic Transactions
Act.
(SIGNATURES TO FOLLOW)
CONFIDENTIAL
IN WITNESS WHEREOF, Borrower, Agent and the
lenders have duly executed and delivered this Loan and Security Agreement as of the day and year first above written.
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BORROWER:
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CENTURY THERAPEUTICS, LLC
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Signature:
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/s/ Douglas Carr
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Print Name:
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Douglas Carr
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Title:
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Vice President Finance & Operations
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Accepted in Palo Alto, California:
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AGENT:
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HERCULES CAPITAL, INC.
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Signature:
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/s/ Jennifer Choe
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Print name:
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Jennifer Choe
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Title:
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Associate General Counsel
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LENDERS:
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HERCULES CAPITAL, INC.
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Signature:
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/s/ Jennifer Choe
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Print name:
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Jennifer Choe
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Title:
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Associate General Counsel
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[Signature Page to Loan and Security Agreement]
Table of Addenda, Exhibits and Schedules
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Addendum 1:
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Taxes; Increased
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Costs Addendum 2:
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[Reserved]
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Addendum 3:
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Agent and Lender Terms
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Exhibit A:
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Advance Request
Attachment to Advance Request
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Exhibit B:
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Name, Locations, and Other Information for Borrower
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Exhibit C:
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Borrower’s Patents, Trademarks, Copyrights and Licenses
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Exhibit D:
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Borrower’s Deposit Accounts and Investment Accounts
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Exhibit E:
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Compliance Certificate
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Exhibit F:
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Joinder Agreement
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Exhibit G:
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[Reserved]
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Exhibit H:
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ACH Debit Authorization Agreement
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Exhibit I:
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[Reserved]
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Exhibit J-1:
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Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
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Exhibit J-2:
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Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
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Exhibit J-3:
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Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
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Exhibit J-4:
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Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
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Schedule 1.1
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Commitments
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Schedule 1
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Subsidiaries
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Schedule 1A
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Existing Permitted Indebtedness
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Schedule 1B
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Existing Permitted Investments
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Schedule 1C
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Existing Permitted Liens
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Schedule 5.3
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Consents, Etc.
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Schedule 5.8
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Tax Matters
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Schedule 5.9
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Intellectual Property Claims
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Schedule 5.10
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Intellectual Property
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Schedule 5.11
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Borrower Products
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Schedule 5.14
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Capitalization
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ADDENDUM 1 to LOAN
AND SECURITY AGREEMENT
TAXES; INCREASED COSTS
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1.
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Defined Terms. For purposes of this Addendum 1:
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a.
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“Connection Income Taxes” means Other Connection Taxes that are imposed on
or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
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b.
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“Excluded Taxes” means any of the following Taxes imposed on or with respect
to a Recipient or required to be withheld or deducted from a payment to a Recipient, (i) Taxes imposed on or measured by net income
(however denominated), franchise Taxes, and branch profits Taxes, in each case, (A) imposed as a result of such Recipient being
organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located
in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (B) that are Other Connection Taxes, (ii)
in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect
to an applicable interest in a Loan or Term Commitment pursuant to a law in effect on the date on which (A) such Lender acquires
such interest in the Loan or Term Commitment or (B) such Lender changes its lending office, except in each case to the extent that,
pursuant to Section 2 or Section 4 of this Addendum 1, amounts with respect to such Taxes were payable either to such Lender’s
assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office,
(iii) Taxes attributable to such Recipient’s failure to comply with Section 7 of this Addendum 1 and (iv) any withholding
Taxes imposed under FATCA.
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c.
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“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with),
any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1)
of the Code, and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement,
treaty or convention among Governmental Authorities and implementing such Sections of the Code.
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d.
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“Foreign Lender” means a Lender that is not a U.S. Person.
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e.
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“Indemnified Taxes” means (i) Taxes, other than Excluded Taxes, imposed on
or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (ii) to the
extent not otherwise described in clause (i), Other Taxes.
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f.
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“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed
as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections
arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under,
received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or
sold or assigned an interest in any Loan or Loan Document).
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g.
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“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery,
performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with
respect to, any Loan Document,
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except any such Taxes that
are Other Connection Taxes imposed with respect to an assignment.
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h.
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“Recipient” means the Agent or any Lender, as applicable.
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i.
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“Withholding Agent” means the Borrower and the Agent.
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2.
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Payments Free of Taxes. Any and all payments by or on account of any obligation of the
Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable
law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction
or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled
to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority
in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased
as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to
additional sums payable under this Section 2 or Section 4 of this Addendum 1) the applicable Recipient receives an amount equal
to the sum it would have received had no such deduction or withholding been made.
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3.
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Payment of Other Taxes by Borrower. The Borrower shall timely pay to the relevant Governmental
Authority in accordance with applicable law, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes.
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4.
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Indemnification by Borrower. The Borrower shall indemnify each Recipient, within 10 days
after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable
to amounts payable under Section 2 of this Addendum 1 or this Section 4) payable or paid by such Recipient or required to be withheld
or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate
as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Agent), or by the Agent
on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
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5.
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Indemnification by the Lenders. Each Lender shall severally indemnify the Agent, within
10 days after demand therefor, for (a) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower
has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so),
(b) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.8 of the Agreement relating
to the maintenance of a Participant Register and (c) any Excluded Taxes attributable to such Lender, in each case, that are payable
or paid by the Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as
to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error. Each
Lender hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document
or otherwise payable by the Agent to the Lender from any other source against any amount due to the Agent under this Section 5.
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6.
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Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower
to a Governmental Authority pursuant to the provisions of this Addendum 1, the Borrower shall deliver to
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the Agent the original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Agent.
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7. Status of Lenders
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a.
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Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect
to payments made under any Loan Document shall deliver to the Borrower and the Agent, at the time or times reasonably requested
by the Borrower or the Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Agent
as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably
requested by the Borrower or the Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested
by the Borrower or the Agent as will enable the Borrower or the Agent to determine whether or not such Lender is subject to backup
withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the
completion, execution and submission of such documentation (other than such documentation set forth in Sections 7(b)(i), 7(b)(ii)
and 7(b)(iv) of this Addendum 1) shall not be required if in the Lender’s reasonable judgment such completion, execution
or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or
commercial position of such Lender.
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b.
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Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,
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i.
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any Lender that is a U.S. Person shall deliver to the Borrower and the Agent on or prior to
the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request
of the Borrower or the Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding
tax;
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ii.
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any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower
and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent),
whichever of the following is applicable:
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A.
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in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United
States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form
W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article
of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E
establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or
“other income” article of such tax treaty;
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B.
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executed copies of IRS Form W-8ECI;
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C.
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in
the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x)
a certificate
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substantially in the form of Exhibit J-1 to the effect that such Foreign Lender is not a
“bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the
Borrower within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to
the Borrower as described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and
(y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E; or
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D.
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to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY,
accompanied by IRS Form W-8ECI, IRS Form W- 8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form
of Exhibit J-2 or Exhibit J-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided
that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the
portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit
J-4 on behalf of each such direct and indirect partner;
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iii.
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any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower
and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent),
executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal
withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit
the Borrower or the Agent to determine the withholding or deduction required to be made; and
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iv.
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if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding
Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Agent at
the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Agent such documentation
prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Agent as may be necessary for the Borrower and the Agent to comply with their obligations
under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the
amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (iv), “FATCA” shall include
any amendments made to FATCA after the date of this Agreement.
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c.
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Each Lender agrees that if any form or certification it previously delivered expires or becomes
obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Agent
in writing of its legal inability to do so.
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7.
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Treatment of Certain Refunds. If any party determines, in its sole discretion
exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to the
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provisions of this Addendum 1 (including by the payment of additional amounts pursuant to the
provisions of this Addendum 1), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent
of indemnity payments made under the provisions of this Addendum 1 with respect to the Taxes giving rise to such refund), net
of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid
by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such
indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 8 (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is
required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 8, in
no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 8 the
payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party
would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or
otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This
Section 8 shall not be construed to require any indemnified party to make available its Tax returns (or any other information
relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
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8.
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Increased Costs. If any change in applicable law shall subject any Recipient to any Taxes
(other than (A) Indemnified Taxes, (B) Taxes described in clauses (ii) through (iv) of the definition of Excluded Taxes and (C)
Connection Income Taxes) on its loans, loan principal, commitments, or other obligations, or its deposits, reserves, other liabilities
or capital attributable thereto, and the result shall be to increase the cost to such Recipient of making, converting to, continuing
or maintaining any Term Loan or of maintaining its obligation to make any such Loan, or to reduce the amount of any sum received
or receivable by such Recipient (whether of principal, interest or any other amount), then, upon the request of such Recipient,
the Borrower will pay to such Recipient such additional amount or amounts as will compensate such Recipient for such additional
costs incurred or reduction suffered.
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9.
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Survival. Each party’s obligations under the provisions of this Addendum 1 shall
survive the resignation or replacement of the Agent or any assignment of rights by, or the replacement of, a Lender, the termination
of the Term Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
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ADDENDUM 2 to LOAN AND
SECURITY AGREEMENT
[RESERVED]
ADDENDUM 3 to LOAN AND
SECURITY AGREEMENT
Agent
and Lender Terms
(a)
Each Lender hereby irrevocably appoints Hercules Capital, Inc. to act on its behalf as the Agent hereunder and under the
other Loan Documents and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to
the Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.
(b)
Each Lender agrees to indemnify the Agent in its capacity as such (to the extent not reimbursed by Borrower and without
limiting the obligation of Borrower to do so), according to its respective Term Commitment percentages (based upon the total outstanding
Term Loan Commitments) in effect on the date on which indemnification is sought under this Addendum 3, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time be imposed on, incurred by or asserted against the Agent in any way relating to or arising out
of, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; The
agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.
(c)
Agent in Its Individual Capacity. The Person serving as the Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it were not the Agent and the term “Lender”
shall, unless otherwise expressly indicated or unless the context otherwise requires, include each such Person serving as Agent
hereunder in its individual capacity.
(d)
Exculpatory Provisions. The Agent shall have no duties or obligations except those expressly set forth herein and in the
other Loan Documents. Without limiting the generality of the foregoing, the Agent shall not:
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(i)
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be subject to any fiduciary or other implied duties, regardless of whether any default or any
Event of Default has occurred and is continuing;
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(ii)
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have any duty to take any discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed
in writing by the Lenders, provided that the Agent shall not be required to take any action that, in its opinion or the opinion
of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or applicable law; and
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(iii)
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except as expressly set forth herein and in the other Loan Documents, have any duty to disclose,
and the Agent shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates
that is communicated to or obtained by any Person serving as the Agent or any of its Affiliates in any capacity.
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(e)
The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Lenders
or as the Agent shall believe in good faith shall be necessary, under the circumstances or (ii) in the absence of its own gross
negligence or willful misconduct.
(f)
The Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default or Event of
Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other
agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 4 or elsewhere herein, other than
to confirm receipt of items expressly required to be delivered to the Agent. Reliance by Agent. Agent may rely, and shall be fully
protected in acting, or refraining to act, upon, any resolution, statement, certificate, instrument, opinion, report, notice, request,
consent, order, bond or other paper or document that it has no reason to believe to be other than genuine and to have been signed
or presented by the proper party or parties or, in the case of cables, telecopies and telexes, to have been sent by the proper
party or parties. In the absence of its gross negligence or willful misconduct, Agent may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to Agent and
conforming to the requirements of this Agreement or any of the other Loan Documents. Agent may consult with counsel, and any opinion
or legal advice of such counsel shall be full and complete authorization and protection in respect of any action taken, not taken
or suffered by Agent hereunder or under any Loan Documents in accordance therewith. Agent shall have the right at any time to seek
instructions concerning the administration of the Collateral from any court of competent jurisdiction. Agent shall not be under
any obligation to exercise any of the rights or powers granted to Agent by this Agreement and the other Loan Documents at the request
or direction of the Lenders unless Agent shall have been provided by the Lenders with adequate security and indemnity against the
costs, expenses and liabilities that may be incurred by it in compliance with such request or direction.
EXHIBIT
A
ADVANCE REQUEST
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To:
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Agent:
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Date:
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________,202__
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Hercules Capital, Inc. (the “Agent”)
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
mail: legal@htgc.com
Attn:
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CENTURY THERAPEUTICS, LLC, a Delaware limited
liability company (“Borrower”) hereby requests from Hercules Capital, Inc. (“Lender”) an Advance in the
amount of Dollars ($ )
(the “Advance Amount”) on (the “Advance Date”) pursuant to the Loan and Security
Agreement among Borrower, Agent and the Lender (the “Agreement”). Capitalized words and other terms used but not otherwise
defined herein are used with the same meanings as defined in the Agreement.
Please:
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(a)
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Issue a check payable to Borrower
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or
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(b)
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Wire Funds to Borrower’s account
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Bank:
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Address:
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ABA Number:
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Account Number:
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Account Name:
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Contact Person:
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Phone Number To Verify Wire Info:
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Email address:
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Borrower represents that
the conditions precedent to the Advance set forth in the Agreement are satisfied and shall be satisfied upon the making of such
Advance, including but not limited to: (i) that no event that has had or could reasonably be expected to have a Material Adverse
Effect has occurred and is continuing; (ii) that the representations and warranties set forth in the Agreement and in the Warrant
are and shall be true and correct in all material respects (or, in the case of any representation and warranty qualified by materiality,
in all respects) on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall
be true and correct in all material respects as of such earlier date, or, in the case of any representation and warranty qualified
by materiality, in all respects as of such earlier date); (iii) that Borrower is in compliance with all material terms and provisions
set forth in each Loan Document on its part to be observed or performed; and (iv) that as of the Advance Date, no fact or condition
exists that could (or could, with the passage of time, the giving of
notice, or both) constitute an Event of Default
under the Loan Documents. Borrower understands and acknowledges that Agent has the right to review the financial information supporting
this representation and, based upon such review in its sole discretion, the Lender may decline to fund the requested Advance.
Borrower hereby represents that
Borrower’s corporate status and locations have not changed since the date of the Agreement or, if the Attachment to this
Advance Request is completed, are as set forth in the Attachment to this Advance Request.
Borrower agrees to notify Agent
promptly before the funding of the Loan if any of the matters which have been represented above shall not be true and correct on
the Borrowing Date and if Agent has received no such notice before the Advance Date then the statements set forth above shall be
deemed to have been made and shall be deemed to be true and correct as of the Advance Date.
Executed as of [ ], 20[ ].
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BORROWER:
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CENTURY THERAPEUTICS, LLC
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Signature:
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Title:
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Print Name:
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ATTACHMENT TO ADVANCE REQUEST
Dated:
Borrower hereby represents and warrants to Agent
that Borrower’s current name and organizational status is as follows:
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Name:
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CENTURY THERAPEUTICS, LLC
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Type of organization:
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limited liability company
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State of organization:
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Delaware
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Organization file number:
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[ ]
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Borrower hereby represents and warrants to Agent
that the street addresses, cities, states and postal codes of its current locations are as follows:
[ ● ]
Borrower hereby represents and warrants to Agent
that the Advance Amount does not exceed the Maximum Term Loan Amount as follows:
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b.
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[Maximum Term Loan Amount: $ ]
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[c. Is clause a. less than or equal to clause b.?
Yes/Compliant No/Non-Compliant ]
EXHIBIT B
NAME,
LOCATIONS, AND OTHER INFORMATION FOR BORROWER
1.
Borrower represents and warrants to Agent that Borrower’s current name and organizational status as of the Closing
Date is as follows:
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Name:
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CENTURY THERAPEUTICS, LLC
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Type of organization:
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limited liability company
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State of organization:
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Delaware
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Organization file number:
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7453663
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2.
Borrower represents and warrants to Agent that for five (5) years prior to the Closing Date, Borrower did not do business
under any other name or organization or form except the following:
Name: N/A
Used during dates of: N/A
Type of Organization: N/A
State of organization: N/A
Organization file Number: N/A
Borrower’s fiscal year ends on 12/31
Borrower’s federal employer tax identification
number is: 84-2040295
3.
Borrower represents and warrants to Agent that its chief executive office is located at 3675 Market Street, Philadelphia,
PA 19104.
EXHIBIT C
BORROWER’S PATENTS,
TRADEMARKS, COPYRIGHTS AND LICENSES
Patents
None.
Registered Trademarks
None.
Registered Copyrights
None.
Material Agreements under which
Borrower licenses Intellectual Property from Third Parties (other than shrink-wrap software licenses)
License Agreement (differentiation) by and between the
Company (as assignee) and FUJIFILM Cellular Dynamics Inc., a Wisconsin corporation, signed September 18, 2018 (exclusive).
License Agreement (reprogramming) by and between the Company
(as assignee) and FUJIFILM Cellular Dynamics Inc., a Wisconsin corporation, effective September 18, 2018 (non-exclusive).
Master Collaboration Agreement by and between the Company
and FUJIFILM Cellular Dynamics Inc., a Wisconsin corporation, dated as of October 21, 2019.
Letter Agreement regarding WARF/CDI
License Agreement and CDI/Century Sublicense Agreement by and among the Company, FUJIFILM Cellular Dynamics Inc., a Wisconsin corporation
and Wisconsin Alumni Research Foundation dated as of July 2, 2019.
Sublicense Agreement by and between
the Company and iCell Inc., a Japanese corporation, effective as of March 20, 2020 (exclusive, excluding Japan).
Master Software and Service Agreement by and between
the Company, Century Therapeutics, Inc., a Delaware Corporation, and Labvantage Solutions, Inc., dated April 1, 2020.
EXHIBIT D
BORROWER’S DEPOSIT
ACCOUNTS AND INVESTMENT ACCOUNTS
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Bank Name
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Account
Number
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Branch Address
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Borrower/
Subsidiary
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Purpose of
Account
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Avg.
Balance
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Silicon Valley Bank
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[***]
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3003 Tasman Drive Santa Clara, CA 95054
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Borrower
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Primary operating account for all business
operations
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$2,000,000
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Silicon Valley Bank
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[***]
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3003 Tasman Drive Santa Clara, CA 95054
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Borrower
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Asset Management Account
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$42,000,000
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JP Morgan
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[***]
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Borrower
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Invest Excess cash, transferred to SVB
Operating account as needed
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$7,000,000
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EXHIBIT E
COMPLIANCE CERTIFICATE
Hercules Capital, Inc. (as “Agent”)
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
Reference is made to that certain
Loan and Security Agreement dated September 14, 2020 and the Loan Documents (as defined therein) entered into in connection with
such Loan and Security Agreement all as may be amended from time to time (hereinafter referred to collectively as the “Loan
Agreement”) by and among Hercules Capital, Inc. (the “Agent”), the several banks and other financial institutions
or entities from time to time party thereto (collectively, the “Lender”) and CENTURY THERAPEUTICS, LLC (the “Company”)
as Borrower. All capitalized terms not defined herein shall have the same meaning as defined in the Loan Agreement.
The undersigned is an Officer
of the Company, knowledgeable of all Company financial matters, and is authorized to provide certification of information regarding
the Company; hereby certifies, in such capacity (and not in his or her personal capacity), that in accordance with the terms and
conditions of the Loan Agreement, to the knowledge of the undersigned, the Company is in compliance for the period ending of
all covenants, conditions and terms and hereby reaffirms that, except as noted below, all representations and warranties contained
therein are true and correct on and as of the date of this Compliance Certificate with the same effect as though made on and as
of such date, except to the extent such representations and warranties expressly relate to an earlier date, after giving effect
in all cases to any standard(s) of materiality contained in the Loan Agreement as to such representations and warranties; provided
that the exceptions noted below shall not apply to an earlier date and shall not cure any default arising from any false or incorrect
misrepresentations and warranties previously made. Attached are the required documents supporting the above certification. The
undersigned further certifies that these are prepared in accordance with GAAP (except for the absence of footnotes with respect
to unaudited financial statement and subject to normal year-end adjustments) and are consistent from one period to the next except
as explained below.
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REPORTING REQUIREMENT
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REQUIRED
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CHECK IF ATTACHED
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Interim Financial Statements
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Monthly within 30 days
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Interim Financial Statements
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Quarterly within 45 days
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Audited Financial Statements
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FYE within 180 days
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ACCOUNTS OF BORROWER AND ITS SUBSIDIARIES AND AFFILIATES
The undersigned hereby also confirms the below disclosed
accounts represent all depository accounts and securities accounts presently open in the name of each Borrower or Borrower’s
Subsidiary/Affiliate, as applicable.
Each new account that has been opened since delivery
of the previous Compliance Certificate is designated below with a “*”.
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Depository AC #
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Financial Institution
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Account
Type
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Last
Month Ending
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Purpose of Account
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(Depository / Securities)
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Account Balance
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BORROWER
Name/Address:
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1
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2
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3
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4
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5
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6
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7
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SUBSIDIARY / AFFILIATE
Name/Address
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1
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2
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3
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4
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5
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6
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7
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Name of Test Required Level Actual
Level In Compliance Y/N?
Minimum Cash*
[Effective if and only if Borrower has both: (a)
drawn the Tranche 2 Advance and (b) not achieved Performance Milestone II by September 30, 2021. See Section 7.20.]
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(a)
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The amount of unrestricted Cash as of the date hereof: $
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(b)
The amount of the Borrower’s accounts payable not paid after the 90th day following the invoice date for such accounts
payable: $
(c) Clause (a) minus clause (b) is: $
Is the amount reported in clause (c) equal to or greater
than $8,500,000?
Yes;
No
If No: not in compliance
* if the Tranche 2 Advance is not drawn or Borrower
has achieved Performance Milestone II by September 30, 2021, then there shall be no minimum cash requirement.
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Very Truly Yours,
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CENTURY THERAPEUTICS, LLC
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By:
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Name:
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Its:
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EXHIBIT F
FORM OF JOINDER AGREEMENT
This Joinder Agreement (the
“Joinder Agreement”) is made and dated as of [ ], 20[ ], and is entered into by and between ., a corporation
(“Subsidiary”), and HERCULES CAPITAL, INC., a Maryland corporation (as “Agent”).
RECITALS
A.
Subsidiary’s Affiliate, CENTURY THERAPEUTICS, LLC (“Company”) [has entered/desires to enter] into that
certain Loan and Security Agreement dated September 14, 2020, with the several banks and other financial institutions or entities
from time to time party thereto as lender (collectively, the “Lenders”) and the Agent, as such agreement may be amended
(the “Loan Agreement”), together with the other agreements executed and delivered in connection therewith;
B.
Subsidiary acknowledges and agrees that it will benefit both directly and indirectly from Company’s execution of the
Loan Agreement and the other agreements executed and delivered in connection therewith;
AGREEMENT
NOW THEREFORE, Subsidiary and Agent agree as follows:
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1.
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The recitals set forth above are incorporated into and made part of this
Joinder Agreement. Capitalized terms not defined herein shall have the meaning provided in the Loan Agreement.
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2.
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By signing this Joinder Agreement, Subsidiary shall be bound by the terms
and conditions of the Loan Agreement the same as if it were the Borrower (as defined in the Loan Agreement) under the Loan Agreement,
mutatis mutandis, provided however, that (a) with respect to (i) Section 5.1 of the Loan Agreement, Subsidiary represents that
it is an entity duly organized, legally existing and in good standing under the laws of [ ], (b) neither Agent nor the Lenders
shall have any duties, responsibilities or obligations to Subsidiary arising under or related to the Loan Agreement or the other
Loan Documents, (c) that
if Subsidiary is covered by Company’s insurance, Subsidiary shall not be required to maintain separate insurance or
comply with the provisions of Sections 6.1 and 6.2 of the Loan Agreement, and (d) that
as long as Company satisfies the requirements of Section 7.1 of the Loan Agreement, Subsidiary shall not have to provide
Agent separate Financial Statements. To the extent that Agent or the Lenders has any duties, responsibilities or obligations
arising under or related to the Loan Agreement or the other Loan Documents, those duties, responsibilities or obligations
shall flow only to Company and not to Subsidiary or any other Person or entity. By way of example (and not an exclusive
list): (i) Agent’s providing notice to Company in accordance with the Loan Agreement or as otherwise agreed among
Company, Agent and the Lenders shall be deemed provided to Subsidiary; (ii) a Lender’s providing an Advance to Company
shall be deemed an Advance to Subsidiary; and (iii) Subsidiary shall have no right to request an Advance or make any other
demand on the Lenders.
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3.
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Subsidiary agrees not to certificate its equity securities without Agent’s
prior written consent, which consent may be conditioned on the delivery of such equity securities to Agent in order to perfect
Agent’s security interest in such equity securities.
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4.
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Subsidiary acknowledges that it benefits, both directly and indirectly,
from the Loan Agreement, and hereby waives, for itself and on behalf on any and all successors in interest (including without limitation
any assignee for the benefit of creditors, receiver, bankruptcy trustee or itself as debtor-in-possession under any bankruptcy
proceeding) to the fullest extent provided by law, any and all claims, rights or defenses to the enforcement of this Joinder Agreement
on the basis that (a) it failed to receive adequate consideration for the execution and delivery of this Joinder Agreement or (b)
its obligations under this Joinder Agreement are avoidable as a fraudulent conveyance.
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5
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As security for the prompt, complete and indefeasible payment when due (whether on the payment dates or otherwise) of all the
Secured Obligations, Subsidiary grants to Agent a security interest in all of Subsidiary’s right, title, and interest
in and to the Collateral.
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[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]
[SIGNATURE PAGE TO JOINDER AGREEMENT]
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By:
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Name:
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Title:
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Address:
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Telephone:
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email:
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AGENT:
HERCULES CAPITAL, INC.
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By:
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Name:
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Title:
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Address:
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400 Hamilton Ave., Suite 310
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Palo Alto, CA 94301
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email: legal@htgc.com
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Telephone: 650-289-3060
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EXHIBIT
G
[RESERVED]
EXHIBIT
I
ACH DEBIT AUTHORIZATION AGREEMENT
Hercules Capital, Inc.
400 Hamilton Avenue, Suite 310
Palo Alto, CA
94301
Re: Loan and Security Agreement dated September 14, 2020
(the “Agreement”) by and among CENTURY THERAPEUTICS, LLC (“Borrower”) and Hercules Capital, Inc., as agent
(“Company”) and the lenders party thereto (collectively, the “Lenders”)
In connection with the above
referenced Agreement, the Borrower hereby authorizes the Company to initiate debit entries for (i) the periodic payments due under
the Agreement and (ii) out-of-pocket legal fees and costs incurred by Agent or the Lenders pursuant to Section 11.12 of the Agreement
to the Borrower’s account indicated below. The Borrower authorizes the depository institution named below to debit to such
account.
[IF FILED PUBLICLY, ACCOUNT INFO REDACTED FOR SECURITY PURPOSES]
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DEPOSITORY NAME
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BRANCH
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CITY
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STATE AND ZIP CODE
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TRANSIT/ABA NUMBER
|
ACCOUNT NUMBER
|
This authority will remain in full force and effect so long
as any amounts are due under the Agreement.
CENTURY THERAPEUTICS, LLC
(Borrower)
EXHIBIT
I
[RESERVED]
EXHIBIT J-1
FORM OF U.S. TAX COMPLIANCE
CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For
U.S. Federal Income Tax Purposes)
Reference is hereby made
to the Loan and Security Agreement dated as of September 14, 2020 (as amended, supplemented or otherwise modified from time to
time, the “Loan Agreement”) by and among CENTURY THERAPEUTICS, LLC, a Delaware limited liability company, and each
of its Subsidiaries (as defined in the Loan Agreement) (hereinafter collectively referred to as the “Borrower”), the
several banks and other financial institutions or entities from time to time parties to the Loan Agreement (collectively, referred
to as the “Lenders”), and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and
collateral agent for itself and the Lenders (in such capacity, the “Agent”).
Pursuant to the provisions
of Addendum 1 of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the
Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii)
it is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “ten percent shareholder”
of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a “controlled foreign corporation”
related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished
the Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing
this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall
promptly so inform the Borrower and the Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Agent
with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined
herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.
|
Date: , 20_
|
[NAME OF LENDER]
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By:
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Name:
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Title:
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EXHIBIT J-2
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That
Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made
to the Loan and Security Agreement dated as of September 14, 2020 (as amended, supplemented or otherwise modified from time to
time, the “Loan Agreement”) by and among CENTURY THERAPEUTICS, LLC, a Delaware limited liability company, and each
of its Subsidiaries (as defined in the Loan Agreement) (hereinafter collectively referred to as the “Borrower”), the
several banks and other financial institutions or entities from time to time parties to the Loan Agreement (collectively, referred
to as the “Lenders”), and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and
collateral agent for itself and the Lenders (in such capacity, the “Agent”).
Pursuant to the provisions
of Addendum 1 of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the
participation in respect of which it is providing this certificate, (ii) it is not a “bank” within the meaning of Section
881(c)(3)(A) of the Code,
(iii)
it is not a “ten percent shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code
and (iv) it is not a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C)
of the Code.
The undersigned has furnished
its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing
this certificate, the undersigned agrees that (1) if the information provided in this certificate changes, the undersigned shall
promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly
completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned,
or in either of the two calendar years preceding such payments.
Unless otherwise defined herein,
terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.
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Date: , 20_
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[NAME OF PARTICIPANT]
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By:
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Name:
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Title:
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EXHIBIT J-3
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are
Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made
to the Loan and Security Agreement dated as of September 14, 2020 (as amended, supplemented or otherwise modified from time to
time, the “Loan Agreement”) by and among CENTURY THERAPEUTICS, LLC, a Delaware limited liability company, and each
of its Subsidiaries (as defined in the Loan Agreement) (hereinafter collectively referred to as the “Borrower”), the
several banks and other financial institutions or entities from time to time parties to the Loan Agreement (collectively, referred
to as the “Lenders”), and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and
collateral agent for itself and the Lenders (in such capacity, the “Agent”).
Pursuant to the provisions
of Addendum 1 of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation
in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners
of such participation,
(iii) with respect to such participation, neither
the undersigned nor any of its direct or indirect partners/members is a “bank” extending credit pursuant to a loan
agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code,
(iv) none of its direct or indirect partners/members is a “ten percent shareholder” of the Borrower within the meaning
of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a “controlled foreign corporation”
related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished
its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied
by an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming
the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided in
this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times
furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment
is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein,
terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.
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Date: , 20_
|
[NAME OF PARTICIPANT]
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By:
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Name:
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Title:
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EXHIBIT J-4
FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are
Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made
to the Loan and Security Agreement dated as of September 14, 2020 (as amended, supplemented or otherwise modified from time to
time, the “Loan Agreement”) by and among CENTURY THERAPEUTICS, LLC, a Delaware limited liability company, and each
of its Subsidiaries (as defined in the Loan Agreement) (hereinafter collectively referred to as the “Borrower”), the
several banks and other financial institutions or entities from time to time parties to the Loan Agreement (collectively, referred
to as the “Lenders”), and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and
collateral agent for itself and the Lenders (in such capacity, the “Agent”).
Pursuant to the provisions
of Addendum 1 of the Loan Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well
as any promissory note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect
partners/members are the sole beneficial owners of such Loan(s) (as well as any promissory note(s) evidencing such Loan(s)),
(iii) with respect to the extension of credit pursuant
to this Loan Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is
a “bank” extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a “ten percent
shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect
partners/members is a “controlled foreign corporation” related to the Borrower as described in Section 881(c)(3)(C)
of the Code.
The undersigned has furnished the
Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is
claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by
an IRS Form W-8BEN or IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the
portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided in this
certificate changes, the undersigned shall promptly so inform the Borrower and the Agent, and (2) the undersigned shall have at
all times furnished the Borrower and the Agent with a properly completed and currently effective certificate in either the calendar
year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined
herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement.
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Date: , 20_
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[NAME OF LENDER]
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By:
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Name:
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Title:
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SCHEDULE 1.1
COMMITMENTS
Tranche 1 Advance
|
LENDER
|
TERM COMMITMENT
|
|
Hercules Capital, Inc.
|
$10,000,000
|
Tranche 2 Advance
|
LENDER
|
TERM COMMITMENT
|
|
Hercules Capital, Inc.
|
$10,000,000
|
Tranche 3 Advance
|
LENDER
|
TERM COMMITMENT
|
|
Hercules Capital, Inc.
|
$10,000,000*
|
*Subject to approval by Lender’s
investment committee in its sole discretion
Total Term Commitment
|
LENDER
|
TERM COMMITMENT
|
|
Hercules Capital, Inc.
|
$30,000,000*
|
Schedule 1
Subsidiaries
Century Therapeutics Canada ULC
Schedule 1A
Existing Permitted Indebtedness
Promissory Note dated as of June 9, 2020, issued
by Century Therapeutics Canada ULC in favor of Empirica Therapeutics, Inc.
Schedule 1B
Existing Permitted Investments
None.
Schedule
1C
Existing Permitted Liens
None.
Schedule 5.3
Consents,
Etc.
None.
Schedule 5.8
Tax
Matters
None.
Schedule
5.9
Intellectual Property Claims
None.
Schedule
5.10
Intellectual Property
License Agreement (differentiation)
by and between the Borrower (as assignee) and FUJIFILM Cellular Dynamics Inc., a Wisconsin corporation, signed September 18, 2018
(exclusive).
License Agreement (reprogramming)
by and between the Borrower (as assignee) and FUJIFILM Cellular Dynamics Inc., a Wisconsin corporation, effective September 18,
2018 (non-exclusive).
Master Collaboration Agreement
by and between the Borrower and FUJIFILM Cellular Dynamics Inc., a Wisconsin corporation, dated as of October 21, 2019.
Letter Agreement regarding WARF/CDI
License Agreement and CDI/Century Sublicense Agreement by and among the Borrower, FUJIFILM Cellular Dynamics Inc., a Wisconsin
corporation and Wisconsin Alumni Research Foundation dated as of July 2, 2019.
Schedule
5.11
Borrower Products
None.
Schedule 5.13
Employee
Loans
None.
Schedule 5.14 Capitalization
Borrower
|
Record Owners
|
|
Number of Units
|
|
Number of Unit Equivalents
|
|
Percentage Ownership
|
|
Century Therapeutics, Inc.
|
|
|
67,226,891
|
|
|
|
—
|
|
|
|
72
|
%
|
|
Bayer Healthcare, LLC
|
|
|
26,143,790
|
|
|
|
—
|
|
|
|
28
|
%
|
|
Reserved
|
|
|
15,598,186
|
|
|
|
121,620
|
|
|
|
—
|
|
|
Total:
|
|
|
108,968,867
|
|
|
|
121,620
|
|
|
|
—
|
|
Subsidiaries
|
Subsidiary
|
Number of Shares
|
|
Percentage Ownership
|
|
Century Therapeutics Canada ULC
|
|
|
100 shares of common stock
|
|
|
|
100%
|
|
Schedule
7.22
Transactions with Affiliates
Shared Services Agreement, to be entered into between the
Borrower and Century Canada.
Exhibit 10.27
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is
not material and the registrant customarily and actually treats as private and confidential.
SUBLICENSE AGREEMENT
This Sublicense Agreement
(together with all exhibits and attachments hereto, this “Agreement”) is made and entered into by and between iCELL
Inc. (“Sublicensor”), a Japanese corporation having a principal place of business at Tokyo Twin Parks 25-26 FL (2505),
Higashi Shinbashi 1-10-2, Minato-ku, Tokyo 105-0021 Japan, and Century Therapeutics, LLC
(“Sublicensee”), a Delaware limited liability company having a principal place of business at 3675 Market St., Philadelphia,
PA 19104, effective as of March 20, 2020 (“Effective Date”).
WHEREAS, Sublicensor is party
to that Exclusive Licensing Agreement concluded on 08/01/2018 and as amended by that certain Amendment No. I to Exclusive Licensing Agreement
concluded as of even date herewith, between Sublicensor and The University of Tokyo
(“UTokyo”) and Todai TLO, Ltd., as may be further amended from time to time (“UTokyo License”), under
which Sublicensor was granted a license to certain patents, technology and technology information; and
WHEREAS, the Sublicensor desires
to grant to the Sublicensee a sublicense to such patents and technology, subject to the terms of this Agreement.
NOW, THEREFORE, and in consideration
of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
|
|
1.1.
|
“Field of Use” shall mean all fields of use.
|
|
|
1.2.
|
“Initiation” shall mean the dosing of the first human subject participating in a clinical
trial.
|
|
|
1.3.
|
“Inventors” shall mean the inventors of the Technology Information.
|
|
|
1.4.
|
“Licensed Patents” shall mean the patents and applications listed in Exhibit A
hereto and any related patents and applications sharing the same priority date as those listed in this Agreement.
|
|
|
1.5.
|
“Licensed Products” shall mean on a country-by-country basis, any product whose
manufacture, use, sale, offer for sale, or import which, but for the licenses granted herein, would infringe a Valid Claim of a
pending Licensed Patent, were such Licensed Patent to have issued, or a Valid Claim of an issued Licensed Patent in such country
in which such product is manufactured, used, sold, offered for sale, or imported.
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|
|
1.6.
|
“Technology Information” shall mean confidential, non-public technology
information, technical data, know-how and other information or materials controlled by Sublicensor during the term of this Agreement
that is necessary for the development and/or use of the Licensed Products which is provided to Sublicensee by or at the
direction of Sublicensor.
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|
|
1.7.
|
“Licensed Territories” shall mean France, Germany, Italy, Japan, Lichtenstein,
the Netherlands, Switzerland, the United States, the United Kingdom and any other countries where Valid Claims exist.
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|
1.8.
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“Net Sales” shall mean the gross amount actually received by Sublicensee for sales
by Sublicensee, its affiliates and sublicensees of a Licensed Product to a third party, less the sum of the following actual
and customary deductions where applicable cash, trade or quantity discounts; sales, use, tariff, import/export duties or other
excise taxes when included in gross sales; transportation charges; and allowances or credits to customers because of rejections or
returns; retroactive price reductions; rebates; and government discounts.
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|
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1.9.
|
“Valid Claim” shall mean, with respect to the patent rights within the Licensed Patents:
(a) a claim in an issued patent which has not (i) expired, (ii) been finally adjudicated or admitted as invalid or unenforceable, or (iii)
been abandoned; or (b) a claim in a pending application that has not been pending for more than eight (8) years and which is actively
being prosecuted.
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|
|
2.1.
|
University of Tokyo License. A copy of the redacted UTokyo License is attached hereto as Schedule
1. Sublicensee acknowledges and agrees that the sublicense granted herein is subject to all restrictions, limitations, terms and
conditions of the UTokyo License applicable to a sublicensee, including without limitation, Articles 5, 7, 8, 9, 11 and 13 to 16 of
the UTokyo License,.
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2.2.
|
Sublicense to Licensed Patents. Sublicensor shall, and hereby does, grant to the Sublicensee an
exclusive, royalty bearing license under the Licensed Patents (collectively, the “Licensed Rights”), with the right
to grant sublicenses through multiple tiers, to research, develop, commercialize, make, have made, use, import, offer for sale, and sell
Licensed Products in the Licensed Territories during the term of this Agreement in the Field of Use provided, however, that in Japan such
license shall be non-exclusive.
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|
|
2.3.
|
Retained Rights. Any provision of this Agreement to the contrary notwithstanding, Sublicensor
reserves for itself and UTokyo an irrevocable, nonexclusive, royalty free, license to make and use the Technology Information for
their own internal educational and research activities practiced in non-profit research and as part of training and research
activities conducted by the Inventors and research collaborators (limited to those belonging to non-profit research institutions) of
laboratories that the Inventors may belong to in the future if they are no longer affiliated with UTokyo. Sublicensee shall include
such retained rights in any sublicenses it grants in accordance with this Agreement.
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|
|
2.4.
|
Technical Assistance. Sublicensor shall provide Sublicensee with access (by teleconference or in
person at Sublicensor’s facilities) as reasonably requested by Sublicensee to Sublicensor’s personnel involved in the research
and development of Licensed Products.
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2.5.
|
No Sublicense Without Compliance with UTokyo License. Sublicensee may grant sublicenses
through multiple tiers under this Agreement, with (i) prior written notice to Sublicensor, (ii) the inclusion in such sublicense of
all restrictions, limitations, terms and conditions of the UTokyo License applicable to a sublicensee, including without
limitation, Articles 5, 7, 8, 9, 11 and 13 to 16 of the UTokyo License, and (iii) UTokyo’s right to confer with Sublicensor if
UTokyo determines it has any concerns regarding such sublicensing.
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|
|
3.1.
|
License Issue Fee. Sublicensee shall pay Sublicensor a one- time, non-creditable, and non-refundable
license issue fee (“License Issue Fee”) of US$100,000, due and payable within five (5) days of the Effective Date.
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3.2.
|
Earned Royalties. Sublicensee shall pay Sublicensor earned royalties (“Earned Royalties”)
on a country-by-country, Licensed Product-by-Licensed Product basis, beginning on the first commercial sale of the first Licensed Product
and continuing until the last-to-expire Valid Claim under the Licensed Patents claiming or covering such Licensed Product in such country,
in an amount equal to [***] of the Net Sales of such Licensed Product (“Earned Royalty Rate”) in the Field of Use by
Sublicensee and its affiliates and sublicensees.
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3.3.
|
Additional Earned Royalties. In addition to the Earned Royalties to be paid in accordance
with Section 3.2 above, Sublicensee shall pay Sublicensor additional sales milestone achievement payments (“Additional
Earned Royalties”) on a country-by-country basis until the last-to-expire Valid Claim under the Licensed Patents claiming
or covering Licensed Products, in the below amounts as additional one time payments based on achievement of Net Sales of Licensed
Products as follows:
|
3.3.1.
If aggregate single calendar year Net Sales of all Licensed Products by Sublicensee and its affiliates and sublicensees in the
Licensed Territories exceed [***] for the first time, Sublicensee will make a one-time payment to Sublicensor of an Additional Earned
Royalty equal to [***] (solely for purposes of the UTokyo License, calculated at [***].
3.3.2.
If aggregate single calendar year Net Sales of all Licensed Products by Sublicensee and its affiliates and sublicensees
in the Licensed Territories exceed [***] for the first time, Sublicensee will make a one-time payment to Sublicensor of an Additional
Earned Royalty equal to [***] (solely for purposes of the UTokyo License, calculated at [***]).
3.3.3.
If aggregate single calendar year Net Sales of all Licensed Products by Sublicensee and its affiliates and sublicensees in the
Licensed Territories exceed [***] for the first time, Sublicensee will make a one-time payment to Sublicensor of an Additional Earned
Royalty equal to [***] (solely for purposes of the UTokyo License, calculated at [***]).
3.3.4.
Each of the royalty payments set forth above in subsections 3.3.1, 3.3.2, 3.3.3 is payable only once and only upon the first achievement
of the applicable sales event for aggregate Net Sales of all Licensed Products as set forth above in subsections 3.3.1, 3.3.2, and 3.3.3
in the Licensed Territories, with no amounts due for subsequent or repeated achievements of such sales. For clarity, in no event shall
Sublicensee be required to pay Sublicensor more than an aggregate of Seventy Million U.S. Dollars ($70,000,000) as Additional Earned Royalties.
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3.4.
|
Late Payments. If any payment due hereunder that is not subject to a good faith dispute is not
paid when due for reasons attributable to Sublicensee and/or its affiliates and sublicensees such payment shall be subject to a late charge
from the date due until paid calculated at the rate of [***] per year.
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|
|
3.5.
|
Earned Royalties in Case of Challenge of the Licensed Patents. Should the Sublicensee challenge
the validity of any of the Licensed Patents:
|
3.5.1.
Provided that the outcome of such action be that any claim of a Patent Right challenged by Sublicensee is both valid and infringed by a Licensed Product, Sublicensee will pay Earned Royalties to the Sublicensor at the rate of 3x the then current Earned Royalty Rate of the Net Sales of all such Licensed Products sold;
3.5.2.
Sublicensee will have no right to recoup expenses paid before or during the challenge; and
3.5.3.
Any
dispute over the validity of the Sublicensor’s (or its licensor’s) Licensed Patents will be litigated in the courts located
in California. The parties agree not to challenge personal jurisdiction in that forum.
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4.
|
Development and Regulatory Approval Milestones and find other Obligations.
|
Sublicensee shall pay Sublicensor the applicable
milestone achievement payment set forth below within thirty (30) days after the first achievement of: each development and regulatory
approval milestone event described below by or on behalf of Sublicensee or its affiliates or sublicensees.
Development and Regulatory Approval
Milestone Event
|
Milestone Payment
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
|
[***]
|
[***]
|
Each of the milestone payments
set forth above will be payable only once under this Agreement regardless of how many times the corresponding milestone event is achieved
by or on behalf of Sublicensee or its affiliates or sublicensees, with respect to one or more Licensed Products. For the avoidance of
doubt, in no event would Sublicensee be required to pay Sublicensor more than an aggregate of [***] in development and regulatory approval
milestone payments.
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|
5.1.
|
Maintenance of Records. During the term of this Agreement, Sublicensee shall maintain, and require
its affiliates and sublicensees to maintain, complete and accurate records of Licensed Products made, had made, used, offered for sale,
imported, or sold under this Agreement, and any amounts payable to Sublicensor in relation to such Licensed Products.
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|
5.2.
|
Annual Statement. Not later than March 1 of each calendar year, Sublicensee shall furnish to Sublicensor
a statement showing the Net Sales for each Licensed Product by Sublicensee and/or its affiliates and sublicensees during the immediate
preceding calendar year or portion thereof, and the Earned Royalties payable thereon calculated in such manner.
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|
|
5.3.
|
Retention of Records and Audit Rights. Sublicensee shall retain such records relating to a
given calendar year for at least five (5) years after the conclusion of that calendar year, during which time Sublicensor shall have
the right, at its expense, to cause an independent, certified public accountant to inspect and audit such records during normal
business hours and upon fourteen (14) business days
prior written notice to Sublicensee for the sole purpose of verifying any
reports and payments delivered under this Agreement. Such accountant shall not disclose to Sublicensor any information other than
information relating to the accuracy of reports and payments delivered under this Agreement. The parties shall reconcile any
underpayment within [***] after such accountant delivers the results of the audit. Sublicensee shall also immediately pay to
Sublicensor a late payment charge calculated at an annual rate of [***] of the unpaid total for the number of days from the date
following the payment deadline to the date of payment. In the event that any audit performed under this Article 5 reveals an
underpayment in excess of [***] in any calendar year, Sublicensee shall bear the full cost of such audit. In the event that any
audit performed under this Article 5 reveals an overpayment in excess of [***] in any calendar year, Sublicensor shall bear the full
cost of such audit.
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|
|
6.
|
Instituting Infringement Actions.
|
|
|
6.1.
|
Duty to Notify. Sublicensee shall promptly notify Sublicensor of any alleged infringement of the
Licensed Patents by a third party and of any available evidence of such infringement.
|
|
|
6.2.
|
Sublicensee’s Right to Institute Infringement Suit. If the infringing activity has not
be abated or terminated without litigation within sixty (60) days following the effective date of the infringement notice,
Sublicensee shall have the right, but shall not be obligated, to institute suit for any infringement of the Licensed Patents, and
Sublicensor agrees to cooperate with Sublicensee in any such suit. Sublicensor further agrees to join as a party to any such suit if
Sublicensee reasonably deems the joinder to be necessary or appropriate. The total cost of any such infringement action (including,
any costs incurred by the Sublicensor arising out of such suit that Sublicensee requested Sublicensor join, including but not
limited to, any legal fees of counsel that the Sublicensor selects and retains to represent it in the suit) instituted by Sublicensee
shall be borne by Sublicensee, and Sublicensee shall retain any recovery or damages awarded in such action.
|
|
|
6.3.
|
Sublicensor’s and UTokvo Right to Institute Suit. If, within one hundred and eighty
(180) days following the effective date of the infringement notice delivered pursuant to Section 6.1 above, the infringing activity
and misappropriation has not been abated and if Sublicensee has not brought suit addressing the infringement or misappropriation
pursuant to Section 6.2 above, Sublicensor or UTokyo under the UTokyo License, or both, shall have the right, but shall not be
obligated, to institute suit for any infringement of the Licensed Patents, and Sublicensee agrees to cooperate with Sublicensor, or
UTokyo, or both, in any such suit. Sublicensee further agrees to join as a party to any such suit if Sublicensor, or UTokyo, deems
the joinder to be necessary or appropriate. As between the Sublicensor and the Sublicensee, the total cost of any such infringement
action. (including, any costs incurred by the Sublicensee arising out of such suit, including but not limited to, any legal fees of
counsel that the Sublicensee selects and retains to represent it in the suit) instituted by Sublicensor and/or UTokyo, shall be
borne by Sublicensor and/or UTokyo, as applicable, and Sublicensor and/or UTokyo, as applicable, shall retain any recovery or
damages awarded in such action.
|
|
|
7.
|
Warranties; Defending Infringement Actions; Indemnification; Covenants.
|
7.1.1. Each
party represents and warrants to the other that as of the Effective Date it has full right, power and authority to enter into this
Agreement and to perform its respective obligations under this Agreement. Each party further represents and warrants that, as of the
Effective Date, the execution and delivery of this Agreement and the performance of such party’s obligations hereunder (a) do
not conflict with or violate any requirement of applicable laws and (b) do not conflict with, violate or breach or constitute a
default of, or require any consent under, any contractual obligations of such party, except such consents as have been obtained as
of the Effective Date.
7.1.2.
Sublicensor represents and warrants to Sublicensee that it is the licensee of the Licensed Patents and has the right to grant the
Licensed Rights as set forth in this Agreement.
7.1.3. Sublicensee
represents and warrants that any Licensed Products made or sold pursuant to this Agreement shall be made or sold in compliance with
all applicable federal and state law regulations, including but not limited to regulations of the Food and Drug Administration, the
Environmental Protection Agency and their state equivalents.
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7.2.
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Defending Infringement Actions. If either party hereto or any affiliate, sublicensee or customer
thereof shall be charged with or sued for infringement of patent or other rights of a third party for performing any act contemplated
by this Agreement, such party shall promptly notify the other of all particulars of such charge or suit. Sublicensor and Sublicensee shall
consult and cooperate as appropriate in the disposition of each such charge and the defense of each such suit.
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7.3.1.
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Sublicensee will indemnify, hold harmless, and defend the Sublicensor, and its officers, directors,
employees, and agents, (collectively, “Sublicensor Indemnitees”) against any and all claims, demands, actions,
suits, losses, damages (including without limitation investigative costs, court costs, and attorneys’ fees), costs, fees, and
expenses arising from third party claims resulting from or arising out of, (i) any material breach of this Agreement by
Sublicensee, (ii) the gross negligence, intentional omission, or willful misconduct of Sublicensee, any permitted Sublicensee or
affiliate or any employees, agents or representatives of Sublicensee, and (iii) death or injury to any person and damage to any
property arising from the possession, manufacture, use or operation of Licensed Products produced or sold by Sublicensee or its
affiliates, sublicensees or their customers in any manner whatsoever.
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7.3.2.
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Sublicensor will indemnify, hold harmless, and defend the Sublicensee, and its officers, directors,
employees, and agents, (collectively, “Sublicensee Indemnitees”) against any and all claims, demands, actions,
suits, losses, damages (including without limitation investigative costs, court costs, and attorneys’ fees), costs, fees, and
expenses arising from third party claims resulting from or arising out of, (i) any material breach of this Agreement by
Sublicensor, and (ii) the gross negligence, intentional omission, or willful misconduct of Sublicensor or any employees, agents or
representatives of Sublicensor.
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7.3.3.
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The
party seeking indemnification under this Article 7 (an “Indemnified Party”) shall give prompt written notification
to the party from whom indemnification is sought (the “Indemnifying Party”) of any claim, suit, action or demand for
which indemnification is sought under this Agreement; provided, however, that no delay or failure on the part of an Indemnified Party
in so notifying the Indemnifying Party shall relieve the Indemnifying Party of any liability or obligation hereunder except to the extent
of any damage or liability caused by or arising out of such delay or failure. Within thirty (30) days after delivery of such notification,
the Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the defense of such claim suit, action
or demand with counsel reasonably satisfactory to the Indemnified Party. If the Indemnifying Party does not assume control of such defense,
the Indemnified Party shall control such defense. The party not controlling such defense may participate therein with counsel of its
own choosing at its own expense; provided that, the Indemnified Party shall have the right to retain its own counsel, at the expense
of the Indemnifying Party, if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate
because of actual or potential differences in the interests of such Indemnified Party and any other party represented by such counsel.
The Indemnified Party shall not agree to any settlement of such action, suit, proceeding or claim without the prior written consent of
the Indemnifying Party, which shall not be unreasonably withheld, delayed or conditioned.
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Insurance.
Sublicensee shall during the term of this Agreement maintain in full force and effect insurance policies and contractually assumed
liabilities in the amount of [***] and shall, upon reasonable request by Sublicensor no more than once each year, provide to
Sublicensor
evidence of such policies. Sublicensee shall place appropriate product liability insurance prior to final regulatory
approval. With respect to one or more Licensed Products, and if requested by Sublicensor, such insurance policies shall name
Sublicensor as an additional insured.
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7.4.
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Amendments of UTokyo License. Sublicensor will not amend any terms or conditions of the
UTokyo License in a manner that is reasonably likely to adversely affect Sublicensee’s rights hereunder, without written
approval of Sublicensee.
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8.
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Limitations. EXCEPT FOR THE EXPRESS WARRANITIES IN SECTION 7, NEITHER PARTY MAKES, AND
EACH PARTY SPECIFICALLY DISCLAIMS, ANY WARRANTIES, EXPRESS OR IMPLIED, IN FACT OR BY OPERATION OF LAW, STATUTORY OR OTHERWISE,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, EFFICACY, AND NON-INFRINGEMENT. EXCEPT FOR (A)
DAMAGES FOR VIOLATIONS OF THE CONFIDENTIALITY OBLIGATIONS UNDER THIS AGREEMENT, (B) AMOUNTS FINALLY AWARDED FOR INDEMNIFICATION FOR
THIRD PARTY CLAIMS UNDER SECTION 7.3 HEREOF AND (C) DAMAGES FOR A PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, NEITHER
PARTY SHALL BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES
(INCLUDING LOST OR ANTICIPATED PROFITS RELATING TO THE SAME) ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH
CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED
OF THE POSSIBILITY OR LIKELIHOOD OF SAME.
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9.
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Maintenance of Licensed Patents
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9.1.
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Notifications. Notifications from government agencies or agents to Sublicensor concerning
procedures for the acquisition of rights for the Licensed Rights in the Licensed Territories and procedures for the maintenance of
the Licensed Patents shall be provided directly to Sublicensee from such government agency and Sublicensee shall have the first
right to control the preparation, filing, prosecution, extension and maintenance of patent rights within the Licensed Rights. To
the extent that government agencies or agents require Sublicensor to control such procedures, Sublicensor shall conduct said
procedures following consultation with, and the prior written consent of, Sublicensee.
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9.2.
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Consultation. Sublicensee may at any time request consultation concerning the procedures for the
acquisition of rights for the Licensed Rights in the Licensed Territories. Sublicensor shall reasonably respond to these requests and
conduct these procedures after obtaining the consent of Sublicensee.
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9.3.
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Expenses. During the Term, Sublicensee shall be responsible for the expenses (including
expenses for work requested of third parties including patent attorneys, attorneys and local agents outside of the United States as
well as translation expenses) required for the acquisition of rights for the Licensed Rights in the Licensed
Territories as well as the maintenance of patent rights within the Licensed Rights. If Sublicensor makes any such payment on behalf
of Sublicensee in advance, Sublicensor shall obtain the prior written consent of Sublicensee for the advance payment total and the
payment details and Sublicensee shall reimburse Sublicensor for such pre-approved expenses.
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9.4.
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Patent Decisions. Regarding the Licensed Patents, if there has been a final rejection, trial
decision of refusal, a filing of opposition to the granting of a patent, a revocation decision, a request for a trial for patent
invalidation, a trial decision to invalidate a patent, or a revocation decision or a decision to invalidate a patent has been
confirmed or a request has been rejected, and circumstances impacting the Licensed Rights have arisen, Sublicensor shall immediately
notify Sublicensee of such facts.
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9.5.
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No Abandonment. Sublicensor shall not abandon rights to any of the Licensed Patents without
the prior written consent of Sublicensee.
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9.6.
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Revisions. Sublicensor shall obtain the prior written consent of Sublicensee if revising specifications
and drawings pertaining to the Licensed Patents.
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9.7.
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Responsibility for Licensed Patents. Notwithstanding anything herein to the contrary,
Sublicensee will control and be responsible for preparing, filing, prosecuting, extending and maintaining patent rights within the
Licensed Patents in the Licensed Territories. Sublicensee will have the first right to defend such patent rights and enforce them
within the scope of this Agreement.
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10.1.
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Term. The term of this Agreement shall begin on the Effective Date and shall, unless earlier
terminated as provided herein, continue until the later of March 31, 2027 or the last-to-expire Valid Claim claiming or covering a
Licensed Product under this Agreement expires.
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10.2.
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Sublicensor’s Right to Terminate. Under the following circumstances, in addition to any
other rights of Sublicensor hereunder, Sublicensor may terminate this Agreement upon (30) day’s prior notice to Sublicensee
without incurring any liability if:
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10.2.1. Sublicensee
has not made a payment of an amount not subject to a good faith dispute as provided for in this Agreement within sixty (60) days
after such payment becomes due, or if Sublicensee otherwise materially breaches any term of this Agreement and does not cure such
breach within thirty (30) days of receiving written notice thereof from Sublicensor.
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10.3.
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Sublicensee’s Right to Terminate. In addition to any other rights of Sublicensee hereunder,
Sublicensee may terminate this Agreement:
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10.3.1.
Upon ninety (90) days prior written notice to Sublicensor without incurring any liability if any third party brings a claim against
Sublicensee over the Licensed Patents or the Technology Information, which the parties reasonably believe may render achievement of their
intent under this Agreement impossible, and such claim is not settled by Sublicensor within ninety (90) days;
10.3.2.
Upon sixty (60) days prior written notice.
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10.4.
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The parties agree that in the event of any termination of the UTokyo License with respect to any
Licensed Rights sublicensed to Sublicensee hereunder, Sublicensee shall have any rights available under the UTokyo License to become
a direct licensee of the licensor under such UTokyo License, and Sublicensor shall use its good faith efforts to assist Sublicensee
in exercising such rights.
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11.1.
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Definition of Confidential Information. “Confidential Information” shall
mean proprietary or confidential information provided or disclosed by or on behalf of one party (the “Disclosing
Party”) to the other party (the “Recipient”) in connection with this Agreement, regardless of the
medium that (a) is orally disclosed and indicated at the time of disclosure to be confidential or is confirmed in writing within
fourteen (14) days of disclosure to be confidential, or (b) information not disclosed by verbal means that is marked as confidential
or proprietary, or (c) that would otherwise be understood to be confidential or proprietary by a reasonable person familiar with the
Disclosing Party’s industry due to the nature and context of the disclosure. Confidential Information that falls under any
of the following items shall be excluded from the definition of Confidential Information: (i) information already in the
possession of the Recipient at the time of provision or disclosure; (ii) information already publicly known at the time of provision
or disclosure; (iii) information that became publicly known not due to the responsibility of the Recipient after provision or
disclosure: (iv) information lawfully obtained from a third party with valid authority and no obligation of confidentiality to
the Disclosing Party; (v) information independently developed by the Recipient without use of or reference to the Disclosing
Party’s Confidential Information; or (vi) information with prior written consent to use or disclose from the Disclosing
Party. The Recipient shall not use the Disclosing Party’s Confidential Information for any purpose other than to exercise
its right or perform its obligations under this Agreement. The Recipient shall protect the confidentiality of the Disclosing
Party’s Confidential Information using at least the same degree of care that it uses to protect its own confidential
information of a similar nature, but in no event less than a reasonable degree of care. This Section 11 shall survive the
expiration or termination of this Agreement for any reason for a period of five (5) years; provided, however, that this period
can be lengthened or shortened upon written agreement between Sublicensor and Sublicensee. Nothing in this Agreement shall
prohibit the Sublicensor from communicating certain terms of this Agreement to UTokyo to the extent necessary to comply with its
obligations under the UTokyo License.
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11.2.
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Third Party Disclosure. Neither party shall disclose the Disclosing Party’s Confidential
Information to any party except its own executives, employees, Inventors and agents (including patent attorneys, attorneys, certified
public accountants, tax accountants and consultants) who have a need to know such Confidential Information for the purpose of exercising
the Recipient’s rights or performing the Recipient’s obligations under this Agreement and who have entered into a written
confidentiality agreement with Recipient with provisions at least as restrictive as this
Article 11 or who are subject to fiduciary obligations of nondisclosure and non-use.
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11.3.
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Required Disclosure. Either party lawfully ordered to disclose the Disclosing Party’s
Confidential Information by a court or government agency, may disclose such information to said court or government agency on
the condition that: (i) such party notifies the other party of the details of the disclosure beforehand if legally permitted; (ii)
the disclosure is limited to what has been legally ordered; and (iii) when making the disclosure, confidential treatment is
requested for such information.
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12.1.
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Assignment. This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors, and permitted assigns. This Agreement shall be personal to each of the Sublicensee and
Sublicensor and assignable or otherwise transferable only with the prior written consent of the other party, provided, however, that
either party may assign or transfer this Agreement without the other party’s consent to an affiliate or to a successor by way
of merger, consolidation or sale of all or substantially all of the assets to which this Agreement relates.
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12.2.
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Notices. All notices and payments required or contemplated hereunder by one party to the
other shall be in writing and shall be deemed to have been duly made and given upon delivery if in person or by mailing if mailed by
first-class mail, postage prepaid, and addressed as follows:
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to Sublicensor: Tokyo Twin Parks 25-26
FL (2505),
Higashi-Shinbashi
1-10-2, Minato-ku, Tokyo 105-0021 Japan,
to Sublicensee: Century Therapeutics,
LLC
3675 Market St.
Philadelphia, PA
19104
Attn: Janelle R.
Anderson
Either party may change its address for
the purpose of this Agreement by notice in writing to the other party.
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12.3.
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Entire Agreement: Amendment. This Agreement constitutes the entire agreement between the parties
respecting the subject matter hereof and shall not be modified, amended, or terminated except as provided herein or except by another
agreement in writing executed by an authorized representative of each of the parties hereto.
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12.4.
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Applicable Law; Venue. This Agreement shall be governed, construed, and enforced in
accordance with the laws of the State of California, United States of America, without application of its conflicts of laws
principles. Each party irrevocably agrees, consents and submits to jurisdiction and venue in the federal and state courts in San
Francisco, California, with respect to any dispute arising out of or relating in any way to this Agreement.
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12.5.
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No Partnership. Nothing in this Agreement shall be construed as creating or constituting a joint
venture, partnership, employment relationship, or franchise between Sublicensor and Sublicensee.
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12.6.
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Severability. All rights and restrictions contained in this Agreement may be exercised and
shall be applicable and binding only to the extent that they do not violate any applicable laws and are intended to be limited to
the extent necessary so that they will not render this Agreement illegal, invalid or unenforceable. If any term of this
Agreement shall be held to be illegal, invalid, or unenforceable, it is the intention of the parties that the remaining parts
hereof shall constitute their Agreement with respect to the subject matter hereof and all of its remaining terms shall be in full
force and effect.
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12.7.
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Waiver. Waiver by either party of any term or provision of this Agreement shall not
constitute a continuing waiver thereof nor of any further or additional rights such party may hold under this Agreement.
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12.8.
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Hearings. Article and Section headings have been inserted herein for convenience of reference
only and shall in no way modify or restrict any of the terms or provisions of this Agreement.
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12.9.
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Survival. The provisions of Articles 1, 5, 7.3, 8, 10.4, 11, and 12 shall survive and remain
valid even after the expiration or termination of the Agreement (regardless of the reason for termination). Clauses with a surviving
period of validity clearly stated in the Agreement shall remain valid for said period even after the expiration or termination
of the Agreement (regardless of the reason for termination).
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12.10.
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Export. Sublicensee acknowledges that the Licensed Products may be subject to United States
laws and regulations controlling the export of technical data, biological materials, chemical compositions, computer software,
laboratory prototypes and other commodities and that Sublicensee shall be responsible for compliance with applicable United States
export laws and regulations.
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12.11.
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Counterparts. This Agreement may be executed in counterparts and by facsimile or electronic means
each of which shall be an original and together one and the same instrument.
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[Signatures Appear on Following Page]
IN WITNESS WHEREOF, the parties
hereto have affixed their signatures as of the Effective Date.
SUBLICENSOR
iCELL Inc.
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By:
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/s/ Genjiro Miwa
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Name: Genjiro Miwa
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Title: Representative Director
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SUBLICENSEE
Century Therapeutics, LLC
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By:
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/s/ Osvaldo Flores
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Name: Osvaldo (Lalo) Flores, PhD
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Title: Chief Executive Officer
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Exhibit A
TABLE OF PATENTS LICENSED FROM THE UNIVERSITY OF
TOKYO
[***]
Schedule 1
UTOKYO LICENSE
Exhibit 10.28
[***] Certain information in this document has
been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and the registrant customarily and
actually treats as private and confidential.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT is made and effective
as of the 22 day of January 2019 (the “Effective Date”)
BETWEEN:
THE GOVERNING COUNCIL OF THE UNIVERSITY
OF TORONTO, a corporation vested with the government, management and control of the University of Toronto by the University of
Toronto Act, 1971 and having offices at Banting Institute, 100 College Street, Suite 413, Toronto, Ontario M5G 1L5, Canada
(hereinafter refer to as “UT”)
THE MCMASTER UNIVERSITY, having an
office at 1280 Main Street West, Hamilton, Ontario, L8S 4L8
(hereinafter refer to as “MAC”)
(UT and MAC together hereinafter referred
to as the “INSTITUTIONS”)
- and -
EMPIRICA THERAPEUTICS an Ontario corporation,
having an office at McMaster Innovation Park, Suite 305, 175
Longwood Road South, Hamilton, ON L8P 0A1
(hereinafter refer to as “EMPIRICA”)
WHEREAS the INSTITUTIONS have granted EMPIRICA
an Option to License and Term Sheet dated October 24, 2018 attached to this Agreement as Schedule “A” (“Term Sheet”)
to obtain an exclusive license to commercialize the Intellectual Property Rights disclosed by the INSTITUTIONS to EMPIRICA;
WHEREAS EMPIRICA exercised its option in
accordance with the Term Sheet on 22 January 2019;
WHEREAS UT, under a separate agreement,
has contracted the Centre for the Commercialization of Antibodies and Biologics (“CCAB”) to perform certain commercialization
services on behalf of UT, including the negotiation of commercial agreements and management of intellectual property;
WHEREAS the INSTITUTIONS have assigned
CCAB as the commercialization agent for the collaboration between UT and MAC under the Collaboration and Material Exchange Agreement UT2017-0514,
and shall continue to act as the Representative for the INSTITUTIONS in the administration of this Agreement;
NOW THEREFORE in consideration of the premises
and the mutual covenants, terms and conditions contained herein, and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the Parties hereto agree as follows:
Article
1
INTERPRETATION
In this Agreement, the following terms have the
meanings set forth below:
“Affiliates” shall mean, with
respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with the first Person.
The term “control” means the ability to direct the management and policies of such Person, whether through ownership of equity,
by contract or otherwise;
“Agreement” means this license
agreement including all attached schedules, as the same may be supplemented, amended, restated or replaced in writing from time to time;
“Antibody” means a composition
of matter that contains complementarity determining regions, including any antibody and any and all antigen binding domains or sequences
or portions, variants, fragments or derivatives thereof (e.g., chimeric, humanized, human, non-human, single chain, monovalent, divalent,
bispecific, polyvalent, multi-specific, unmodified, modified, or conjugates) and includes full length-immunoglobulins’.
“Antibody Sequences” means
sequence data (including nucleic acid and peptide) for any and all Antibodies resulting from the screening of Antibody panels against
cell surface receptor targets and including sequence data for any Antibodies having documented lineage (with respect to an Antibody, that
such Antibody has lineage derived from a predecessor Antibody as documented in lab notebooks or in regulatory filings) to such Antibodies.
“Beneficiaries” means the INSTITUTIONS
and their Affiliates, as applicable, and the INSTITUTIONS’ current, former and future trustees, board members, officers, employees,
appointees, faculty, professional staff, consultants, affiliated corporations and agents and their respective heirs, successors and assigns
and “Beneficiary” means one of them;
“Best Efforts” means the efforts
that a prudent person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditiously
as possible; provided, however, that an obligation to use best efforts under this Agreement
does not require the person subject to that
obligation to take actions that would result in a materially adverse change in the benefits to such person of this Agreement;
“Calendar Year” means January
1st through to December 31st;
“Commercially Reasonable Efforts”
shall mean reasonable, diligent, good-faith efforts to accomplish an objective comparable to the efforts commonly used by similarly situated
Persons to accomplish a similar objective under similar circumstances for products owned by it or to which it has rights having similar
sales potential, at a similar stage in development or product life, and taking into account relevant product and business considerations,
including product profile, regulation, costs and competitive environment;
“Confidential Information”
means the specific terms and conditions set forth in this Agreement, the Know-how, and any information, which is non-public, confidential
or proprietary in nature, including, without limitation, business information, trade secrets, and any information related to any Licensed
Product or Therapeutic Products, whether written, oral or in electronic form, provided that tangible materials are marked as confidential,
and provided that information given orally is identified as confidential at the time of disclosure, and confirmed as confidential in writing
within fifteen (15) days, but shall not include information that:
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(a)
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is or becomes generally available to the public other than as a result of any act by a receiving Party
to this Agreement;
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(b)
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is rightfully received from a Third Party without similar restriction or without breach of this Agreement;
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(c)
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a receiving Party is able to demonstrate, in writing, was known to it on a non-confidential basis; or
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(d)
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was independently developed by a receiving Party without the use of any of the Confidential Information.
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“Diagnostic Product” means
any Licensed Product or derivative thereof, sold, used, manufactured or distributed by EMPIRICA, its Affiliates, any Sub-Licensees under
this Agreement, as part of a diagnostic product anywhere in the Territory;
“Encumbrance” means any mortgage,
charge, pledge, hypothecation, lien, encumbrance, restriction, option or security interest of any kind and “Encumber”
means to create an Encumbrance;
“Field of Use” shall mean therapeutic
and diagnostic use for all indications;
“First Commercial Sale” means
the first sale of a Therapeutic Products in the Territory (as hereinafter defined), by EMPIRICA, its Affiliates, or any Sub-Licensees
to any Third Party;
“Intellectual Property Rights”
means all patents, patent applications, copyrights, trademarks, trade-names, and other intangible property rights, whether registered
or not;
“Inventor(s)” means any individual
listed as an inventor on any Patent or Licensed Inventions;
“Know-how” means any and all
trade secrets, technical expertise, knowledge, and confidential information specifically relating to the Licensed Inventions. For the
avoidance of doubt, this excludes Know-how that apply to other technologies not covered by this Agreement;
“Licensed Inventions” means
the Patents and Antibody Sequences described in Schedule “B”, any related Intellectual Property Rights
and Know-how, including but not limited to:
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(a)
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Antibody Sequences that are at least 70% homologous at the amino acid level to the complementarity-determining
regions (CDR) of the Antibody Sequences set forth in Schedule B;
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(b)
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any continuations of the patent applications identified in Schedule “B”, including
divisionals, continuations and continuation-in-part applications, except in any subject-matter or claim of continuation-in-part applications
which is not disclosed nor enabled in patent applications thereof;
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(c)
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any patents or patent applications, in any jurisdiction, corresponding to Patents in Schedule “B”;
except in any issued patent claims, arising from continuation-in-part applications, of which the subject-matter is not disclosed nor enabled
in the patent applications disclosed in Schedule “B”.
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“Licensed Products” means any
Antibody or Antibody Sequences derived technology including but not limited to BiTE and Bi-Specific or engineered T-Cells including but
not limited to chimeric antigen receptors (CAR-Ts) derived in whole or in part from the Licensed Inventions;
“Milestone Payments” has the
meaning attributed in Subsection 3.2.1;
“Net Sales” means the total
of the gross invoice price (including, without limitation, the fair market value of any non-cash consideration received directly in connection
therewith) of Therapeutic Products sold by EMPIRICA, its Affiliates and Sub-Licensees, or any combination thereof, in the Territory, minus
the sum of the following actual and customary industry deductions where applicable as follows:
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(a)
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normal trade and cash discounts;
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(b)
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rebates and chargebacks to customers and Third Parties (including Medicare, Medicaid, TriCare, Managed
Healthcare);
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(c)
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any amounts recorded in gross revenue associated with goods provided to customers for free - with the
exception of samples;
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(d)
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amounts paid or credited to customers through coupons, other discount programs and co-pay assistance programs;
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(e)
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credits, rebates or allowances because of damaged goods or returns with respect to Therapeutic Products;
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(f)
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freight, postage, shipping and insurance charges incurred in transporting the Therapeutic Products to
the end customer;
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(g)
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taxes, duties, tariffs, or other governmental charges (other than income taxes) levied on, absorbed or
otherwise imposed on sales of Therapeutic Products; and
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A sale will be deemed to have occurred
on the day when EMPIRICA, its Affiliates or any Sub-Licensees receive payment for the sold Therapeutic Products.
“Parties” means the INSTITUTIONS
and EMPIRICA collectively, and “Party” means one of them, including UT and/or MAC;
“Patents” means the patents
and/or patent applications listed in Schedule “B”, as may be updated from time to time, and shall include any divisional,
re-examination or renewal based on the said patents and /or patent applications, any patents which may issue on, from, or as a result
of, any of the foregoing and any reissue of said patents;
“Person” means any individual,
sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate
and/or a natural person in his or her capacity as trustee, executor, administrator or other legal representative;
“Prime Rate” means the rate
of interest expressed as a rate per annum that the Canadian Imperial Bank of Commerce establishes at its head office in Toronto as the
reference rate of interest that it will charge on a specified day for demand loans and which it at present refers to as its prime rate;
“EMPIRICA Improvements” means
any modifications, enhancements, upgrades or additions to the Licensed Inventions made or created solely by or for EMPIRICA;
“Phase I clinical trial” means
a human clinical trial with the first testing in humans to test the safety, side effects, best dose, and formulation method for a product;
“Phase II clinical trial”
means a human clinical trial or the adaptation of an existing human clinical trial in any country of a product, for which the
primary endpoints include
a determination of dose ranges and/or a preliminary determination of efficacy and/or pharmacodynamic
activity. A Phase II Trial includes: (i) a small scale Phase II Trial or a portion of Phase II thereof in which a human clinical
trial is performed, the primary purpose of which is to estimate the biologic or clinical effect of a pharmaceutical product in a
target population (known as a Phase IIa Study); and (ii) a Phase II Trial or a portion of Phase II thereof in which a placebo or
active drug controlled, randomized human clinical trial is performed to gain evidence of the efficacy of a pharmaceutical product in
a target population, and/or to establish the optimal dosing regimen for such product and any other clinical trial that is not a
Phase I Trial, Phase IIa Trial or Phase III Trial (known as a Phase IIb Trial).
“Phase III clinical trial”
means a large scale, pivotal, usually multicentred human clinical trial that is prospectively designed to demonstrate statistically whether
a product is safe and effective for use in humans in a manner sufficient to obtain regulatory approval to market such product in patients
having the disease or condition being studied. A Phase III trial also includes any well controlled study intended to provide the substantial
evidence of efficacy necessary to support an NDA (New Drug Application) Filing (such as a combined Phase II/Phase III Trial, or any Phase
III Trial in lieu of a Phase II Trial), whether or not such study is a traditional Phase III Trial.
“Reporting Period” shall mean
each three-month period ending March 31, June 30, September 30 and December 31;
“Representative(s)” means board
members, officers, employees, professional advisors, consultants, and agents of a Party; and in the case of INSTITUTIONS the Representatives
shall be appointed by UT and MAC;
“Royalty Payments” means Royalty
Payments calculated for Therapeutic Products;
“Semi-annual Period” means
the periods of time beginning on January 1 and ending on June 30 and beginning on July 1 and ending on December 31 of each year;
“Sub-Licensees” means a Third
Party licensed by EMPIRICA or an Affiliate of EMPIRICA and includes but not limited to joint venture, co-development and other equivalent
relationships but excludes distributor relationships;
“Term” means a period of 20
years commencing on the Effective Date or terminating on the last to expire Valid Claim within the Licensed Inventions covering such Licensed
Product in such country;
“Territory” means each and
every country of the world;
“Therapeutic Products” means
any Licensed Products or derivatives thereof, sold, used, manufactured or distributed by EMPIRICA, its Affiliates, any Sub-Licensees under
this Agreement as a therapeutic product anywhere in the Territory;
“Third Party” means, in respect
of a Party, a Person who deals with such Party at arm’s length, as that term is defined in the Income Tax Act (Canada) on
the date hereof; and
“Valid Claim” means, on a country
by country basis, a claim in: (a) any issued and unexpired Patents which has not been permanently revoked or held unenforceable, unpatentable
or invalid by a decision of a court or other governmental agency of competent jurisdiction, which decision is unappealable or not appealed
within the time allowed for appeal, has not been donated to the public and has not been cancelled, withdrawn, abandoned, disclaimed or
admitted to be invalid or unenforceable through reissue, disclaimer or otherwise; or (b) pending Patents that (i) have been filed in good
faith, that (ii) have not been cancelled, withdrawn, finally rejected, expired or abandoned without the possibility of an appeal or refiling,
or ten (10) years after the earliest priority filing date for any such application.
“Voting Common Shares” -
means Voting Common Shares in the capital of Empirica Therapeutics
The division of this Agreement into articles,
sections, subsections and schedules and the insertion of headings are for convenience of reference only and shall not affect the construction
or interpretation of this Agreement. The article, section, subsection and schedule headings in this Agreement are not intended to be full
or precise descriptions of the text to which they refer and are not to be considered part of this Agreement. All uses of the words “hereto”,
“herein”, “hereof”, “hereby” and “hereunder” and similar expressions refer to this Agreement
and not to any particular section or portion of it. References to an Article, Section, Subsection or Schedule refer to the applicable
article, section, subsection or schedule of this Agreement unless explicitly noted otherwise.
Unless specified otherwise, all statements of
or references to dollar amounts in this Agreement are to lawful money of the United States.
1.4 Schedules
The following schedules are attached to and incorporated
by reference into this Agreement:
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Schedule “A”
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Option to License and Term Sheet dated October 24, 2018
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Schedule “B”
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Licensed Inventions
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Article
2
TECHNOLOGY LICENSE
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(a)
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Subject to the terms and conditions of this Agreement, the INSTITUTIONS hereby grant to EMPIRICA an exclusive,
non- transferable, sub-licensable license to the Licensed Inventions throughout the Territory in the Field of Use to:
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(i)
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reproduce, manufacture, have made, use, import, offer for sale and sell any Therapeutic Products and to
export any Therapeutic Products;
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(ii)
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engage vendors, contractors, sub-contractors or other parties to reproduce or make components of subsystems
that incorporate or embody or that are derived from any parts of the Licensed Inventions to be used or sold by EMPIRICA;
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(iii)
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copy, translate or modify any artistic or literary works, including drawings or software relating to the
Licensed Inventions;
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(iv)
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otherwise practice the Licensed Inventions (including making improvements as described at Section 4.4);
and
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(v)
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grant sub-licenses of all rights set out in Paragraphs 2.1(a)(i) through 2.l(a)(v) provided that:
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x)
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EMPIRICA shall have the right to audit the books and records of each such Sub-Licensee in the same manner
as the INSTITUTIONS as per Section 3.5(e); and
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y)
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any such sub-licenses shall also be subject to Section 2.2.
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(b)
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Notwithstanding any other provision, EMPIRICA, its Affiliates, and all Sub-Licensees shall reproduce,
manufacture, have made, import, sell, and export the Therapeutic Products in accordance with recognized best practices, including but
not limited to good manufacturing practices for any Therapeutic Products.
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When sub-licensing any rights under this Agreement
to any Sub-Licensee, EMPIRICA shall:
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(a)
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promptly notify the Representatives of INSTITUTIONS of proposed terms of all sub-license agreements and
the identity of the parties thereto;
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(b)
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not grant any royalty-free sub-licenses or any sub-licenses for consideration less than fair market value;
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(c)
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grant sub-licenses solely to Third Parties by written contract and Affiliates of EMPIRICA;
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(d)
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not grant any irrevocable sub-licenses;
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(e)
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ensure that all Sub-Licensees are bound by terms consistent with those in Sections 2.1(b) (Grant of License),
2.2 (Sub-Licensing), 2.3 (Reserved Rights), 2.4 (License Restrictions), 3.5 (Accounting and Records), 4.1 (Ownership), 4.6 (Infringement),
4.6 (Confidentiality), 5.3 (Indemnity), 5.4 (Insurance), 5.5 (Limitation of Liability), and Article 7 (General Provisions) herein;
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(f)
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ensure that Sub-Licensees do not Encumber any Licensed Inventions or apply for any intellectual property
registrations in respect of the Licensed Inventions;
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(g)
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provide the Representatives of INSTITUTIONS with reasonable access, at the INSTITUTIONS’ cost and
expense, to books and records during ordinary business hours in order that the INSTITUTIONS can assure itself that EMPIRICA’s obligations
under this Section 2.2 are fulfilled; and
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(h)
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promptly provide the Representatives of INSTITUTIONS with a copy of each sub-license agreement following
the execution of such agreements.
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EMPIRICA acknowledges that the INSTITUTIONS on
behalf of themselves and on behalf of the Inventors have reserved a royalty-free, non-exclusive perpetual irrevocable license to use the
Licensed Inventions for non-commercial research, educational and administrative purposes.
EMPIRICA acknowledges and agrees that EMPIRICA,
its Affiliates and all Sub-Licensees:
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(a)
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shall not use the Licensed Inventions or advertise, promote, market or otherwise offer Therapeutic Products
for sale in any manner which will adversely affect the reputation of the INSTITUTIONS;
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(b)
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shall not, at any time, use the Licensed Inventions for any purpose except as authorized by this Agreement,
nor in any manner likely to negate,
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impair or dilute any of the rights of
the INSTITUTIONS as owners of the Licensed Inventions;
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(c)
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shall not, at any time, directly or indirectly, dispute or contest:
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(i)
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the validity or enforceability of the INSTITUTIONS’ Intellectual Property Rights in the Licensed
Inventions; or
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(ii)
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the ownership rights of the INSTITUTIONS in and to the Licensed Inventions.
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Article
3
consideration
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3.1.1
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Upfront License Fee.
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(a)
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There shall be upon execution of this Agreement, an issuance by EMPIRICA in favour of the Representative
of the INSTITUTIONS of the number of Voting Common Shares equal to 5% of the issued and outstanding shares in the capital of EMPIRICA,
on an as converted and fully-diluted basis (calculating at the time of issuance and including those shares contemplated to be issued under
this fee structure option) (“Equity Consideration”);
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(b)
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Each of the Representative of the INSTITUTIONS shall, prior to receiving the Equity Consideration, sign
and deliver to EMPIRICA an adoption agreement or counterpart and acknowledgement to EMPIRICA’S Shareholders Agreement and any other
agreement that the company requires a holder of Voting Common Shares to sign in form and substance satisfactory to EMPIRICA.
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3.2
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Milestone Payments and Royalty
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3.2.1
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Milestone Payment. EMPIRICA shall pay to the Representative of the INSTITUTIONS the following
“Milestone Payments” for each of the Therapeutic Products to achieve a specified milestone, as applicable:
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Products Royalty Payments.
EMPIRICA shall pay to the Representative of the INSTITUTIONS a royalty rate of [***] of the Net Sales by EMPIRICA for each of the Therapeutic
Products or Diagnostic Products.
If EMPIRICA provides the Representative
of the INSTITUTIONS with reasonably satisfactory evidence that it is required to license a Third Party’s technology in order to
commercialize the Licensed Invention, then, upon written approval by the INSTITUTIONS, EMPIRICA shall be entitled to deduct such Third
Party royalties from the INSTITUTIONS’ Products Royalty Payments up to a maximum of [***] of the INSTITUTIONS’ Royalty Payments,
provided that in no event shall such Royalty Payments be less than [***] for annual Net Sales.
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3.3
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Sub-License Fee Payments
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3.3.1
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Sub-License Fees. In the event of sub-licensing, EMPIRICA shall pay to the Representative
of the INSTITUTIONS [***] on all non-royalty payments received by EMPIRICA from the Sub-Licensee for each of the Therapeutic Products
as set out below:
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(i)
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All cumulative payments received by Empirica up to and including [***];
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(ii)
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All cumulative payments received by Empirica after [***];
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(iii)
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All cumulative payments received by Empirica after [***];
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(iv)
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All cumulative payments received by Empirica [***];
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(v)
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All cumulative payments received by Empirica [***]
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; and
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(vi)
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All cumulative payments received by Empirica [***].
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Sub-License Fees accrued to the Institutions
at the amount specified by milestone (i), (ii), and (iii) defined here in Section 3.3.1 for each of the Therapeutic Products prior to
sub-licensing and are payable by Empirica upon entering into a definitive sub-license agreement.
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3.3.2
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Sub-License Royalties. Where Net Sales Revenue-based royalties are paid in accordance with
a Sublicense, the INSTITUTIONS shall receive [***] flow through Product Royalty Payments from Empirica to a maximum of [***] of Net Sales.
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3.4
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Reports. EMPIRICA shall use Commercially Reasonable Efforts to develop,
promote, market and sell Therapeutic Products or to sub-license Licensed Inventions or Therapeutic Products to a commercial partner in
accordance with the terms of this Agreement.
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3.4.1
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Status Reports. Subject to any applicable federal, provincial, or state privacy laws or
regulations, EMPIRICA shall provide the Representatives of the INSTITUTIONS with the following reports within thirty (30) days following
each Calendar Year during the Term:
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(a)
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a commercialization status report for each of the Therapeutic Products, disclosing a summary of regulatory,
marketing and sales progress (containing sufficient detail acceptable to Representatives of INSTITUTIONS, acting reasonably) obtained
during the preceding twelve (12) month period;
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(b)
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an updated business plan as it relates to the portfolio of Therapeutic Products; and
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(c)
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a written disclosure of all EMPIRICA Improvements (if any).
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together the “Annual Reports”
If any of the Therapeutic Products are
available for sale at the end of the relevant Annual Period, the corresponding Annual Report for said Therapeutic Products shall not be
required.
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3.4.2
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Sales Reports. EMPIRICA shall report to the Representatives of the INSTITUTIONS the date
of the First Commercial Sale in each country of the Territory of any Therapeutic Products on which Royalty Payments are payable hereunder
within [***] after each such occurrence. Following the First Commercial Sale, EMPIRICA shall deliver to the Representatives of the INSTITUTIONS,
within [***] after the end of each Reporting Period, a report under this Section 3.54, which report shall be certified as correct by an
officer of EMPIRICA and shall contain at least the following information as may be pertinent to a royalty accounting and fees payable
hereunder for the immediately preceding Reporting Period:
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(a)
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the quantity of Therapeutic Products on which any Royalty Payments or Sub-License Royalty Payments is
payable hereunder sold by EMPIRICA, its Affiliates and Sub-Licensees in each country;
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(b)
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calculation of Net Sales for the applicable Reporting Period in each country, including an itemized listing
of offsets and deductions as permitted under the definition of Net Sales (provided that in the case of sub-licenses, this obligation shall
apply only to the extent such itemized listing of permitted offsets and deductions is available from Sub-Licensees under the terms of
the relevant sub-license);
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(c)
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total royalties payable on Net Sales in US dollars, together with the exchange rates and sources for such
rates used for conversion; and
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(d)
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Sub-License Fee Payments and any other fees due to the INSTITUTIONS under this Agreement.
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If no amounts are due to the INSTITUTIONS
for any Reporting Period, the report shall state so.
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3.5
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Accounting and Records
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(a)
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The Royalty Payments and the Sub-License Fee Payments (collectively the “Fees”) under
Sections 3.2 and 3.3 are to be paid by EMPIRICA to CCAB on a semi-annual basis and shall be made within ninety (90) days following the
last day of each Semi-annual Period in which such Fees become due and payable pursuant to this Agreement. For clarity, Therapeutic Products
shall be deemed to have been sold under this Agreement (and under any sub-license) when Therapeutic Products are delivered and payment
is received by EMPIRICA.
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(b)
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The Parties acknowledge that the royalties and fees payable hereunder for all sales of Therapeutic Products
within Canada are subject to tax under Part IX of the Excise Tax Act (Canada) (“GST/HST”). The INSTITUTIONS
is registered to collect GST/HST under registration
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number R108162330 for UT and R119035988
for MAC. EMPIRICA hereby agrees to provide to the Representatives of INSTITUTIONS a statement as to EMPIRICA applicable value-added tax
status and to remit such amounts to the INSTITUTIONS as required by law.
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(c)
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Fees paid to the INSTITUTIONS shall be free and clear of all taxes, except those taxes EMPIRICA is required
by law to withhold.
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(d)
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EMPIRICA agrees to keep complete and maintain accurate books of account in which the particulars of all
sales of the Therapeutic Products are recorded in sufficient detail to enable Fees payable to be determined.
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(e)
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The INSTITUTIONS’ authorized Representatives shall have the right at any time, upon ten (10) days
prior written notice, to audit EMPIRICA’s books and accounting records and any documents or other materials in the possession or
under the control of EMPIRICA relating to the sales and accounting, but only with respect to the Therapeutic Products. The Representatives
of the INSTITUTIONS reserve the right to confirm any information gleaned in the course of such audit with any Person that has purchased
any Therapeutic Products from EMPIRICA to verify the accuracy of EMPIRICA’s calculation of Fees and compliance with this Agreement.
EMPIRICA shall preserve and make available to the Representatives of INSTITUTIONS all relevant books and records, documents, contracts,
and other data (including reports of audits undertaken by EMPIRICA of the books and records of its own Sub-Licensees) for a period of
six (6) years from the date of each record.
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(f)
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In the event that any audit of the books and records of EMPIRICA reveals an error in excess of [***] to
the detriment of the INSTITUTIONS, which can be independently verified by a Third Party auditor at the option of EMPIRICA, then EMPIRICA
shall bear all the costs of the audit and pay all outstanding amounts forthwith, together with interest thereon as calculated under Subsection
3.5 (g).
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(g)
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Interest shall be payable on any amounts owing which are not paid when due, at the Prime Rate plus [***]
per annum, compounded monthly. The payment of interest shall be in addition to the amounts owing when due. Default of payment of interest
shall constitute a material breach and be subject to termination provisions as provided in Section 6.2.
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Article
4
INTELLECTUAL PROPERTY
All of the Licensed Inventions
and Therapeutic Products, including all Intellectual Property Rights associated therewith, but excluding EMPIRICA Improvements, shall
be exclusively owned by the INSTITUTIONS. Nothing herein shall grant any ownership
rights whatsoever in the Licensed Inventions or Therapeutic
Products to EMPIRICA, its Affiliates, or any of its Sub-Licensees.
In the event of termination
of this Agreement for any reason, EMPIRICA hereby grants a non-exclusive license to INSTITUTIONS to use any EMPIRICA Improvements necessary
for INSTITUTIONS to pursue commercialization of Therapeutic Products with any Third Party.
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(a)
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The Representatives of INSTITUTIONS shall furnish a concise written summary of the relevant Know-how to
EMPIRICA within thirty (30) days following the Effective Date, and will use Best Efforts to provide complete relevant documentation respecting
Patents within the first sixty (60) days, together with all information that is reasonably necessary for understanding the Licensed Inventions,
to the extent that such exists and is within the control of the INSTITUTIONS, along with oral explanations of the Know-how, as requested
by EMPIRICA, and of any unwritten Confidential Information.
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(b)
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EMPIRICA shall be deemed to have received all necessary production and disclosure under this Section 4.2,
if EMPIRICA has not notified the Representatives of INSTITUTIONS within one hundred and twenty (120) days after the Effective Date that
complete disclosure has not occurred. In the event that EMPIRICA has not received all necessary deliverables it shall so notify the Representatives
of INSTITUTIONS in writing in advance of the expiry of the one hundred and twenty (120) days and indicate what additional documentation
is required. The Representatives of INSTITUTIONS will use Best Efforts to comply with any additional documentation requests in a timely
manner.
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4.3
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Patents and Patent Applications
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(a)
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EMPIRICA shall bear the full costs and responsibility to file, prosecute, and maintain the Patents in
accordance with its Best Efforts and standard practices, including payment of all Patents prosecution and maintenance fees.
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(b)
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EMPIRICA undertakes to keep the Representatives of INSTITUTIONS reasonably and promptly advised of the
progress of prosecution and of any actions EMPIRICA proposes to take or has taken in connection with the prosecution or maintenance of
the Patents. EMPIRICA will ensure the Representatives of INSTITUTIONS and CCAB are copied on all correspondence with patent counsel and
patent offices and all actions issued by patent authorities and shall use Best Efforts to incorporate, any comments, remarks or suggestions
the Representatives of
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INSTITUTIONS and CCAB may promptly provide
to EMPIRICA in writing at least ten (10) days prior to any due date established by EMPIRICA for preparation of a response or amendment
and in all cases thirty (30) days prior to any patent office action due dates of which it becomes aware. EMPIRICA shall correspond with
INSTITUTIONS and CCAB and not directly with Inventors with respect to the Patents and Patent Applications unless otherwise agreed by the
INSTITUTIONS.
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(c)
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Nothing contained in this Agreement (including, without limitation, the provisions of this Section 4.3)
shall interfere with, amend or supersede any obligations of the Inventors to the respective INSTITUTIONS (or the obligations of INSTITUTIONS
to the Inventors) which exist under contract as of the date hereof.
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(d)
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The INSTITUTIONS undertake to sign all documents necessary to fully assign the Patents and Patent Applications
identified in Schedule “B” to EMPIRICA, subject to the INSTITUTION’s continued license to use for non-commercial purposes,
upon the occurrence of either of the following triggering events:
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(i)
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Upon the successful completion of good faith negotiations for such assignment, not to occur prior to EMPIRICA
securing confirmed financing and/or capital investment in the total amount of Eight Million Dollars ($8,000,000) and provides the INSTITUTIONS
with proof of said financing/investment; or
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(ii)
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EMPIRICA enters into a binding agreement to sell or transfer all of its assets or business to a solvent
Third Party with the means to continue the Commercially Reasonable Efforts to develop Licensed Products and agrees to assume the obligations
outlined in this Agreement (including payment and reporting obligations to the INSTITUTIONS) and provides a copy of binding agreement
to both UT and MAC.
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(a)
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Subject to Section 4.1, all EMPIRICA Improvements, and any Intellectual Property Rights specifically associated
therewith, shall be owned exclusively by EMPIRICA.
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(b)
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If EMPIRICA produces or has produced any EMPIRICA Improvements, then EMPIRICA shall grant an exclusive
license to the INSTITUTIONS to use all EMPIRICA Improvements for non-commercial research, educational and administrative purposes.
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(c)
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In the event that UT or MAC obtains commercialization rights in relation to any modifications, enhancements,
upgrades or additions to the Licensed Inventions (“INSTITUTIONS Improvements”), then UT or MAC shall promptly inform,
EMPIRICA in confidence, and EMPIRICA shall have an exclusive option to obtain a commercial license to use such INSTITUTIONS Improvements
on terms to be negotiated, such right being subject to any third-party rights. Within sixty (60) days following the date of the disclosure
of INSTITUTIONS Improvements to EMPIRICA, EMPIRICA shall notify UT or MAC in writing indicating whether or not EMPIRICA will exercise
this option. Should the sixty (60) days elapse without EMPIRICA responding to UT or MAC, EMPIRICA shall be deemed to have rejected this
option in relation to the INSTITUTIONS Improvements and UT or MAC shall have an unfettered right to offer licenses in such INSTITUTIONS
Improvements at its discretion, provided that such licenses will not infringe or violate the exclusive rights granted under this Agreement
to EMPIRICA.
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(a)
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EMPIRICA will notify the Representatives of INSTITUTIONS promptly upon becoming aware of any claim or
assertion by a Third Party that any Licensed Products or Therapeutic Products infringe or are otherwise in violation of a Third Party’s
Intellectual Property Rights. The Parties shall promptly appoint a Representative to enter into discussions with the Third Party to determine
the existence and extent of the alleged infringement and determine the Parties’ mutually agreed course of action. Each Party will
absorb its own costs of the discussions and any legal representation.
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(b)
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EMPIRICA and the INSTITUTIONS may agree to jointly defend or pursue litigation, but neither of them shall
bind or commit the other to any course of action which involves liability for legal costs, expenses or damages. If EMPIRICA and the INSTITUTIONS
agree to jointly defend or pursue litigation, then the Parties will agree in advance on their level of participation (including, but not
limited to, the funding and time to be provided by each Party) in any such claim, action or proceeding, and each Party will absorb its
own costs in relation to any such claim, action or proceedings. The Parties acknowledge and agree that they shall share anything awarded
by a court or paid as a settlement by a Third Party in proportion to each Party’s level of participation as mutually agreed in advance.
If EMPIRICA and the INSTITUTIONS fail to agree within a reasonable time as to any joint course of action which might be taken, then either
of them may take or defend proceedings independently and shall be entitled to retain anything awarded to it by a court, or paid to it
as a settlement by the Third Party. Where EMPIRICA or UT or MAC wishes to act independently or the Parties are unable to agree on a joint
defense, but formalities require participation of the other, then the other shall join in the proceeding to the extent necessary for formalities.
Each will
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cooperate with the other in making available
all necessary documents and witnesses for any legal proceedings, subject to the prompt re-imbursement by the requesting Party of any out-of-pocket
expenses. If EMPIRICA or UT or MAC proceed unilaterally, it shall indemnify the others for reasonable legal costs for representation that
is reasonably necessary and for any court-ordered payments. Neither EMPIRICA nor the INSTITUTIONS shall settle any such claim without
the prior written consent of the other, such consent not to be unreasonably withheld.
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(a)
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All Confidential Information will remain the property of its owner or the Party that disclosed it under
a duty of confidence, as the case may be.
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(b)
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For the Term of this Agreement, and for a period of five (5) years from its termination or expiry, each
Party agrees to maintain in confidence all Confidential Information disclosed with the same degree of care as it normally takes to preserve
its own Confidential Information of similar grade, but in any event, no less than a reasonable degree of care.
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(c)
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Each Party may only disclose Confidential Information to Persons with a “need to know” who
shall be made aware of and be required to observe and comply with the covenants and obligations contained herein, and the Confidential
Information shall only be used to carry on or facilitate the business of EMPIRICA as contemplated under this Agreement.
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(d)
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A Party may disclose Confidential Information pursuant to the requirements of a government agency or pursuant
to a court order, provided, that the Party shall take all reasonable steps, including, but not limited to seeking of an appropriate protective
order to preserve the confidentiality of the Confidential Information provided.
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(e)
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If this Agreement is terminated for any reason, any Party in receipt of Confidential Information shall,
at the request of the party that furnished the Confidential Information, promptly deliver or destroy all Confidential Information of the
disclosing Party without retaining copies thereof, except that the receiving Party may retain one (1) archival copy of written Confidential
Information for the purpose of the receiving Party’s monitoring its obligations under this Agreement.
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(f)
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In the event that a Party becomes aware of, or perceives any threat that, any Confidential Information
may be disclosed contrary to the provisions of this Section 4.6, or in the circumstances referred to in Subsection 4.6(d), such Party
shall immediately provide written notice thereof to the other Party.
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Article
5
REPRESENTATIONS, WARRANTIES AND INDEMNITY
|
|
5.1
|
Representations and Warranties of Parties
|
The representations of EMPIRICA and the INSTITUTIONS
to each other are as follows:
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(a)
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EMPIRICA is a corporation duly organized, validly existing and in good standing, and it has the right
and authority to enter this Agreement, and do all acts and things as required or contemplated to be done, observed and performed by it
hereunder.
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(b)
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UT and MAC are corporations duly organized, validly existing and in good standing, and they have the right
and authority to enter this Agreement and the right to grant the license as provided herein and that such grant is not in conflict with
any other agreement to which it is a party.
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(c)
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The execution, delivery and performance of this Agreement does not contravene any law, rule or regulation
of any Party or of the jurisdiction in which that Party is incorporated or organized.
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EXCEPT FOR THE FOREGOING REPRESENTATIONS AND WARRANTIES
PROVIDED IN SECTION 5.1, THE TECHNOLOGY AND ALL OTHER INTELLECTUAL PROPERTY RIGHTS GRANTED UNDER THIS AGREEMENT ARE SUPPLIED AND LICENSED
TO EMPIRICA BY THE INSTITUTIONS ON AN “AS IS” BASIS, AND THE INSTITUTIONS, INVENTORS, AND BENEFICIARIES DISCLAIM ALL REPRESENTATIONS,
WARRANTIES AND CONDITIONS OF ANY KIND, WHETHER EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, CONCERNING THE TECHNOLOGY AND ALL OTHER INTELLECTUAL
PROPERTY RIGHTS GRANTED UNDER THIS AGREEMENT INCLUDING WITHOUT LIMITATION:
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(a)
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ALL REPRESENTATIONS, WARRANTIES AND CONDITIONS AS TO THE PATENTABILITY, VALIDITY, SCOPE OR ENFORCEABILITY
OF ANY OF THE PATENT CLAIMS OF THE LICENSED INVENTIONS, WHETHER ISSUED OR PENDING AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER
OR NOT DISCOVERABLE;
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(b)
|
ALL REPRESENTATIONS, WARRANTIES AND CONDITIONS THAT ANY USE OR EXPLOITATION OF THE INTELLECTUAL PROPERTY
RIGHTS IN THE LICENSED INVENTIONS OR ANY LICENSED PRODUCTS OR THERAPEUTIC PRODUCTS WILL NOT INFRINGE ANY PATENTS OR OTHER INTELLECTUAL
PROPERTY RIGHTS OF ANY THIRD PARTY; AND
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(c)
|
ALL REPRESENTATIONS, WARRANTIES AND CONDITIONS AS TO QUALITY, MERCHANTABILITY, OR FITNESS OF THE LICENSED
INVENTIONS FOR ANY PARTICULAR PURPOSE.
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(a)
|
EMPIRICA shall defend and hold harmless and indemnify the INSTITUTIONS and all Beneficiaries, from and
against all claims, threats, loss, liabilities, damages, fees or expenses, including reasonable attorney’s fees, (individually a
“Claim” and collectively the “Claims”) by reason or arising out of any acts or failure to act by
or out of any use of the Licensed Inventions or a Licensed Products or a Therapeutic Products by EMPIRICA, its Affiliates, or any Sub-Licensee(s)
or their respective servants, agents, Affiliates, officers, directors, stock-holders, employees or customers.
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(b)
|
Notwithstanding anything contained in this Subsection 5.3: (i) EMPIRICA shall not be entitled to settle
any Claim against any one or more Beneficiaries in respect of which such Claim has been made without the prior written approval of the
Representatives of the INSTITUTIONS, which approval shall not be unreasonably withheld; (ii) EMPIRICA shall consult with the Representatives
of the INSTITUTIONS and shall keep the INSTITUTIONS reasonably informed with respect to all Claims in respect of which indemnification
may be sought hereunder; and (iii) EMPIRICA shall not be required to indemnify the INSTITUTIONS, to the extent allowed by law where such
Claim is caused by the gross negligence or willful misconduct of the INSTITUTIONS, or to the extent that contributory negligence on the
part of the INSTITUTIONS is found to have occurred.
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(c)
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The indemnity provided herein shall survive any termination or assignment of this Agreement subject to
any prescription rights available to the EMPIRICA under the Limitations Act, 2002. EMPIRICA acknowledges that the INSTITUTIONS
are entering this Agreement and obtaining the foregoing indemnification on their own behalf and also on behalf of the other Beneficiaries
and are holding the rights contained in this Subsection 5.1 in trust for the other Beneficiaries.
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(a)
|
EMPIRICA, at its own expense and at all times during the term of this Agreement, and for the duration
of its indemnity obligations which survive the expiration or premature termination of this Agreement pursuant to Section 6.2 hereof, shall
carry and maintain in full force and effect comprehensive general liability insurance, in an amount that is commercially reasonable and
customary for a party engaged in the business activities in which EMPIRICA is engaged, that covers the
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INSTITUTIONS in any and all Claims brought
in a form and with a carrier satisfactory to the INSTITUTIONS. Prior to execution of the Agreement, EMPIRICA shall provide an insurance
certificate to the INSTITUTIONS for review, and the INSTITUTIONS shall provide a written notice that EMPIRICA has satisfied the general
liability insurance requirement.
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(b)
|
Prior to initiation of clinical trials and/or with the achievement of the First Commercial Sale or a sub-license
agreement with a Third Party, EMPIRICA shall agree to amend such general liability insurance to include product liability provisions,
in a form and with a carrier satisfactory to the INSTITUTIONS. The lower limit of such policy shall be [***] per incident and [***] annual
aggregate unless the INSTITUTIONS specifically agrees in writing to such lesser amount.
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(c)
|
The coming into force of this Agreement is conditional upon the INSTITUTIONS having reviewed a certificate
of insurance from the relevant insurance company, in a form acceptable to the INSTITUTIONS, acting reasonably, evidencing EMPIRICA’s
compliance with the provisions of this Section 5.4. Such policy shall contain an endorsement by the insurer providing that it shall not
be cancelled or amended without thirty (30) days prior notice to the INSTITUTIONS. EMPIRICA shall provide a certificate of such insurance
to the INSTITUTIONS annually hereafter on the anniversary of the Effective Date.
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5.5
|
Limitation of Liability
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|
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(a)
|
IN NO EVENT SHALL THE INSTITUTIONS NOR ANY OF THEIR DIRECTORS, OFFICERS, CONTRACTORS, EMPLOYEES OR AGENTS
BE LIABLE TO EMPIRICA, ITS AFFILATES, ANY SUBLICENSEES AND THEIR RESPECTIVE REPRESENTATIVES FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL,
PUNITIVE OR EXEMPLARY DAMAGES OR EXPENSES OF ANY TYPE HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING BUT NOT LIMITED TO ANY
DAMAGES FOR LOST PROFITS, LOSS OF USE, BUSINESS INTERRUPTION, LOSS OF DATA, LOST BUSINESS, LOST SAVINGS, OR INJURY TO PROPERTY) ARISING
IN ANY WAY OUT OF THIS AGREEMENT OR THE USE OF THE TECHNOLOGY BY EMPIRICA, ITS AFFILIATES OR SUB-LICENSEES, WHETHER SUCH DAMAGES OR EXPENSES
ARISE OUT OF BREACH OF CONTRACT (INCLUDING FUNDAMENTAL BREACH), OR TORT OR ON ANY OTHER STATUTORY OR COMMON LAW BASIS, EVEN IF THE INSTITUTIONS
OR ANY OF ITS REPRESENTATIVES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
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(b)
|
IN NO EVENT SHALL INSTITUTION’S TOTAL LIABILITY FOR ALL DAMAGES OF ANY KIND ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ITS SUBJECT-MATTER EXCEED THE TOTAL AMOUNT ACTUALLY PAID TO THE INSTITUTIONS BY EMPIRICA UNDER THIS AGREEMENT UP
TO THE DATE OF SUCH LIABILITY BEING ESTABLISHED BY A FINAL DECISION OF A COURT OF COMPETENT JURISDICTION.
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(c)
|
The Parties acknowledge and agree that the exclusions of liability contained herein reflect the allocations
of risk between the Parties and the price of the Licensed Inventions, and accordingly are reasonable and appropriate in the circumstances
and were a material factor in determining the Fees payable hereunder.
|
Article
6
TERM AND TERMINATION
This Agreement shall come into effect upon the
Effective Date, and unless earlier terminated in accordance with Subsection 6.2, shall terminate on the last to expire Valid Claim within
the Licensed Inventions covering such Licensed Products or Therapeutic Products in such country.
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|
(a)
|
EMPIRICA retains the right to terminate this Agreement at any time by providing the Representatives of
the INSTITUTIONS with thirty (30) days’ prior written notice.
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|
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(b)
|
The occurrence of any one or more of the following events shall constitute an event that allows for the
termination of this Agreement by the INSTITUTIONS and shall, in addition to any other right or remedy the INSTITUTIONS may have, permit
the INSTITUTIONS to immediately terminate this Agreement if
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|
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(i)
|
any order is made or a resolution passed for the winding-up of the Empirica or if a petition (voluntary
or involuntary) is filed under the Bankruptcy and Insolvency Act (Canada) against Empirica or an authorized assignment for the benefit
of creditors is made by Empirica or if a receiver or agent is appointed by or on behalf of a secured creditor of the Licensee or pursuant
to a court order or an application is made under the Companies’ Creditors Arrangement Act (Canada) or notice of intention to make
a proposal is filed or a proposal is made by Empirica to its creditors under the Bankruptcy and Insolvency Act (Canada);
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(ii)
|
an encumbrancer, whether permitted or otherwise, takes possession of any substantial part of the assets
of EMPIRICA, or any process of a court, execution, distress, or analogous process becomes enforceable or is enforced against any substantial
part of the assets of EMPIRICA and EMPIRICA is not instituting proceedings to vacate or lift such execution, distress or analogous process;
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(iii)
|
EMPIRICA ceases or threatens to cease to carry on its business, commits any act of bankruptcy, becomes
insolvent, proposes a compromise or arrangement to its creditors or makes an unauthorized sale in bulk of its assets; or
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(iv)
|
EMPIRICA is liquidated, dissolved or its corporate charter expires or is revoked.
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(c)
|
This Agreement may also be terminated by the INSTITUTIONS for material breach of any provision hereof
by EMPIRICA upon thirty (30) days prior written notice to EMPIRICA, specifying the breach and the cure in sufficient detail to enable
EMPIRICA to respond appropriately, provided, that if EMPIRICA cures the breach within such thirty (30) day period, the Agreement shall
continue in full force and effect.
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|
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(d)
|
Termination as set forth in this Section 6.2 shall not relieve any of the Parties of any obligations accrued
under this Agreement prior to the date of termination. Each of Sections 1.1 (Definitions); 2.3 (Reserved Rights); 2.4 (License Restrictions);
3.5 (Accounting and Records); 4.1 (Ownership); 4.4 (Improvements); 4.6 (Confidentiality); 5.3 (Indemnity); 5.4 (Insurance); 5.5 (Limitation
of Liability); Subsection 6.2(d) (Survival); Section 6.3 (Effect of Termination); and Article 7 (General Provisions) shall survive termination
of this Agreement.
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6.3
|
Effect of Termination
|
Upon termination of this Agreement:
|
|
(a)
|
EMPIRICA, its Affiliates, and all Sub-Licensees shall immediately cease use of the Licensed Inventions
and sale of any Licensed Products or Therapeutic Products. Patients who have begun receiving any Therapeutic Products as treatment may
continue to receive the Therapeutic Products as per the physician recommendation until the end of the treatment course. Subject to the
IP Rights Management Agreement referenced below, joint IP rights can be practiced in accordance with the patent law of the corresponding
jurisdiction.;
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(b)
|
Within a commercially reasonable period of time, the Parties shall enter into an IP Rights Management
Agreement in respect of any jointly-owned
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|
|
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Intellectual Property Rights, which shall
govern the management and administration of any such jointly-owned Intellectual Property Rights;
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|
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(c)
|
EMPIRICA shall pay promptly all amounts it owes hereunder to the INSTITUTIONS;
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|
|
(d)
|
EMPIRICA shall assign any and all sub-licenses granted under this Agreement to the INSTITUTIONS;
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|
|
(e)
|
subject to Subsection 4.6 (e), EMPIRICA shall return to the respective INSTITUTIONS all Confidential Information;
and
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|
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(f)
|
upon termination, EMPIRICA, or its successor(s), or its assignee(s) will immediately assign back to the
INSTITUTIONS all Patents identified in Schedule “B” that were assigned, excluding any jointly-owned Intellectual Property
Rights, which shall be subject to the IP Rights Management Agreement to be entered into pursuant to paragraph (b) above.
|
Article
7
GENERAL
Time is of the essence of each provision of this
Agreement.
|
|
7.2
|
Assignment and Sub-Licenses
|
|
|
(a)
|
Neither Party may sell, assign, Encumber, license or otherwise transfer any of its rights, duties or obligations
hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld.
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|
|
(b)
|
EMPIRICA may assign this Agreement in conjunction with a) a corporate reorganization; or b) a sale or
transfer of all or substantially all of its business or assets associated with the subject matter hereof provided that the assignee accepts
in writing all the terms and conditions of this Agreement, and EMPIRICA notifies the Representatives of the INSTITUTIONS of any such assignment,
providing details thereof, and the INSTITUTIONS provides consent to do so, where such consent not to be unreasonably withheld.
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|
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(c)
|
EMPIRICA is responsible for any and all activities of any Sub-Licensee and the Sub-Licensees shall
adhere to all confidentiality, indemnity and insurance requirements set forth in this Agreement. No sub-license granted by EMPIRICA
shall be less favorable with respect to any term or condition to the INSTITUTIONS than the license granted herein. Further
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|
|
|
EMPIRICA shall be vicariously liable for
any breaches of the obligations under this Agreement in connection with the activities of a sub-licensee.
|
Any notice, demand or other communication required
or permitted to be given or made hereunder shall be in writing and shall be sufficiently given or made if delivered personally or sent
by prepaid registered mail to its address or by confirmed email or telecopier to the number and to the attention of the person set forth
below:
|
|
(a)
|
In the case of a notice to EMPIRICA:
|
EMPIRICA THERAPEUTICS INC.
Attention: Dr. Sheila Singh
E-mail: [***]
|
|
(b)
|
In the case of a notice to the INSTITUTIONS:
|
The Governing Council of the University
of Toronto
Banting Institute,
100 College Street, Room 413,
Toronto, Ontario
M5G 1L5
Canada
Attention: Jennifer Fraser
E-mail: commercialization@utoronto.ca
Telecopier No: (416) 978-6052
With copy to: [***]
McMaster University
1280 Main Street West,
Hamilton, ON
L8S 4K1, Canada
Attention: Jae-Ho Yoo
Email: [***]
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|
(c)
|
In the case of a notice to CCAB
|
The Centre for the Commercialization
of Antibodies and Biologics
Banting Institute,
100 College Street, Room 80,
Toronto, Ontario
M5G 1L5
Attention: Robert Verhagen
Email: robert.verhagen@ccabcanada.com
Each notice sent in accordance with this Subsection
7.3 shall be deemed to have been given and received:
|
|
(i)
|
if delivered, on the day it was delivered if received within normal business hours;
|
|
|
(ii)
|
if mailed, on the fifth (5th) business day following the date on which it was mailed, unless
an interruption of postal services occurs or is continuing on or within the five (5) business days after the date of mailings in which
case the notice shall be deemed to have been received on the fifth (5th) business day after postal service resumes;
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|
|
(iii)
|
if sent by e-mail or telecopier, on the day it was received, or on the first (1st) business
day thereafter if the day on which it was sent was not a business day or outside normal business hours.
|
Either Party may, by notice to the other, given
as aforesaid, designate a changed address e-mail address, or telecopier number.
In the event any term or any part of any term
of this Agreement is determined to be void or unenforceable, such term or part of a term shall be considered separate and severable from
this Agreement and the remaining terms shall continue in full force and effect.
|
|
7.5
|
Governing Law & Attornment
|
This Agreement shall be governed by and interpreted
and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein (excluding any conflict
of laws, rule or principle which might refer such interpretation to the laws of another jurisdiction). Subject to Section 7.6, each Party
hereby attorns and submits to the exclusive jurisdiction of the Ontario Superior Court of Justice in any action or proceeding arising
out of or relating to this Agreement. Further, each Party hereby agrees that service may be made on any Representative of the Parties
hereto, whether in Toronto or elsewhere. Finally, each Party hereby agrees that all such claims in respect of such actions or proceedings
shall be heard and determined in Toronto in such Ontario court. Notwithstanding any of the foregoing, the Parties acknowledge that a Patent
is governed by the laws of its granting jurisdiction.
|
|
(a)
|
Each Party forthwith following the execution
of this Agreement will nominate a Representative to form a committee to address any and all
|
|
|
|
conflicts between the Parties hereto pursuant
to the terms of this Agreement (the “Committee”). Each Party may change its Representative on the Committee at any
time upon written notice to the other Party.
|
|
|
|
|
|
|
(b)
|
If a disagreement between the Parties arises about any matter which is the subject matter of this Agreement,
then the aggrieved Party may give written notice to the responding Party and the Committee clearly setting out the matter of contention.
The Parties shall have twenty (20) days to resolve their disagreement. If they cannot resolve the disagreement within the said time frame,
they shall refer it to the Committee which shall then have ten (10) days to work with both Parties to try and resolve the conflict.
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|
|
(c)
|
If the Committee cannot resolve the conflict within the time period set out above, then the conflict shall
be resolved according to Section 7.5 hereof, unless the parties agree to an alternative dispute resolution process, such as mediation
or arbitration.
|
The Parties agree to execute, acknowledge and
deliver all such further instruments, and to do all such other acts, as may be necessary or appropriate to carry out the intent and purpose
of this Agreement.
No failure or delay on a part of a Party hereto
in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or future exercise thereof or the exercise of any other right, power or remedy. No waiver
by a Party of a default under this Agreement shall operate against that Party as a waiver of such default unless made in writing and signed
by an authorized officer of that Party.
|
|
7.9
|
Relationship of the Parties
|
|
|
(a)
|
The relationship of EMPIRICA to either UT or MAC is that of an independent contractor and neither EMPIRICA
nor its agents or employees shall be considered employees of UT or MAC, unless such personnel have an existing employee relationship with
either UT or MAC outside of this Agreement. This Agreement does not constitute and shall not be construed as constituting a partnership
or joint venture or grant of a franchise between EMPIRICA and the INSTITUTIONS.
|
|
|
(b)
|
A Party will not use the name of any other Party, nor any member of such Party’s staff in any advertising
or publicity without the prior written approval of an authorized Representative of the body whose name is to be used. However, a Party
may notify others of the fact that this Agreement is in effect and of the name of the Parties involved.
|
No Party shall be liable to any other party for
delay or failure in the performance of any of its obligations hereunder if such failure is caused by Force Majeure, as hereinafter defined.
“Force Majeure” means any act of God, action or failure to act of any government or governmental or regulatory authority,
failure of supplies, materials, equipment, labour or transportation being provided by any other person, power failure or shortage, strike,
lockout, work slowdown or stoppage, accident, fire, flood, explosion, storm, other natural occurrence, sabotage, act of terrorism, cyberattack,
or other event beyond the control of the relevant party.
In the event that any Party should breach or violate
any covenant or obligation in this Agreement, the non-breaching Party shall be entitled, subject to Section 7.6 hereof, to exercise any
right or remedy available to it at law. Such rights shall include, without limitation, termination of this Agreement, and damages.
This Agreement, including all attached Schedules
which are hereby incorporated by reference, sets forth the entire agreement and understanding of the Parties relating to the subject matter
contained herein and merges all prior discussions and agreements between them, and neither Party shall be bound by any definition, condition,
warranty or representation other than expressly stated in this Agreement. Any amendment to this Agreement shall not be effective unless
it is in writing and signed by the duly authorized signing officers of each Party.
|
|
7.13
|
Electronic or Facsimile Execution
|
To evidence the fact that it has executed this
Agreement, a Party may send a copy of its executed counterpart to the other Party in .pdf format by e-mail, or by facsimile transmission.
That Party shall be deemed to have executed this Agreement on the date it sent such e-mail or facsimile transmission. In such event, such
Party shall forthwith deliver to the other Party the counterpart of this Agreement executed by such Party.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which, together, shall constitute one and the same instrument.
This Agreement shall be binding upon and
enure to the benefit of the Parties hereto and their respective heirs, executors, administrators and other legal Representative and,
to the
extent permitted hereunder, their respective successors and permitted assigns.
IN WITNESS WHEREOF, the Parties have caused
this Agreement to be executed as of the Effective Date in a legally binding manner.
|
EMPIRICA THERAPEUTICS
|
THE GOVERNING COUNCIL OF THE UNIVERSITY OF TORONTO
|
|
|
|
|
By:
|
/s/ Sheila Singh
|
By:
|
/s/ Jennifer Fraser
|
|
|
(Signature)
|
|
(Signature)
|
|
|
|
|
|
|
Name:
|
Sheila Singh, MD, PhD, FRCS
|
Name:
|
Jennifer Fraser, MSC, MBA
|
|
|
|
|
|
|
Title:
|
CEO
|
Title:
|
Director, Innovations
|
|
|
|
|
MCMASTER UNIVERSITY
|
|
|
|
|
|
By:
|
/s/ Gay Yuyitung
|
|
|
|
(Signature)
|
|
|
|
|
|
|
Name:
|
Gay Yuyitung
|
|
|
|
|
|
|
Title:
|
Director, McMaster Industrial Liaison Office
|
|
|
|
|
|
Acknowledged by:
|
|
|
THE CENTRE FOR THE COMMERCIALIZATION OF ANTIBODIES AND BIOLOGICS
|
|
|
|
|
|
By:
|
/s/ Robert Verhagen
|
|
|
|
(Signature)
|
|
|
|
|
|
|
Name:
|
Robert Verhagen
|
|
|
|
|
|
|
Title:
|
CEO
|
|
schedule “A”
Option to License And Term Sheet
[***]
SCHEDULE “B”
LICENSED INVENTIONS
[***]
Exhibit 10.29
MAD7 Research and Development License
Effective January 1, 2019
|
TERMS
|
|
License Type
|
Non-exclusive, non-transferable license in the Licensed Fields of Use from Inscripta, Inc. for research and development using 1) the MAD7 nuclease (as defined by SEQ ID NO:7 in U.S. Pat. No. 9,982,279); or 2) native and codon optimized nucleic acids encoding a MAD7 nuclease. 1) and 2) collectively are referred to as “MAD7”. This license in the Licensed Fields of Use is irrevocable, subject to licensee not using MAD7 in the Excluded Fields of Use below without reaching further agreement with Inscripta.
|
|
Inscripta, Inc. Contact
|
General Counsel, Inscripta, Inc. (dianna.devore@inscripta.com)
|
|
Licensed Patent(s)
|
U.S. Patent No. 9,982,279, U.S. Patent No. 10,337,028, and applications claiming priority therefrom, including continuations, continuations-in part, divisionals, and foreign counterparts.
|
|
Licensed Fields of Use
|
1) Use of MAD7 to perform research and development in both academic and commercial settings with no restrictions on plant or animal species and varieties; 2) use of MAD7 to perform commercial services, subject to the Excluded Fields of Use.
|
|
Excluded Fields of use
|
1) Sale or re-sale of MAD7, including as part of a therapeutic product; or 2) continued use of MAD7 in a commercial manufacturing process; and 3) use of MAD7 in the editing of human embryos. For clarity, the use of MAD7 to create a commercial product that does not physically contain MAD7 at the time of sale and does not require continued use of MAD7 for manufacture is not considered an Excluded Field of Use.
|
|
Licensed Territory
|
Worldwide
|
|
Duration
|
The duration of the last valid claim of the Licensed Patent(s)
|
|
ROYALTIES & PAYMENTS
|
|
|
Initial License Fee
|
None
|
|
Earned Royalties
|
None
|
|
CHOICE OF LAW
|
This Agreement shall be governed by the laws of the State of
Delaware, without reference to conflict of laws principles
|
|
SUBLICENSING
|
|
|
Sublicensing
|
Not permitted; collaborators and/or distribution partners can acquire an individual license on the same terms as provided herein.
|
|
INSCRIPTA, INC.
|
|
CENTURY THERAPEUTICS, INC.
|
|
|
|
By:
|
/s/ Dianne L. DeVore
|
|
By:
|
/s/ Janelle Anderson
|
|
Printed Name: Dianne L.
DeVore
|
|
Printed Name: Janelle Anderson
|
|
Title: General Counsel
|
|
Title: Chief Strategy Officer
|
|
Date: January 1, 2019
|
|
Date 1 Jan 2019
|
|
5500 Central Avenue
|
*
|
Suite 220
|
*
|
Boulder, CO 80301
|
Exhibit 10.30
EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive Employment
Agreement (the “Agreement”), dated May 26, 2021, is made and entered into by and between CENTURY THERAPEUTICS, INC.,
a Delaware corporation (the “Company”) and OSVALDO FLORES (“Executive”), and will become effective
on the first date that the Company’s common stock is traded on a national stock exchange or national market system (the “Effective
Date”).
Introduction
WHEREAS, Executive is currently
employed by the Company as its Chief Executive Officer in accordance with the terms and conditions of that certain offer letter by and
between the Company and Executive dated August 13, 2018 (the “Prior Agreement”); and
WHEREAS, the parties desire
to replace the Prior Agreement with this Agreement, effective as of the Effective Date.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:
1. Position.
Executive will continue to serve as the Chief Executive Officer of the Company, reporting directly to the Board of Directors of the Company
(the “Board”). In addition to performing the duties and responsibilities associated with that position, from time
to time the Company may assign to Executive other duties and responsibilities reasonable and consistent with such position. Executive
agrees to devote his full business time and best efforts to the performance of his duties and to the furtherance of the Company’s
interests. Executive also agrees that during his employment with the Company, he will not engage in any other employment, consulting
or business services without the written consent of the Company; provided, however, that without such consent, Executive may engage in
charitable or public service, so long as such activities do not interfere with the performance of his duties and obligations to the Company.
The Company also expects that Executive will continue to serve, without the receipt of any additional compensation, as a member of the
Board while employed as the Chief Executive Officer of the Company, subject to re-election by the Company’s stockholders from time
to time. The Company will use commercially reasonable efforts to nominate Executive for election to a seat on the Board for as long as
Executive continues to serve as Chief Executive Officer, provided that the failure of the Company’s stockholders to re-elect Executive
will not be construed as a termination by Executive for “Good Reason” under Section 12(e)(i).
2. Term.
Executive’s employment pursuant to this Agreement will commence on the Effective Date and will continue until terminated in accordance
with Section 8 hereof. Notwithstanding the foregoing, if the Company’s common stock has not commenced trading on a
national stock exchange or national market system
on or prior to December 31, 2022, this Agreement shall be null and void.
3. Place of Performance. Executive will perform services hereunder at the principal executive offices of the Company
in a location to be determined by the Board; provided, however, that Executive may be required to travel from time to time for business
purposes.
4. Salary.
This is a full-time exempt position. The Company will pay Executive a salary at an annual rate of $557,000 (“Base Salary”),
payable in accordance with the Company’s standard payroll schedule and subject to applicable deductions and withholdings. The Base
Salary shall be reviewed on an annual basis by the Compensation Committee of the Board (the “Committee”) and may be
adjusted from time to time by the Committee.
5. Annual
Bonus. For each calendar year ending during his employment, Executive will have the opportunity to earn an annual bonus with
a target amount of 50% of the Base Salary in effect at the end of the applicable year (the “Target Bonus”). The actual
bonus payable to Executive, if any, with respect to any year may be more or less than the Target Bonus and will be determined by the
Committee, in its sole discretion, based on the achievement of corporate and/or personal objectives established by the Committee. Except
as otherwise provided herein or determined by the Committee, payment of any otherwise earned bonus will be conditioned on Executive’s
continued service through the date that annual bonuses are paid to the Company’s executive officers generally with respect to the
applicable year.
6. Equity Incentives. Executive may receive additional equity awards, at times and on terms determined by the Committee
in its discretion.
7. Benefits; Business Expenses.
(a) Executive
shall be entitled to participate in Company benefit plans that are generally available to other employees of the Company of similar rank
and tenure, in accordance with and subject to the terms and conditions of such plans, as in effect from time to time.
(b) The
Company will pay or reimburse Executive for all reasonable business expenses incurred or paid by Executive in the performance of his
duties and responsibilities for the Company in accordance with the expense reimbursement policies of the Company, as may be amended from
time to time.
8. Termination.
(a) Executive’s employment hereunder shall terminate on the earliest of: (i) on the date set forth in a written notice to Executive
from the Board that Executive’s employment with the Company has been or will be terminated, (ii) on the date not less than 30 days
following written notice from Executive to the Company that Executive is resigning from the Company, (iii) on the date of Executive’s
death, or (iv) on the date set forth in a written notice to Executive from the Board that Executive’s employment is terminated on
account of Executive’s Disability, as determined by the Board. Notwithstanding the foregoing, in the event that Executive gives
notice
of termination to the Company, the Company may
unilaterally accelerate the date of termination and such acceleration shall not constitute a termination by the Company for purposes of
this Agreement.
(b) Upon cessation of Executive’s employment for any reason, unless otherwise consented to in writing by the Board, Executive
will resign immediately from any and all officer, director and other positions Executive then holds with the Company and its affiliates
and agrees to execute such documents as may be requested by the Company to confirm that resignation.
(c) Upon
any cessation of Executive’s employment with the Company, Executive will be entitled only to such compensation and benefits as
described in Section 9 below.
(d) Executive
agrees that, following any cessation of his employment and subject to reimbursement of his reasonable expenses, he will cooperate with
the Company and its counsel with respect to any matter (including litigation, investigations, or governmental proceedings) in which Executive
was in any way involved during his employment with the Company. Executive agrees to render such cooperation in a timely manner on reasonable
notice from the Company, provided the Company exercises reasonable efforts to limit and schedule the need for Executive’s cooperation
so as not to materially interfere with his other professional obligations.
(e) Executive
agrees that, upon any cessation of his employment, he will deliver to the Company (and will not retain in his possession or control,
or deliver to anyone else) all property and equipment of the Company, including without limitation (i) all keys, books, records, computer
hardware, software, cellphones, access cards, credit cards and identification, and (ii) all other Company materials (including copies
thereof), including without limitation any records, data, notes, reports, proposals, lists or correspondence.
9. Rights Upon Termination.
(a) Termination
without Cause or Resignation for Good Reason. If Executive’s employment by the Company ceases due to a termination by the
Company without Cause (as defined below) or a resignation by Executive for Good Reason (as defined below):
(i) the Company shall pay to Executive all accrued and unpaid Base Salary through the date of such cessation of employment at the time
such Base Salary would otherwise be paid according to the Company’s usual payroll practices;
(ii) to the extent then unpaid, the Company shall pay to Executive the annual bonus (if any) earned with respect to the fiscal year
ended immediately prior to the cessation of Executive’s employment;
(iii) the Company shall make monthly severance payments equal to one-twelfth of Executive’s Base Salary as in effect immediately
prior to such cessation of employment (or, if such cessation is due to the Good Reason described in clause (ii) of that definition, the
Base Salary in effect immediately prior to such material diminution) for a period equal to the Severance Period;
(iv) if
Executive validly elects to receive continuation coverage under the Company’s group health plan (if any) pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse Executive the applicable premium
otherwise payable for COBRA continuation coverage for himself and his eligible dependents for the Severance Period, to the extent such
premium exceeds the monthly amount charged to active similarly-situated employees of the Company for the same coverage; and
(v) to
the extent such cessation of employment occurs within three (3) months prior to or twelve (12) months following a Change in
Control (as defined below), (x) the Company shall pay to Executive an amount equal to the Target Bonus, and (y) all outstanding equity
awards that are subject to vesting solely based on the passage of time and Executive’s continued employment shall become vested
upon the later of the date of Executive’s cessation of employment and the Change in Control.
Except as otherwise provided
in this Section 9(a), all compensation and benefits will cease at the time of Executive’s cessation of employment and the
Company will have no further liability or obligation by reason of such cessation of employment. The payments and benefits described in
this Section 9(a) are in lieu of, and not in addition to, any other severance arrangement maintained by the Company. Notwithstanding
any provision of this Agreement, the payments and benefits described in Section 9(a)(ii)- 9(a)(v) are conditioned on Executive’s
execution and delivery to the Company and the expiration of all applicable statutory revocation periods, by the 60th day following
the effective date of Executive’s cessation of employment, of a general release of claims against the Company and its affiliates
(which shall have customary exclusions relating to Executive’s equity in the Company, any claims that Executive may have relating
to accrued vested benefits under the Company’s benefit plans, subject to the terms and conditions of such plans, and any claims
for indemnification in Executive’s role as an officer and director of the Company) in a form and manner satisfactory to the Company
(the “Release”) and on Executive’s continued compliance with the provisions of the Proprietary Information and
Assignment Agreement (defined below).
Subject to Section 10
below (to the extent applicable) and provided the Release requirement described above has been timely satisfied: (x) the payment described
in Section 9(a)(ii)will be paid on the later of the sixty-fifth (65th) day following Executive’s cessation of
employment (the “Settlement Date”), or the date such annual bonus would have otherwise been paid, absent Executive’s
cessation of employment; (y) the payments described in Section 9(a)(iii) and 9(a)(iv) will commence to be paid on the Settlement
Date, provided that the initial payment will include any payments that, but for the above-described timing rule, would have otherwise
been paid since the date of Executive’s cessation of employment; and (z) the payment of an amount equal to the Target Bonus described
in Section 9(a)(v) will be paid on the later of the Settlement Date or the tenth (10th) day following the Change in
Control.
(b) Other Terminations. If Executive’s employment with the Company ceases for any reason other than as described
in Section 9(a) above (including but not limited to (i) termination by the Company for Cause, (ii) resignation by Executive without
Good Reason, (iii) termination as a result of Executive’s Disability, or (iv) Executive’s death), then the Company’s
obligation to
Executive will be limited solely to the payment
of accrued and unpaid Base Salary through the date of such cessation of employment. All compensation and benefits will cease at the time
of such cessation of employment and, except as otherwise provided by COBRA, the Company will have no further liability or obligation by
reason of such termination. The foregoing will not be construed to limit Executive’s right to payment or reimbursement for claims
incurred prior to the date of such termination under any insurance contract funding an employee benefit plan, policy or arrangement of
the Company in accordance with the terms of such insurance contract.
10. Section 409A.
(a) The parties intend for this Agreement to comply with or be exempt from Section 409A of the Code, and all provisions of this Agreement
will be interpreted and applied accordingly. Nonetheless, the Company does not guaranty the tax treatment of any compensation payable
to Executive.
(b) Notwithstanding
anything to the contrary in this Agreement, no portion of the benefits or payments to be made under Section 9(a) above will be
payable until Executive has a “separation from service” from the Company within the meaning of Section 409A of the Code.
In addition, to the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any successor provision) is necessary
to avoid the application of an additional tax under Section 409A of the Code to payments due to Executive upon or following his “separation
from service,” then notwithstanding any other provision of this Agreement (or any otherwise applicable plan, policy, agreement
or arrangement), any such payments that are otherwise due within six months following Executive’s “separation from service”
(taking into account the preceding sentence of this paragraph) will be deferred without interest and paid to Executive in a lump sum
immediately following that six month period. This paragraph should not be construed to prevent the application of Treas. Reg. §
1.409A-1(b)(9)(iii) (or any successor provision) to amounts payable hereunder. For purposes of the application of Section 409A of the
Code, each payment in a series of payments will be deemed a separate payment.
(c) Notwithstanding anything in this Agreement to the contrary, to the extent an expense, reimbursement or in-kind benefit provided
to Executive pursuant to this Agreement or otherwise constitutes a “deferral of compensation” within the meaning of Section 409A
of the Code: (i) the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive during any calendar
year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive in any other calendar
year, (ii) the reimbursements for expenses for which Executive is entitled to be reimbursed shall be made on or before the last
day of the calendar year following the calendar year in which the applicable expense is incurred, and (iii) the right to payment
or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.
11. Section
280G. Notwithstanding any contrary provision of this Agreement (or any plan, policy, agreement or other arrangement covering
Executive), if any payment, right or benefit paid, provided or due to Executive, whether pursuant to this Agreement or otherwise (each,
a “Payment,” and collectively, the “Total Payments”), would subject Executive to the excise tax
imposed by Section 4999 of the Code (the
“Excise Tax”), then the Total Payments will be reduced to the minimum extent necessary to avoid the imposition of the Excise
Tax, but only if (i) the amount of such Total Payments, as so reduced, is greater than or equal to (ii) the amount of such Total Payments
without reduction (in each case, determined on an after-tax basis). Any reduction of the Total Payments required by this paragraph
will be implemented by determining the Parachute Ratio (as defined below) for each Payment and then by reducing the Payments in order,
beginning with the Payment with the highest Parachute Ratio. For Payments with the same Parachute Ratio, later Payments will be reduced
before earlier Payments. For Payments with the same Parachute Ratio and the same time of payment, each Payment will be reduced proportionately.
For purposes of this paragraph, “Parachute Ratio” means a fraction, (x) the numerator of which is the value of the applicable
Payment, as calculated for purposes of Section 280G of the Code, and (y) the denominator of which is the economic value of the applicable
Payment.
12. Certain Definitions. For purposes of this Agreement:
(a) “Cause”
means (i) conduct by Executive constituting a material act of misconduct in connection with the performance of Executive’s duties,
including, without limitation, a material misappropriation of funds or property of the Company or any of its subsidiaries or affiliates;
(ii) the commission by Executive of any felony or a misdemeanor involving moral turpitude, deceit, dishonesty or fraud, or any conduct
by Executive that would reasonably be expected to result in material injury or reputational harm to the Company or any of its subsidiaries
and affiliates; (iii) continued material non-performance by Executive of his duties hereunder (other than by reason of Executive’s
physical or mental illness, incapacity or disability) which has continued for more than 10 days following written notice of such non-performance
from the Board; (iv) a material breach by Executive of the Proprietary Information and Assignment Agreement (defined below), any other
agreement with the Company or its affiliates, or of any duty owed to the Company or its affiliates, which breach is not cured (if curable)
within 10 days after the delivery of written notice thereof; (v) a material violation by Executive of the Company’s written employment
policies, including policies prohibiting sexual harassment, which violation is not cured (if curable) within 10 days after the delivery
of written notice thereof; (vi) alcohol abuse or use of controlled substances (other than prescription drugs taken in accordance with
a physician’s prescription); or (vii) failure to cooperate with a bona fide internal investigation or an investigation by
regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction or failure
to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to cooperate
or to produce documents or other materials in connection with such investigation. For avoidance of doubt, a termination of Executive’s
employment due to his Disability will not constitute a termination without Cause.
(b) “Change in Control” shall mean the occurrence of a “change in control event” with respect to the
Company, within the meaning of Treas. Reg. § 1.409A-3(i)(5)(i).
(c) “Code” means the Internal Revenue Code of 1986, as amended.
(d) “Disability”
means a condition entitling Executive to benefits under the Company’s long term disability plan, policy or arrangement; provided,
however, that if no such plan, policy or arrangement is then maintained by the Company and applicable to Executive, “Disability”
will mean Executive’s inability to perform his duties under this Agreement due to a mental or physical condition (other than alcohol
or substance abuse) that can be expected to result in death or that can be expected to last (or has already lasted) for a continuous
period of 90 days or more, or for 120 days in any 180 consecutive-day period. Termination as a result of a Disability will not be construed
as a termination by the Company “without Cause.”
(e) “Good
Reason” means: (i) a material diminution in Executive’s title, responsibilities, authority or duties, provided that the
failure of the Company’s stockholders to re-elect Executive to the Board will not be construed as a material diminution in Executive’s
title, responsibilities, authority or duties; (ii) a material diminution in Executive’s Base Salary, except for across-the-board
salary reductions similarly affecting all or substantially all C-level executives of the Company; (iii) a change of more than 50 miles
in the geographic location at which Executive provide services to the Company; or (iv) the material breach of this Agreement by the Company;
provided, however, that no such event will constitute Good Reason unless (x) Executive provides the Company with written objection to
such event within 60 days after the initial occurrence thereof, (y) such event is not reversed or corrected by the Company within 30
days of its receipt of such written objection, and (z) Executive separates from service within 60 days following the expiration of that
cure period.
(f) “Severance Period” means twelve (12) months. Notwithstanding the foregoing, with respect to a cessation of employment
due to a termination by the Company without Cause or resignation by Executive for Good Reason that occurs (in either case) within three
(3) months prior to a Change in Control or twelve (12) months following a Change in Control, “Severance Period” shall mean
eighteen (18) months.
13. Company
Policies. Executive will comply with all policies of the Company in effect from time to time, including (without limitation)
policies regarding ethics, personal conduct, stock ownership, securities trading, clawback and hedging and pledging of securities.
14. Indemnification.
In addition to any rights to indemnification to which Executive may be entitled under the Company’s governing documents, the Company
shall obtain and maintain an appropriate level of Directors and Officers Liability insurance coverage for Executive’s benefit on
the same terms as applicable to other directors and C-level executives of the Company.
15. Proprietary
Information and Assignment Agreement. On the same date this Agreement is executed, Executive will execute the Proprietary Information
and Assignment Agreement, attached hereto as Exhibit A (the “Proprietary Information and Assignment Agreement”).
16. No Conflicting
Agreements. Executive represents and warrants that he is not a party to or otherwise bound by any agreement or restriction that
could conflict with, or be violated by, the performance of his duties to the Company or his obligations under this Agreement. Executive
will
not use or misappropriate any intellectual property,
trade secrets or confidential information belonging to any third party.
17. Taxes. All compensation payable to Executive are subject to reduction to reflect applicable withholding and payroll
taxes and other deductions required by law. Executive hereby acknowledges that the Company does not have a duty to design its compensation
policies in a manner that minimizes Executive’s tax liabilities, and Executive not make any claim against the Company or its board
of directors related to tax liabilities arising from his compensation.
18. Entire
Agreement; Assignment; Amendment.
(a) This
Agreement, together with the Proprietary Information and Assignment Agreement, constitute the final and entire agreement of the parties
with respect to the matters covered hereby and replace and supersede all prior agreements, discussions, negotiations, representations
or understandings (whether written, oral or implied) relating to Executive’s employment by the Company, including without limitation
the Prior Agreement.
(b) The
rights and obligations of Executive hereunder are personal and may not be assigned. The Company may assign this Agreement, and its rights
and obligations hereunder, to any entity to which the Company transfers substantially all of its assets (or an affiliate thereof). Notwithstanding
any other provision of this Agreement, any such assignment of this Agreement by the Company will not entitle Executive to severance benefits
under Section 9(a) or otherwise, whether or not Executive accepts employment with the assignee.
(c) This Agreement may be amended or modified only by a written instrument signed by a duly authorized officer of the Company and Executive.
19. Governing
Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without
regard to its choice of law provisions.
20. Arbitration.
In the event of any dispute under the provisions of this Agreement or otherwise regarding Executive’s employment or compensation
(other than a dispute in which the primary relief sought is an injunction or other equitable remedy, such as an action to enforce compliance
with the Proprietary Information and Assignment Agreement), the parties shall be required to have the dispute, controversy or claim settled
by arbitration in Philadelphia County, Commonwealth of Pennsylvania, in accordance with the National Rules for the Resolution of Employment
Disputes then in effect of the American Arbitration Association (“AAA”), by one arbitrator mutually agreed upon by
the parties (or, if no agreement can be reached within 30 days after names of potential arbitrators have been proposed by the AAA, then
by one arbitrator having relevant experience who is chosen by the AAA). Any award or finding will be confidential. The arbitrator may
not award attorneys’ fees to either party unless a statute or contract at issue specifically authorizes such an award. Any award
entered by the arbitrators will be final, binding and non-appealable and judgment may be entered thereon by either party in accordance
with applicable law in any court of competent jurisdiction. This arbitration provision will be specifically enforceable. Each party will
be responsible for its own expenses relating to the
conduct of the arbitration (including reasonable
attorneys’ fees and expenses) and will share equally the fees of the arbitrator.
21. Headings.
The headings of the sections of this Agreement are inserted for convenience only and shall not the meaning of this Agreement.
22. Notices. All notices, demands or other communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered in person, by e-mail or fax, by United States mail, certified or registered with return receipt requested, or
by a nationally recognized overnight courier service, or otherwise actually delivered: (a) if to Executive, at the most recent address
contained in the Company’s personnel files; (b) if to the Company, to the attention of its Legal Department at the address of its
principal executive office; or (c) or at such other address as may have been furnished by such person in writing to the other party. Any
such notice, demand or communication shall be deemed given on the date given, if delivered in person, e-mailed or faxed, on the date received,
if given by registered or certified mail, return receipt requested or by overnight delivery service, or three days after the date mailed,
if otherwise given by first class mail, postage prepaid.
23. Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures
of more than one party, but all of which taken together will constitute one and the same Agreement.
[Signature Page Follows]
This Agreement has been executed
and delivered on the date first above written.
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CENTURY
THERAPEUTICS, INC.
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By:
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/s/
Michael Diem, M.D.
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Name:
Michael Diem, M.D.
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Title:
Chief Business Officer
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EXECUTIVE
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Osvaldo Flores,
Ph.D.
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By:
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/s/
Osvaldo Flores, Ph.D.
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Name:
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Osvaldo
Flores, Ph.D.
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[Signature
Page to Employment Agreement]
Exhibit 10.31
EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive Employment
Agreement (the “Agreement”), dated May 26, 2021, is made and entered into by and between CENTURY THERAPEUTICS, INC.,
a Delaware corporation (the “Company”) and MICHAEL DIEM (“Executive”), and will become effective
on the first date that the Company’s common stock is traded on a national stock exchange or national market system (the “Effective
Date”).
Introduction
WHEREAS, Executive is currently
employed by the Company as its Chief Business Officer in accordance with the terms and conditions of that certain offer letter by and
between the Company and Executive dated August 11, 2020 (the “Prior Agreement”); and
WHEREAS, the parties desire
to replace the Prior Agreement with this Agreement, effective as of the Effective Date.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:
1.
Position. Executive will serve as the Chief Business Officer of the Company and will report directly to the Chief
Executive Officer of the Company or his or her delegate. In addition to performing the duties and responsibilities associated with that
position, from time to time the Company may assign to Executive other duties and responsibilities reasonable and consistent with such
position. Executive agrees to devote his full business time and best efforts to the performance of his duties and to the furtherance of
the Company’s interests. Executive also agrees that during his employment with the Company, he will not engage in any other employment,
consulting or business services without the written consent of the Company; provided, however, that without such consent, Executive may
engage in charitable or public service, so long as such activities do not interfere with the performance of his duties and obligations
to the Company.
2.
Term. Executive’s employment pursuant to this Agreement will commence on the Effective Date and will continue
until terminated in accordance with Section 8 hereof. Notwithstanding the foregoing, if the Company’s common stock has not
commenced trading on a national stock exchange or national market system on or prior to December 31, 2022, this Agreement shall be null
and void.
3.
Place of Performance. Executive will perform services hereunder at the principal executive offices of the Company
in a location to be determined by the board of directors of the Company (the “Board”); provided, however, that Executive
may be required to travel from time to time for business purposes.
4.
Salary. This is a full-time exempt position. The Company will pay Executive a salary at an annual rate of $437,800
(“Base Salary”), payable in accordance with the Company’s standard payroll schedule and subject to applicable
deductions and withholdings. The Base Salary shall be
reviewed on an annual basis by the Compensation Committee of the Board (the
“Committee”) and may be adjusted from time to time by the Committee.
5.
Annual Bonus. For each calendar year ending during his employment, Executive will have the opportunity to earn an
annual bonus with a target amount of 40% of the Base Salary in effect at the end of the applicable year (the “Target
Bonus”). The actual bonus payable to Executive, if any,
with respect to any year may be more or less than the Target Bonus and will be determined by the Committee, in its sole discretion, based
on the achievement of corporate and/or personal objectives established by the Committee. Except as
otherwise provided herein or determined by the Committee, payment of any otherwise earned bonus will be conditioned on Executive’s
continued service through the date that annual bonuses are paid to the Company’s executive officers generally with respect to the
applicable year.
6.
Equity Incentives. Executive may receive additional equity awards, at times and on terms determined by the Committee
in its discretion.
7.
Benefits; Business Expenses.
(a)
Executive shall be entitled to participate in Company benefit plans that are generally available to other employees of the Company
of similar rank and tenure, in accordance with and subject to the terms and conditions of such plans, as in effect from time to time.
(b)
The Company will pay or reimburse Executive for all reasonable business expenses incurred or paid by Executive in the performance
of his duties and responsibilities for the Company in accordance with the expense reimbursement policies of the Company, as may be amended
from time to time.
8.
Termination.
(a)
Executive’s employment hereunder shall terminate on the earliest of: (i) on the date set forth in a written notice to Executive
from the Board that Executive’s employment with the Company has been or will be terminated, (ii) on the date not less than 30 days
following written notice from Executive to the Company that Executive is resigning from the Company, (iii) on the date of Executive’s
death, or (iv) on the date set forth in a written notice to Executive from the Board that Executive’s employment is terminated on
account of Executive’s Disability, as determined by the Board. Notwithstanding the foregoing, in the event that Executive gives
notice of termination to the Company, the Company may unilaterally accelerate the date of termination and such acceleration shall not
constitute a termination by the Company for purposes of this Agreement.
(b) Upon
cessation of Executive’s employment for any reason, unless otherwise consented to in writing by the Board, Executive will
resign immediately from any and all officer,
director and other positions Executive then holds with the Company and its affiliates
and agrees to execute such documents as may be requested by the Company to confirm that resignation.
(c)
Upon any cessation of Executive’s employment with the Company, Executive will be entitled only to such compensation and benefits
as described in Section 9 below.
(d)
Executive agrees that, following any cessation of his employment and subject to reimbursement of his reasonable expenses, he will
cooperate with the Company and its counsel with respect to any matter (including litigation, investigations, or governmental proceedings)
in which Executive was in any way involved during his employment with the Company. Executive agrees to render such cooperation in a timely
manner on reasonable notice from the Company, provided the Company exercises reasonable efforts to limit and schedule the need for Executive’s
cooperation so as not to materially interfere with his other professional obligations.
(e)
Executive agrees that, upon any cessation of his employment, he will deliver to the Company (and will not retain in his possession
or control, or deliver to anyone else) all property and equipment of the Company, including without limitation (i) all keys, books, records,
computer hardware, software, cellphones, access cards, credit cards and identification, and (ii) all other Company materials (including
copies thereof), including without limitation any records, data, notes, reports, proposals, lists or correspondence.
(f)
Executive acknowledges that, pursuant to Section 4 of the Prior Agreement, he previously received a signing bonus in the gross
amount of $125,000 (the “Signing Bonus”). Executive agrees that, upon a cessation of his employment due to a termination
by the Company with Cause (as defined below) or resignation by Executive without Good Reason (as defined below), in either case, prior
to September 16, 2021, Executive will repay the Signing Bonus to the Company within thirty (30) days of such date of termination as follows:
(i)
if such cessation of employment is due to a termination by the Company for Cause, then Executive will repay the entire gross amount
of the Signing Bonus; or
(ii)
if such cessation of employment is due to a resignation by Executive without Good Reason, then Executive will repay a pro rata
portion of the gross amount of the Signing Bonus calculated by multiplying (A) the quotient obtained by dividing (1) the number of days
between Executive’s date of termination and September 16, 2021, by (2) 365, and (B) the Signing Bonus.
9.
Rights Upon Termination.
(a)
Termination without Cause or Resignation for Good Reason. If Executive’s employment by the Company ceases due
to a termination by the Company without Cause or a resignation by Executive for Good Reason:
(i)
the Company shall pay to Executive all accrued and unpaid Base Salary through the date of such cessation of employment at the time
such Base Salary would otherwise be paid according to the Company’s usual payroll practices;
(ii)
to the extent then unpaid, the Company shall pay to Executive the annual bonus (if any) earned with respect to the fiscal year
ended immediately prior to the cessation of Executive’s employment;
(iii) the Company shall make monthly severance payments equal to one-twelfth of Executive’s Base Salary as in effect immediately
prior to such cessation of employment (or, if such cessation is due to the Good Reason described in clause (ii) of that definition, the
Base Salary in effect immediately prior to such material diminution) for a period equal to the Severance Period;
(iv) if Executive validly elects to receive continuation coverage under the Company’s group health plan (if any) pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse Executive the applicable
premium otherwise payable for COBRA continuation coverage for himself and his eligible dependents for the Severance Period, to the extent
such premium exceeds the monthly amount charged to active similarly-situated employees of the Company for the same coverage; and
(v) to the extent such cessation of employment occurs within three (3) months prior to or twelve (12) months following a
Change in Control (as defined below), (x) the Company shall pay to Executive an amount equal to the Target Bonus, and (y) all outstanding
equity awards that are subject to vesting solely based on the passage of time and Executive’s continued employment shall become
vested upon the later of the date of Executive’s cessation of employment and the Change in Control.
Except as otherwise provided in this Section
9(a), all compensation and benefits will cease at the time of Executive’s cessation of employment and the Company will have
no further liability or obligation by reason of such cessation of employment. The payments and benefits described in this Section 9(a)
are in lieu of, and not in addition to, any other severance arrangement maintained by the Company. Notwithstanding any provision
of this Agreement, the payments and benefits described in Section 9(a)(ii) - 9(a)(v) are conditioned on Executive’s execution
and delivery to the Company and the expiration of all applicable statutory revocation periods, by the 60th day following the
effective date of Executive’s cessation of employment, of a general release of claims against the Company and its affiliates (which
shall have customary exclusions relating to Executive’s equity in the Company, any claims that Executive may have relating to accrued
vested benefits under the Company’s benefit plans, subject to the terms and conditions of such plans, and any claims for indemnification
in Executive’s role as an officer and director of the Company) in a
form and manner
satisfactory to the Company (the “Release”) and on Executive’s continued compliance with the provisions of
the Proprietary Information and Assignment Agreement (defined below).
Subject to Section 10 below (to the extent
applicable) and provided the Release requirement described above has been timely satisfied: (x) the payment described in Section 9(a)(ii)
will be paid on the later of the sixty-fifth (65th) day following Executive’s cessation of employment (the “Settlement
Date”), or the date such annual bonus would have otherwise been paid, absent Executive’s cessation of employment; (y)
the payments described in Section 9(a)(iii) and 9(a)(iv) will commence to be paid on the Settlement Date, provided that the initial
payment will include any payments that, but for the above-described timing rule, would have otherwise been paid since the date of Executive’s
cessation of employment; and (z) the payment of an amount equal to the Target Bonus described in Section 9(a)(v) will be paid on
the later of the Settlement Date or the tenth (10th) day following the Change in Control.
(b)
Other Terminations. If Executive’s employment with the Company ceases for any reason other than as described
in Section 9(a) above (including but not limited to (i) termination by the Company for Cause, (ii) resignation by Executive without
Good Reason, (iii) termination as a result of Executive’s Disability, or (iv) Executive’s death), then the Company’s
obligation to Executive will be limited solely to the payment of accrued and unpaid Base Salary through the date of such cessation of
employment. All compensation and benefits will cease at the time of such cessation of employment and, except as otherwise provided by
COBRA, the Company will have no further liability or obligation by reason of such termination. The foregoing will not be construed to
limit Executive’s right to payment or reimbursement for claims incurred prior to the date of such termination under any insurance
contract funding an employee benefit plan, policy or arrangement of the Company in accordance with the terms of such insurance contract.
10.
Section 409A.
(a)
The parties intend for this Agreement to comply with or be exempt from Section 409A of the Code, and all provisions of this Agreement
will be interpreted and applied accordingly. Nonetheless, the Company does not guaranty the tax treatment of any compensation payable
to Executive.
(b)
Notwithstanding anything to the contrary in this Agreement, no portion of the benefits or payments to be made under Section
9(a) above will be payable until Executive has a “separation from service” from the Company within the meaning of Section
409A of the Code. In addition, to the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any successor
provision) is necessary to avoid the application of an additional tax under Section 409A of the Code to payments due to Executive upon
or following his “separation from service,” then notwithstanding any other provision of this Agreement (or any otherwise
applicable plan, policy, agreement or arrangement), any such payments that are otherwise due within six months following Executive’s
“separation from service” (taking into account the preceding sentence of this
paragraph) will be
deferred without interest and paid to Executive in a lump sum immediately following that six month period. This paragraph should not
be construed to prevent the application of Treas. Reg. § 1.409A-1(b)(9)(iii) (or any successor provision) to amounts payable
hereunder. For purposes of the application of Section 409A of the Code, each payment in a series of payments will be deemed a
separate payment.
(c)
Notwithstanding anything in this Agreement to the contrary, to the extent an expense, reimbursement or in-kind benefit provided
to Executive pursuant to this Agreement or otherwise constitutes a “deferral of compensation” within the meaning of Section 409A
of the Code: (i) the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive during any calendar
year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive in any other calendar
year, (ii) the reimbursements for expenses for which Executive is entitled to be reimbursed shall be made on or before the last
day of the calendar year following the calendar year in which the applicable expense is incurred, and (iii) the right to payment
or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.
11.
Section 280G. Notwithstanding any contrary provision of this Agreement (or any plan, policy, agreement or other arrangement
covering Executive), if any payment, right or benefit paid, provided or due to Executive, whether pursuant to this Agreement or otherwise
(each, a “Payment,” and collectively, the “Total Payments”), would subject Executive to the excise tax imposed
by Section 4999 of the Code (the “Excise Tax”), then the Total Payments will be reduced to the minimum extent necessary
to avoid the imposition of the Excise Tax, but only if (i) the amount of such Total Payments, as so reduced, is greater than or equal
to (ii) the amount of such Total Payments without reduction (in each case, determined on an after-tax basis). Any reduction of the Total
Payments required by this paragraph will be implemented by determining the Parachute Ratio (as defined below) for each Payment
and then by reducing the Payments in order, beginning with the Payment with the highest Parachute Ratio. For Payments with the same Parachute
Ratio, later Payments will be reduced before earlier Payments. For Payments with the same Parachute Ratio and the same time of payment,
each Payment will be reduced proportionately. For purposes of this paragraph, “Parachute Ratio” means a fraction, (x) the
numerator of which is the value of the applicable Payment, as calculated for purposes of Section 280G of the Code, and (y) the denominator
of which is the economic value of the applicable Payment.
12.
Certain Definitions. For purposes of this Agreement:
(a) “Cause”
means (i) conduct by Executive constituting a material act of misconduct in connection with the performance of Executive’s
duties, including, without limitation, a material misappropriation of funds or property of the Company or any of its subsidiaries or
affiliates; (ii) the commission by Executive of any felony or a misdemeanor involving moral turpitude, deceit, dishonesty or fraud,
or any conduct by Executive that would reasonably be expected to result in material injury or reputational harm to the Company or
any of its subsidiaries and affiliates; (iii) continued material non-performance by Executive of his duties hereunder (other than by
reason of
Executive’s physical or mental illness, incapacity or disability) which has continued for more than 10 days
following written notice of such non-performance from the Board; (iv) a material breach by Executive of the Proprietary Information
and Assignment Agreement (defined below), any other agreement with the Company or its affiliates, or of any duty owed to the Company
or its affiliates, which breach is not cured (if curable) within 10 days after the delivery of written notice thereof; (v) a
material violation by Executive of the Company’s written employment policies, including policies prohibiting sexual
harassment, which violation is not cured (if curable) within 10 days after the delivery of written notice thereof; (vi) alcohol
abuse or use of controlled substances (other than prescription drugs taken in accordance with a physician’s prescription); or
(vii) failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement
authorities, after being instructed by the Company to cooperate, or the willful destruction or failure to preserve documents or
other materials known to be relevant to such investigation or the inducement of others to fail to cooperate or to produce documents
or other materials in connection with such investigation. For avoidance of doubt, a termination of Executive’s employment due
to his Disability will not constitute a termination without Cause.
(b)
“Change in Control” shall mean the occurrence of a “change in control event” with respect to the
Company, within the meaning of Treas. Reg. § 1.409A-3(i)(5)(i).
(c)
“Code” means the Internal Revenue Code of 1986, as amended.
(d)
“Disability” means a condition entitling Executive to benefits under the Company’s long term disability
plan, policy or arrangement; provided, however, that if no such plan, policy or arrangement is then maintained by the Company and applicable
to Executive, “Disability” will mean Executive’s inability to perform his duties under this Agreement due to
a mental or physical condition (other than alcohol or substance abuse) that can be expected to result in death or that can be expected
to last (or has already lasted) for a continuous period of 90 days or more, or for 120 days in any 180 consecutive-day period. Termination
as a result of a Disability will not be construed as a termination by the Company “without Cause.”
(e)
“Good Reason” means: (i) a material diminution in Executive’s title, responsibilities, authority or duties;
(ii) a material diminution in Executive’s Base Salary, except for across-the-board salary reductions similarly affecting all or
substantially all C-level executives of the Company; (iii) a change of more than 50 miles in the geographic location at which Executive
provide services to the Company; or (iv) the material breach of this Agreement by the Company; provided, however, that no such event will
constitute Good Reason unless (x) Executive provides the Company with written objection to such event within 60 days after the initial
occurrence thereof, (y) such event is not reversed or corrected by the
Company within 30 days of its receipt of such written objection, and (z) Executive separates from service within 60 days following the
expiration of that cure period.
(f) “Severance
Period” means nine (9) months. Notwithstanding the foregoing, with respect to a cessation of employment due to a
termination by the Company without Cause or resignation by Executive for Good Reason that occurs (in either case) within three (3)
months prior
to a Change in Control or twelve (12) months following a Change in Control, “Severance Period” shall mean
twelve (12) months.
13.
Company Policies. Executive will comply with all policies of the Company in effect from time to time, including (without
limitation) policies regarding ethics, personal conduct, stock ownership, securities trading, clawback and hedging and pledging of securities.
14.
Indemnification. In addition to any rights to indemnification to which Executive may be entitled under the Company’s
governing documents, the Company shall obtain and maintain an appropriate level of Directors and Officers Liability insurance coverage
for Executive’s benefit on the same terms as applicable to other directors and C-level executives of the Company.
15.
Proprietary Information and Assignment Agreement. On the same date this Agreement is executed, Executive will execute
the Proprietary Information and Assignment Agreement, attached hereto as Exhibit A (the “Proprietary Information and Assignment
Agreement”).
16.
No Conflicting Agreements. Executive represents and warrants that he is not a party to or otherwise bound by any
agreement or restriction that could conflict with, or be violated by,
the performance of his duties to the Company or his obligations under this Agreement. Executive will not use or misappropriate
any intellectual property, trade secrets or confidential information belonging to any third party.
17.
Taxes. All compensation payable to Executive are subject to reduction to reflect applicable withholding and payroll
taxes and other deductions required by law. Executive hereby acknowledges that the Company does not have a duty to design its compensation
policies in a manner that minimizes Executive’s tax liabilities, and Executive not make any claim against the Company or its board
of directors related to tax liabilities arising from his compensation.
18.
Entire Agreement; Assignment; Amendment.
(a)
This Agreement, together with the Proprietary Information and Assignment Agreement, constitute the final and entire agreement of
the parties with respect to the matters covered hereby and replace and supersede all prior agreements, discussions, negotiations, representations
or understandings (whether written, oral or implied) relating to Executive’s employment by the Company, including without limitation
the Prior Agreement.
(b) The
rights and obligations of Executive hereunder are personal and may not be assigned. The Company may assign this Agreement, and its
rights and obligations hereunder, to any entity to which the Company transfers substantially all of its assets (or an affiliate
thereof). Notwithstanding any other provision of this Agreement, any such assignment of this Agreement
by the Company will not
entitle Executive to severance benefits under Section 9(a) or otherwise, whether or not Executive accepts employment with the
assignee.
(c)
This Agreement may be amended or modified only by a written instrument signed by a duly authorized officer of the Company and Executive.
19.
Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State
of Delaware, without regard to its choice of law provisions.
20.
Arbitration. In the event of any dispute under the provisions of this Agreement or otherwise regarding Executive’s
employment or compensation (other than a dispute in which the primary relief sought is an injunction or other equitable remedy, such as
an action to enforce compliance with the Proprietary Information and Assignment Agreement), the parties shall be required to have the
dispute, controversy or claim settled by arbitration in Philadelphia County, Commonwealth of Pennsylvania, in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (“AAA”), by
one arbitrator mutually agreed upon by the parties (or, if no agreement can be reached within 30 days after names of potential arbitrators
have been proposed by the AAA, then by one arbitrator having relevant experience who is chosen by the AAA). Any award or finding will
be confidential. The arbitrator may not award attorneys’ fees to either party unless a statute or contract at issue specifically
authorizes such an award. Any award entered by the arbitrators will be final, binding and non-appealable and judgment may be entered thereon
by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision will be specifically
enforceable. Each party will be responsible for its own expenses relating to the conduct of the arbitration (including reasonable attorneys’
fees and expenses) and will share equally the fees of the arbitrator.
21.
Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not the meaning
of this Agreement.
22. Notices.
All notices, demands or other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered
in person, by e-mail or fax, by United States mail, certified or registered with return receipt requested, or by a nationally
recognized overnight courier service, or otherwise actually delivered: (a) if to Executive, at the most recent address contained in
the Company’s personnel files; (b) if to the Company, to the attention of its Legal Department at the address of its principal
executive office; or (c) or at such other address as may have been furnished by such person in writing to the other party. Any such
notice, demand or communication shall be deemed given on the date given, if delivered in person, e-mailed or faxed, on the date
received, if given by registered or certified mail, return receipt requested or by
overnight delivery service, or three days after
the date mailed, if otherwise given by first class mail, postage prepaid.
23.
Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures
of more than one party, but all of which taken together will constitute one and the same Agreement.
[Signature Page Follows]
This Agreement has been executed
and delivered on the date first above written.
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CENTURY THERAPEUTICS, INC.
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By:
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/s/ Osvaldo
Flores, Ph.D.
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Name:
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Osvaldo Flores, Ph.D.
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Title:
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President and Chief Executive Officer
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By:
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/s/ Michael
Diem, M.D.
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Name:
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Michael Diem, M.D.
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[Signature Page to Employment Agreement]
Exhibit 10.32
EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive Employment
Agreement (the “Agreement”), dated May 26, 2021, is made and entered into by and between CENTURY THERAPEUTICS, INC.,
a Delaware corporation (the “Company”) and HYAM LEVITSKY (“Executive”), and will become effective
on the first date that the Company’s common stock is traded on a national stock exchange or national market system (the “Effective
Date”).
Introduction
WHEREAS, Executive is currently
employed by the Company as its President of Research and Development in accordance with the terms and conditions of that certain employment
agreement by and between the Company and Executive dated May 1, 2019 (the “Prior Agreement”); and
WHEREAS, the parties desire
to replace the Prior Agreement with this Agreement, effective as of the Effective Date.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:
1. Position.
Executive will serve as the President of Research and Development of the Company and will report directly to the Chief Executive Officer
of the Company or his or her delegate. In addition to performing the duties and responsibilities associated with that position, from
time to time the Company may assign to Executive other duties and responsibilities reasonable and consistent with such position. Executive
agrees to devote his full business time and best efforts to the performance of his duties and to the furtherance of the Company’s
interests. Executive also agrees that during his employment with the Company, he will not engage in any other employment, consulting
or business services without the written consent of the Company; provided, however, that without such consent, Executive may engage in
charitable or public service, so long as such activities do not interfere with the performance of his duties and obligations to the Company.
2. Term. Executive’s employment pursuant to this Agreement will commence on the Effective Date and will continue
until terminated in accordance with Section 8 hereof. Notwithstanding the foregoing, if the Company’s common stock has not
commenced trading on a national stock exchange or national market system on or prior to December 31, 2022, this Agreement shall be null
and void.
3. Place
of Performance. Executive will perform services hereunder at the principal executive offices of the Company in a location to
be determined by the board of directors of the
Company (the “Board”); provided, however, that Executive may be
required to travel from time to time for business purposes.
4. Salary. This is a full-time exempt position. The Company will pay Executive a salary at an annual rate of $430,700
(“Base Salary”), payable in accordance with the Company’s standard payroll schedule and subject to applicable
deductions and withholdings. The Base Salary shall be reviewed on an annual basis by the Compensation Committee of the Board (the “Committee”)
and may be adjusted from time to time by the Committee.
5.
Annual Bonus. For each calendar year ending during his employment, Executive will have the opportunity to earn an
annual bonus with a target amount of 40% of the Base Salary in effect at the end of the applicable year (the “Target
Bonus”). The actual bonus payable to Executive, if any,
with respect to any year may be more or less than the Target Bonus and will be determined by the Committee, in its sole discretion, based
on the achievement of corporate and/or personal objectives established by the Committee. Except as
otherwise provided herein or determined by the Committee, payment of any otherwise earned bonus will be conditioned on Executive’s
continued service through the date that annual bonuses are paid to the Company’s executive officers generally with respect to the
applicable year.
6.
Equity Incentives. Executive may receive additional equity awards, at times and on terms determined by the Committee
in its discretion.
7. Benefits; Business Expenses.
(a) Executive shall be entitled to participate in Company benefit plans that are generally available to other employees of the Company
of similar rank and tenure, in accordance with and subject to the terms and conditions of such plans, as in effect from time to time.
(b) The
Company will pay or reimburse Executive for all reasonable business expenses incurred or paid by Executive in the performance of his
duties and responsibilities for the Company in accordance with the expense reimbursement policies of the Company, as may be amended from
time to time.
8. Termination.
(a) Executive’s
employment hereunder shall terminate on the earliest of: (i) on the date set forth in a written notice to Executive from the Board
that Executive’s employment with the Company has been or will be terminated, (ii) on the date not less than 30 days following
written notice from Executive to the Company that Executive is resigning from the Company, (iii) on the date of Executive’s
death, or (iv) on the date set forth in a written notice to Executive from the Board that Executive’s employment is terminated
on account of Executive’s Disability, as determined by the Board. Notwithstanding the foregoing, in the event that Executive
gives notice of termination to the Company, the Company may unilaterally accelerate the date of termination
and such acceleration
shall not constitute a termination by the Company for purposes of this Agreement.
(b) Upon cessation of Executive’s employment for any reason, unless otherwise consented to in writing by the Board, Executive
will resign immediately from any and all officer, director and other positions Executive then holds with the Company and its affiliates
and agrees to execute such documents as may be requested by the Company to confirm that resignation.
(c) Upon any cessation of Executive’s employment with the Company, Executive will be entitled only to such compensation and benefits
as described in Section 9 below.
(d) Executive
agrees that, following any cessation of his employment and subject to reimbursement of his reasonable expenses, he will cooperate with
the Company and its counsel with respect to any matter (including litigation, investigations, or governmental proceedings) in which Executive
was in any way involved during his employment with the Company. Executive agrees to render such cooperation in a timely manner on reasonable
notice from the Company, provided the Company exercises reasonable efforts to limit and schedule the need for Executive’s cooperation
so as not to materially interfere with his other professional obligations.
(e) Executive agrees that, upon any cessation of his employment, he will deliver to the Company (and will not retain in his possession
or control, or deliver to anyone else) all property and equipment of the Company, including without limitation (i) all keys, books, records,
computer hardware, software, cellphones, access cards, credit cards and identification, and (ii) all other Company materials (including
copies thereof), including without limitation any records, data, notes, reports, proposals, lists or correspondence.
9. Rights Upon Termination.
(a)
Termination without Cause or Resignation for Good Reason. If Executive’s employment by the Company ceases due
to a termination by the Company without Cause (as defined below) or a resignation by Executive for Good Reason (as defined below):
(i) the Company shall pay to Executive all accrued and unpaid Base Salary through the date of such cessation of employment at the time
such Base Salary would otherwise be paid according to the Company’s usual payroll practices;
(ii) to the extent then unpaid, the Company shall pay to Executive the annual bonus (if any) earned with respect to the fiscal year
ended immediately prior to the cessation of Executive’s employment;
(iii) the Company shall make monthly severance payments equal to one-twelfth of Executive’s Base Salary as in effect immediately
prior to such cessation of employment (or, if such cessation is due to the Good Reason described in clause (ii) of that definition, the
Base Salary in effect immediately prior to such material diminution) for a period equal to the Severance Period;
(iv) if Executive validly elects to receive continuation coverage under the Company’s group health plan (if any) pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse Executive the applicable
premium otherwise payable for COBRA continuation coverage for himself and his eligible dependents for the Severance Period, to the extent
such premium exceeds the monthly amount charged to active similarly-situated employees of the Company for the same coverage; and
(v) to the extent such cessation of employment occurs within three (3) months prior to or twelve (12) months following a
Change in Control (as defined below), (x) the Company shall pay to Executive an amount equal to the Target Bonus, and (y) all outstanding
equity awards that are subject to vesting solely based on the passage of time and Executive’s continued employment shall become
vested upon the later of the date of Executive’s cessation of employment and the Change in Control.
Except as otherwise provided in this Section
9(a), all compensation and benefits will cease at the time of Executive’s cessation of employment and the Company will have
no further liability or obligation by reason of such cessation of employment. The payments and benefits described in this Section 9(a)
are in lieu of, and not in addition to, any other severance arrangement maintained by the Company. Notwithstanding any provision of this
Agreement, the payments and benefits described in Section 9(a)(ii) - 9(a)(v) are conditioned on Executive’s execution and
delivery to the Company and the expiration of all applicable statutory revocation periods, by the 60th day following the effective
date of Executive’s cessation of employment, of a general release of claims against the Company and its affiliates (which shall
have customary exclusions relating to Executive’s equity in the Company, any claims that Executive may have relating to accrued
vested benefits under the Company’s benefit plans, subject to the terms and conditions of such plans, and any claims for indemnification
in Executive’s role as an officer and director of the Company) in a form and manner satisfactory to the Company (the “Release”)
and on Executive’s continued compliance with the provisions of the Proprietary Information and Assignment Agreement (defined below).
Subject to Section 10 below (to the extent
applicable) and provided the Release requirement described above has been timely satisfied: (x) the payment described in Section 9(a)(ii)
will be paid on the later of the sixty-fifth (65th) day following Executive’s cessation of employment (the “Settlement
Date”), or the date such annual bonus would have otherwise been paid, absent Executive’s cessation of employment; (y)
the payments described in Section 9(a)(iii) and 9(a)(iv) will commence to be paid on the Settlement Date, provided that the initial
payment will include any payments that, but for the above-described timing rule, would have otherwise been paid since the date of Executive’s
cessation of employment; and (z) the payment of an amount equal to the Target Bonus described in Section 9(a)(v) will be paid on
the later of the Settlement Date or the tenth (10th) day following the Change in Control.
(b) Other
Terminations. If Executive’s employment with the Company ceases for any reason other than as described in Section
9(a) above (including but not limited to (i) termination by the Company for Cause, (ii) resignation by Executive without Good
Reason, (iii) termination as a result of Executive’s Disability, or (iv) Executive’s death), then the Company’s
obligation to Executive will be limited solely to the payment of accrued and unpaid Base Salary through the date of such cessation
of employment. All compensation and benefits will cease at the time of such cessation of employment and, except as otherwise
provided by COBRA, the Company will have no further liability or obligation by reason of such termination. The foregoing will not be
construed to limit Executive’s right to payment or reimbursement for claims incurred prior to the date of such termination
under any insurance contract funding an employee benefit plan, policy or arrangement of the Company in accordance with the terms of
such insurance contract.
10.
Section 409A.
(a)
The parties intend for this Agreement to comply with or be exempt from Section 409A of the Code, and all provisions of this Agreement
will be interpreted and applied accordingly. Nonetheless, the Company does not guaranty the tax treatment of any compensation payable
to Executive.
(b) Notwithstanding anything to the contrary in this Agreement, no portion of the benefits or payments to be made under Section
9(a) above will be payable until Executive has a “separation from service” from the Company within the meaning of Section
409A of the Code. In addition, to the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any successor provision)
is necessary to avoid the application of an additional tax under Section 409A of the Code to payments due to Executive upon or following
his “separation from service,” then notwithstanding any other provision of this Agreement (or any otherwise applicable plan,
policy, agreement or arrangement), any such payments that are otherwise due within six months following Executive’s “separation
from service” (taking into account the preceding sentence of this paragraph) will be deferred without interest and paid to Executive
in a lump sum immediately following that six month period. This paragraph should not be construed to prevent the application of Treas.
Reg. § 1.409A-1(b)(9)(iii) (or any successor provision) to amounts payable hereunder. For purposes of the application of Section
409A of the Code, each payment in a series of payments will be deemed a separate payment.
(c) Notwithstanding anything in this Agreement to the contrary, to the extent an expense, reimbursement or in-kind benefit provided
to Executive pursuant to this Agreement or otherwise constitutes a “deferral of compensation” within the meaning of Section 409A
of the Code: (i) the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive during any calendar
year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive in any other calendar
year, (ii) the reimbursements for expenses for which Executive is entitled to be reimbursed shall be made on or before the last
day of the calendar year following the calendar year in which the applicable expense is incurred, and (iii) the right to payment
or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.
11. Section
280G. Notwithstanding any contrary provision of this Agreement (or any plan, policy, agreement or other arrangement covering
Executive), if any payment, right or benefit paid, provided or due to Executive, whether pursuant to this Agreement or otherwise
(each, a “Payment,” and collectively, the “Total Payments”), would subject Executive to the excise tax
imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments will be reduced to the minimum
extent necessary to avoid the imposition of the Excise Tax, but only if (i) the amount of such Total Payments, as so reduced, is
greater than or equal to (ii) the amount of such Total Payments without reduction (in each case, determined on an after-tax basis).
Any reduction of the Total Payments required by this paragraph will be implemented by determining the Parachute Ratio (as
defined below) for each Payment and then by reducing the Payments in order, beginning with the Payment with the highest Parachute
Ratio. For Payments with the same Parachute Ratio, later Payments will be reduced before earlier Payments. For Payments with the
same Parachute Ratio and the same time of payment, each Payment will be reduced proportionately. For purposes of this paragraph,
“Parachute Ratio” means a fraction, (x) the numerator of which is the value of the applicable Payment, as calculated for
purposes of Section 280G of the Code, and (y) the denominator of which is the economic value of the applicable Payment.
12. Certain Definitions.
For purposes of this Agreement:
(a) “Cause” means (i) conduct by Executive constituting a material act of misconduct in connection with the performance
of Executive’s duties, including, without limitation, a material misappropriation of funds or property of the Company or any of
its subsidiaries or affiliates; (ii) the commission by Executive of any felony or a misdemeanor involving moral turpitude, deceit, dishonesty
or fraud, or any conduct by Executive that would reasonably be expected to result in material injury or reputational harm to the Company
or any of its subsidiaries and affiliates; (iii) continued material non-performance by Executive of his duties hereunder (other than by
reason of Executive’s physical or mental illness, incapacity or disability) which has continued for more than 10 days following
written notice of such non-performance from the Board; (iv) a material breach by Executive of the Proprietary Information and Assignment
Agreement (defined below), any other agreement with the Company or its affiliates, or of any duty owed to the Company or its affiliates,
which breach is not cured (if curable) within 10 days after the delivery of written notice thereof; (v) a material violation by Executive
of the Company’s written employment policies, including policies prohibiting sexual harassment, which violation is not cured (if
curable) within 10 days after the delivery of written notice thereof; (vi) alcohol abuse or use of controlled substances (other than prescription
drugs taken in accordance with a physician’s prescription); or (vii) failure to cooperate with a bona fide internal investigation
or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction
or failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to
cooperate or to produce documents or other materials in connection with such investigation. For avoidance of doubt, a termination of Executive’s
employment due to his Disability will not constitute a termination without Cause.
(b) “Change in Control” shall mean the occurrence of a “change in control event” with respect to the
Company, within the meaning of Treas. Reg. § 1.409A-3(i)(5)(i).
(c) “Code” means the Internal Revenue Code of 1986, as amended.
(d) “Disability”
means a condition entitling Executive to benefits under the Company’s long term disability plan, policy or arrangement; provided,
however, that if no such
plan, policy or arrangement is then maintained by the Company and applicable to Executive,
“Disability” will mean Executive’s inability to perform his duties under this Agreement due to a mental or
physical condition (other than alcohol or substance abuse) that can be expected to result in death or that can be expected to last
(or has already lasted) for a continuous period of 90 days or more, or for 120 days in any 180 consecutive-day period. Termination
as a result of a Disability will not be construed as a termination by the Company “without Cause.”
(e) “Good Reason”
means: (i) a material diminution in Executive’s title, responsibilities, authority or duties; (ii) a material diminution in Executive’s
Base Salary, except for across-the-board salary reductions similarly affecting all or substantially all C-level executives of the Company;
(iii) a change of more than 50 miles in the geographic location at which Executive provide services to the Company; or (iv) the material
breach of this Agreement by the Company; provided, however, that no such event will constitute Good Reason unless (x) Executive provides
the Company with written objection to such event within 60 days after the initial occurrence thereof, (y)
such event is not reversed or corrected by the Company within 30 days of its receipt of such written
objection, and (z) Executive separates from service within 60 days following the expiration of that cure period.
(f) “Severance Period” means nine (9) months. Notwithstanding the foregoing, with respect to a cessation of employment
due to a termination by the Company without Cause or resignation by Executive for Good Reason that occurs (in either case) within three
(3) months prior to a Change in Control or twelve (12) months following a Change in Control, “Severance Period” shall mean
twelve (12) months.
13. Company Policies. Executive will comply with all policies of the Company in effect from time to time, including (without
limitation) policies regarding ethics, personal conduct, stock ownership, securities trading, clawback and hedging and pledging of securities.
14. Indemnification. In addition to any rights to indemnification to which Executive may be entitled under the Company’s
governing documents, the Company shall obtain and maintain an appropriate level of Directors and Officers Liability insurance coverage
for Executive’s benefit on the same terms as applicable to other directors and C-level executives of the Company.
15. Proprietary Information and Assignment Agreement. On the same date this Agreement is executed, Executive will execute
the Proprietary Information and Assignment Agreement attached hereto as Exhibit A (the “Proprietary Information and Assignment
Agreement”).
16. No Conflicting Agreements. Executive represents and warrants that he is not a party to or otherwise bound by any
agreement or restriction that could conflict with, or be violated by,
the performance of his duties to the Company or his obligations under this Agreement. Executive will not use or misappropriate
any intellectual property, trade secrets or confidential information belonging to any third party.
17. Taxes.
All compensation payable to Executive are subject to reduction to reflect applicable withholding and payroll taxes and other
deductions required by law. Executive hereby acknowledges that the Company does not have a duty to design its compensation policies
in a
manner that minimizes Executive’s tax liabilities, and Executive not make any claim against the Company or its board of
directors related to tax liabilities arising from his compensation.
18. Entire Agreement; Assignment; Amendment.
(a) This Agreement, together with the Proprietary Information and Assignment Agreement, constitute the final and entire agreement of
the parties with respect to the matters covered hereby and replace and supersede all prior agreements, discussions, negotiations, representations
or understandings (whether written, oral or implied) relating to Executive’s employment by the Company, including without limitation
the Prior Agreement.
(b)
The rights and obligations of Executive hereunder are personal and may not be assigned. The Company may assign this Agreement,
and its rights and obligations hereunder, to any entity to which the Company transfers substantially all of its assets (or an affiliate
thereof). Notwithstanding any other provision of this Agreement, any such assignment of this Agreement by the Company will not entitle
Executive to severance benefits under Section 9(a) or otherwise, whether or not Executive accepts employment with the assignee.
(c) This Agreement may be amended or modified only by a written instrument signed by a duly authorized officer of the Company and Executive.
19.
Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State
of Delaware, without regard to its choice of law provisions.
20. Arbitration.
In the event of any dispute under the provisions of this Agreement or otherwise regarding Executive’s employment or
compensation (other than a dispute in which the primary relief sought is an injunction or other equitable remedy, such as an action
to enforce compliance with the Proprietary Information and Assignment Agreement), the parties shall be required to have the dispute,
controversy or claim settled by arbitration in Philadelphia County, Commonwealth of Pennsylvania, in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (“AAA”),
by one arbitrator mutually agreed upon by the parties (or, if no agreement can be reached within 30 days after names of potential
arbitrators have been proposed by the AAA, then by one arbitrator having relevant experience who is chosen by the AAA). Any award or
finding will be confidential. The arbitrator may not award attorneys’ fees to either party unless a statute or contract at
issue specifically authorizes such an award. Any award entered by the arbitrators will be final, binding and non-appealable and
judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This
arbitration provision will be specifically enforceable. Each party will be responsible for its own expenses relating to the
conduct
of the arbitration (including reasonable attorneys’ fees and expenses) and will share equally the fees of the arbitrator.
21.
Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not the meaning
of this Agreement.
22.
Notices. All notices, demands or other communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered in person, by e-mail or fax, by United States mail, certified or registered with return receipt requested, or
by a nationally recognized overnight courier service, or otherwise actually delivered: (a) if to Executive, at the most recent address
contained in the Company’s personnel files; (b) if to the Company, to the attention of its Legal Department at the address of its
principal executive office; or (c) or at such other address as may have been furnished by such person in writing to the other party. Any
such notice, demand or communication shall be deemed given on the date given, if delivered in person, e-mailed or faxed, on the date received,
if given by registered or certified mail, return receipt requested or by overnight delivery service, or three days after the date mailed,
if otherwise given by first class mail, postage prepaid.
23. Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures
of more than one party, but all of which taken together will constitute one and the same Agreement.
[Signature Page Follows]
This Agreement has been executed
and delivered on the date first above written.
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CENTURY
THERAPEUTICS, INC.
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By:
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/s/ Osvaldo Flores, Ph.D.
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Name:
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Osvaldo Flores, Ph.D.
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Title:
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President and Chief Executive Officer
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EXECUTIVE
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Hyam
Levitsky, M.D.
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By:
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/s/ Hyam Levitsky, M.D.
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Name:
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Hyam Levitsky, M.D.
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[Signature Page to Employment Agreement]
Exhibit 10.33
EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive Employment
Agreement (the “Agreement”), dated May 26, 2021, is made and entered into by and between CENTURY THERAPEUTICS, INC.,
a Delaware corporation (the “Company”) and LUIS BORGES (“Executive”), and will become effective
on the first date that the Company’s common stock is traded on a national stock exchange or national market system (the “Effective
Date”).
Introduction
WHEREAS, Executive is currently
employed by the Company as its Chief Scientific Officer in accordance with the terms and conditions of that certain offer letter by and between the Company and Executive dated February 15, 2019 (the “Prior Agreement”); and
WHEREAS, the parties desire
to replace the Prior Agreement with this Agreement, effective as of the Effective Date.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:
1. Position.
Executive will serve as the Chief Scientific Officer of the Company and will report directly to the Chief Executive Officer
of the Company or his or her delegate. In addition to performing the duties and responsibilities associated with that position, from
time to time the Company may assign to Executive other duties and responsibilities reasonable and consistent with such position. Executive
agrees to devote his full business time and best efforts to the performance of his duties and to the furtherance of the Company’s
interests. Executive also agrees that during his employment with the Company, he will not engage in any other employment, consulting
or business services without the written consent of the Company; provided, however, that without such consent, Executive may engage in
charitable or public service, so long as such activities do not interfere with the performance of his duties and obligations to the Company.
2. Term. Executive’s employment pursuant to this Agreement will commence on the Effective Date and will continue
until terminated in accordance with Section 8 hereof. Notwithstanding the foregoing, if the Company’s common stock has not
commenced trading on a national stock exchange or national market system on or prior to December 31, 2022, this Agreement shall be null
and void.
3. Place
of Performance. Executive will perform services hereunder at the principal executive offices of the Company in a location to
be determined by the board of directors of the
Company (the “Board”); provided, however, that Executive may be
required to travel from time to time for business purposes.
4. Salary. This is a full-time exempt position. The Company will pay Executive a salary at an annual rate of $430,700
(“Base Salary”), payable in accordance with the Company’s standard payroll schedule and subject to applicable
deductions and withholdings. The Base Salary shall be reviewed on an annual basis by the Compensation Committee of the Board (the “Committee”)
and may be adjusted from time to time by the Committee.
5.
Annual Bonus. For each calendar year ending during his employment, Executive will have the opportunity to earn an
annual bonus with a target amount of 40% of the Base Salary in effect at the end of the applicable year (the “Target
Bonus”). The actual bonus payable to Executive, if any,
with respect to any year may be more or less than the Target Bonus and will be determined by the Committee, in its sole discretion, based
on the achievement of corporate and/or personal objectives established by the Committee. Except as
otherwise provided herein or determined by the Committee, payment of any otherwise earned bonus will be conditioned on Executive’s
continued service through the date that annual bonuses are paid to the Company’s executive officers generally with respect to the
applicable year.
6.
Equity Incentives. Executive may receive additional equity awards, at times and on terms determined by the Committee
in its discretion.
7. Benefits; Business Expenses.
(a) Executive shall be entitled to participate in Company benefit plans that are generally available to other employees of the Company
of similar rank and tenure, in accordance with and subject to the terms and conditions of such plans, as in effect from time to time.
(b) The
Company will pay or reimburse Executive for all reasonable business expenses incurred or paid by Executive in the performance of his
duties and responsibilities for the Company in accordance with the expense reimbursement policies of the Company, as may be amended from
time to time.
8. Termination.
(a) Executive’s
employment hereunder shall terminate on the earliest of: (i) on the date set forth in a written notice to Executive from the Board
that Executive’s employment with the Company has been or will be terminated, (ii) on the date not less than 30 days following
written notice from Executive to the Company that Executive is resigning from the Company, (iii) on the date of Executive’s
death, or (iv) on the date set forth in a written notice to Executive from the Board that Executive’s employment is terminated
on account of Executive’s Disability, as determined by the Board. Notwithstanding the foregoing, in the event that Executive
gives notice of termination to the Company, the Company may unilaterally accelerate the date of termination
and such acceleration
shall not constitute a termination by the Company for purposes of this Agreement.
(b) Upon cessation of Executive’s employment for any reason, unless otherwise consented to in writing by the Board, Executive
will resign immediately from any and all officer, director and other positions Executive then holds with the Company and its affiliates
and agrees to execute such documents as may be requested by the Company to confirm that resignation.
(c) Upon any cessation of Executive’s employment with the Company, Executive will be entitled only to such compensation and benefits
as described in Section 9 below.
(d) Executive
agrees that, following any cessation of his employment and subject to reimbursement of his reasonable expenses, he will cooperate with
the Company and its counsel with respect to any matter (including litigation, investigations, or governmental proceedings) in which Executive
was in any way involved during his employment with the Company. Executive agrees to render such cooperation in a timely manner on reasonable
notice from the Company, provided the Company exercises reasonable efforts to limit and schedule the need for Executive’s cooperation
so as not to materially interfere with his other professional obligations.
(e) Executive agrees that, upon any cessation of his employment, he will deliver to the Company (and will not retain in his possession
or control, or deliver to anyone else) all property and equipment of the Company, including without limitation (i) all keys, books, records,
computer hardware, software, cellphones, access cards, credit cards and identification, and (ii) all other Company materials (including
copies thereof), including without limitation any records, data, notes, reports, proposals, lists or correspondence.
9. Rights Upon Termination.
(a)
Termination without Cause or Resignation for Good Reason. If Executive’s employment by the Company ceases due
to a termination by the Company without Cause (as defined below) or a resignation by Executive for Good Reason (as defined below):
(i) the Company shall pay to Executive all accrued and unpaid Base Salary through the date of such cessation of employment at the time
such Base Salary would otherwise be paid according to the Company’s usual payroll practices;
(ii) to the extent then unpaid, the Company shall pay to Executive the annual bonus (if any) earned with respect to the fiscal year
ended immediately prior to the cessation of Executive’s employment;
(iii) the Company shall make monthly severance payments equal to one-twelfth of Executive’s Base Salary as in effect immediately
prior to such cessation of employment (or, if such cessation is due to the Good Reason described in clause (ii) of that definition, the
Base Salary in effect immediately prior to such material diminution) for a period equal to the Severance Period;
(iv) if Executive validly elects to receive continuation coverage under the Company’s group health plan (if any) pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse Executive the applicable
premium otherwise payable for COBRA continuation coverage for himself and his eligible dependents for the Severance Period, to the extent
such premium exceeds the monthly amount charged to active similarly-situated employees of the Company for the same coverage; and
(v) to the extent such cessation of employment occurs within three (3) months prior to or twelve (12) months following a
Change in Control (as defined below), (x) the Company shall pay to Executive an amount equal to the Target Bonus, and (y) all outstanding
equity awards that are subject to vesting solely based on the passage of time and Executive’s continued employment shall become
vested upon the later of the date of Executive’s cessation of employment and the Change in Control.
Except as otherwise provided in this Section
9(a), all compensation and benefits will cease at the time of Executive’s cessation of employment and the Company will have
no further liability or obligation by reason of such cessation of employment. The payments and benefits described in this Section 9(a)
are in lieu of, and not in addition to, any other severance arrangement maintained by the Company. Notwithstanding any provision of this
Agreement, the payments and benefits described in Section 9(a)(ii) - 9(a)(v) are conditioned on Executive’s execution and
delivery to the Company and the expiration of all applicable statutory revocation periods, by the 60th day following the effective
date of Executive’s cessation of employment, of a general release of claims against the Company and its affiliates (which shall
have customary exclusions relating to Executive’s equity in the Company, any claims that Executive may have relating to accrued
vested benefits under the Company’s benefit plans, subject to the terms and conditions of such plans, and any claims for indemnification
in Executive’s role as an officer and director of the Company) in a form and manner satisfactory to the Company (the “Release”)
and on Executive’s continued compliance with the provisions of the Proprietary Information and Assignment Agreement (defined below).
Subject to Section 10 below (to the extent
applicable) and provided the Release requirement described above has been timely satisfied: (x) the payment described in Section 9(a)(ii)
will be paid on the later of the sixty-fifth (65th) day following Executive’s cessation of employment (the “Settlement
Date”), or the date such annual bonus would have otherwise been paid, absent Executive’s cessation of employment; (y)
the payments described in Section 9(a)(iii) and 9(a)(iv) will commence to be paid on the Settlement Date, provided that the initial
payment will include any payments that, but for the above-described timing rule, would have otherwise been paid since the date of Executive’s
cessation of employment; and (z) the payment of an amount equal to the Target Bonus described in Section 9(a)(v) will be paid on
the later of the Settlement Date or the tenth (10th) day following the Change in Control.
(b) Other
Terminations. If Executive’s employment with the Company ceases for any reason other than as described in Section
9(a) above (including but not limited to (i) termination by the Company for Cause, (ii) resignation by Executive without Good
Reason, (iii) termination as a result of Executive’s Disability, or (iv) Executive’s death), then the Company’s
obligation to Executive will be limited solely to the payment of accrued and unpaid Base Salary through the date of such cessation
of employment. All compensation and benefits will cease at the time of such cessation of employment and, except as otherwise
provided by COBRA, the Company will have no further liability or obligation by reason of such termination. The foregoing will not be
construed to limit Executive’s right to payment or reimbursement for claims incurred prior to the date of such termination
under any insurance contract funding an employee benefit plan, policy or arrangement of the Company in accordance with the terms of
such insurance contract.
10.
Section 409A.
(a)
The parties intend for this Agreement to comply with or be exempt from Section 409A of the Code, and all provisions of this Agreement
will be interpreted and applied accordingly. Nonetheless, the Company does not guaranty the tax treatment of any compensation payable
to Executive.
(b) Notwithstanding anything to the contrary in this Agreement, no portion of the benefits or payments to be made under Section
9(a) above will be payable until Executive has a “separation from service” from the Company within the meaning of Section
409A of the Code. In addition, to the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any successor provision)
is necessary to avoid the application of an additional tax under Section 409A of the Code to payments due to Executive upon or following
his “separation from service,” then notwithstanding any other provision of this Agreement (or any otherwise applicable plan,
policy, agreement or arrangement), any such payments that are otherwise due within six months following Executive’s “separation
from service” (taking into account the preceding sentence of this paragraph) will be deferred without interest and paid to Executive
in a lump sum immediately following that six month period. This paragraph should not be construed to prevent the application of Treas.
Reg. § 1.409A-1(b)(9)(iii) (or any successor provision) to amounts payable hereunder. For purposes of the application of Section
409A of the Code, each payment in a series of payments will be deemed a separate payment.
(c) Notwithstanding anything in this Agreement to the contrary, to the extent an expense, reimbursement or in-kind benefit provided
to Executive pursuant to this Agreement or otherwise constitutes a “deferral of compensation” within the meaning of Section 409A
of the Code: (i) the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive during any calendar
year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive in any other calendar
year, (ii) the reimbursements for expenses for which Executive is entitled to be reimbursed shall be made on or before the last
day of the calendar year following the calendar year in which the applicable expense is incurred, and (iii) the right to payment
or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.
11. Section
280G. Notwithstanding any contrary provision of this Agreement (or any plan, policy, agreement or other arrangement covering
Executive), if any payment, right or benefit paid, provided or due to Executive, whether pursuant to this Agreement or otherwise
(each, a “Payment,” and collectively, the “Total Payments”), would subject Executive to the excise tax
imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments will be reduced to the minimum
extent necessary to avoid the imposition of the Excise Tax, but only if (i) the amount of such Total Payments, as so reduced, is
greater than or equal to (ii) the amount of such Total Payments without reduction (in each case, determined on an after-tax basis).
Any reduction of the Total Payments required by this paragraph will be implemented by determining the Parachute Ratio (as
defined below) for each Payment and then by reducing the Payments in order, beginning with the Payment with the highest Parachute
Ratio. For Payments with the same Parachute Ratio, later Payments will be reduced before earlier Payments. For Payments with the
same Parachute Ratio and the same time of payment, each Payment will be reduced proportionately. For purposes of this paragraph,
“Parachute Ratio” means a fraction, (x) the numerator of which is the value of the applicable Payment, as calculated for
purposes of Section 280G of the Code, and (y) the denominator of which is the economic value of the applicable Payment.
12. Certain Definitions.
For purposes of this Agreement:
(a) “Cause” means (i) conduct by Executive constituting a material act of misconduct in connection with the performance
of Executive’s duties, including, without limitation, a material misappropriation of funds or property of the Company or any of
its subsidiaries or affiliates; (ii) the commission by Executive of any felony or a misdemeanor involving moral turpitude, deceit, dishonesty
or fraud, or any conduct by Executive that would reasonably be expected to result in material injury or reputational harm to the Company
or any of its subsidiaries and affiliates; (iii) continued material non-performance by Executive of his duties hereunder (other than by
reason of Executive’s physical or mental illness, incapacity or disability) which has continued for more than 10 days following
written notice of such non-performance from the Board; (iv) a material breach by Executive of the Proprietary Information and Assignment
Agreement (defined below), any other agreement with the Company or its affiliates, or of any duty owed to the Company or its affiliates,
which breach is not cured (if curable) within 10 days after the delivery of written notice thereof; (v) a material violation by Executive
of the Company’s written employment policies, including policies prohibiting sexual harassment, which violation is not cured (if
curable) within 10 days after the delivery of written notice thereof; (vi) alcohol abuse or use of controlled substances (other than prescription
drugs taken in accordance with a physician’s prescription); or (vii) failure to cooperate with a bona fide internal investigation
or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction
or failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to
cooperate or to produce documents or other materials in connection with such investigation. For avoidance of doubt, a termination of Executive’s
employment due to his Disability will not constitute a termination without Cause.
(b) “Change in Control” shall mean the occurrence of a “change in control event” with respect to the
Company, within the meaning of Treas. Reg. § 1.409A-3(i)(5)(i).
(c) “Code” means the Internal Revenue Code of 1986, as amended.
(d) “Disability”
means a condition entitling Executive to benefits under the Company’s long term disability plan, policy or arrangement; provided,
however, that if no such
plan, policy or arrangement is then maintained by the Company and applicable to Executive,
“Disability” will mean Executive’s inability to perform his duties under this Agreement due to a mental or
physical condition (other than alcohol or substance abuse) that can be expected to result in death or that can be expected to last
(or has already lasted) for a continuous period of 90 days or more, or for 120 days in any 180 consecutive-day period. Termination
as a result of a Disability will not be construed as a termination by the Company “without Cause.”
(e) “Good Reason”
means: (i) a material diminution in Executive’s title, responsibilities, authority or duties; (ii) a material diminution in Executive’s
Base Salary, except for across-the-board salary reductions similarly affecting all or substantially all C-level executives of the Company;
(iii) a change of more than 50 miles in the geographic location at which Executive provide services to the Company; or (iv) the material
breach of this Agreement by the Company; provided, however, that no such event will constitute Good Reason unless (x) Executive provides
the Company with written objection to such event within 60 days after the initial occurrence thereof, (y)
such event is not reversed or corrected by the Company within 30 days of its receipt of such written
objection, and (z) Executive separates from service within 60 days following the expiration of that cure period.
(f) “Severance Period” means nine (9) months. Notwithstanding the foregoing, with respect to a cessation of employment
due to a termination by the Company without Cause or resignation by Executive for Good Reason that occurs (in either case) within three
(3) months prior to a Change in Control or twelve (12) months following a Change in Control, “Severance Period” shall mean
twelve (12) months.
13. Company Policies. Executive will comply with all policies of the Company in effect from time to time, including (without
limitation) policies regarding ethics, personal conduct, stock ownership, securities trading, clawback and hedging and pledging of securities.
14. Indemnification. In addition to any rights to indemnification to which Executive may be entitled under the Company’s
governing documents, the Company shall obtain and maintain an appropriate level of Directors and Officers Liability insurance coverage
for Executive’s benefit on the same terms as applicable to other directors and C-level executives of the Company.
15. Proprietary Information and Assignment Agreement. On the same date this Agreement is executed, Executive will execute
the Proprietary Information and Assignment Agreement attached hereto as Exhibit A (the “Proprietary Information and Assignment
Agreement”).
16. No Conflicting Agreements. Executive represents and warrants that he is not a party to or otherwise bound by any
agreement or restriction that could conflict with, or be violated by,
the performance of his duties to the Company or his obligations under this Agreement. Executive will not use or misappropriate
any intellectual property, trade secrets or confidential information belonging to any third party.
17. Taxes.
All compensation payable to Executive are subject to reduction to reflect applicable withholding and payroll taxes and other
deductions required by law. Executive hereby acknowledges that the Company does not have a duty to design its compensation policies
in a
manner that minimizes Executive’s tax liabilities, and Executive not make any claim against the Company or its board of
directors related to tax liabilities arising from his compensation.
18. Entire Agreement; Assignment; Amendment.
(a) This Agreement, together with the Proprietary Information and Assignment Agreement, constitute the final and entire agreement of
the parties with respect to the matters covered hereby and replace and supersede all prior agreements, discussions, negotiations, representations
or understandings (whether written, oral or implied) relating to Executive’s employment by the Company, including without limitation
the Prior Agreement.
(b)
The rights and obligations of Executive hereunder are personal and may not be assigned. The Company may assign this Agreement,
and its rights and obligations hereunder, to any entity to which the Company transfers substantially all of its assets (or an affiliate
thereof). Notwithstanding any other provision of this Agreement, any such assignment of this Agreement by the Company will not entitle
Executive to severance benefits under Section 9(a) or otherwise, whether or not Executive accepts employment with the assignee.
(c) This Agreement may be amended or modified only by a written instrument signed by a duly authorized officer of the Company and Executive.
19.
Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State
of Delaware, without regard to its choice of law provisions.
20. Arbitration.
In the event of any dispute under the provisions of this Agreement or otherwise regarding Executive’s employment or
compensation (other than a dispute in which the primary relief sought is an injunction or other equitable remedy, such as an action
to enforce compliance with the Proprietary Information and Assignment Agreement), the parties shall be required to have the dispute,
controversy or claim settled by arbitration in Philadelphia County, Commonwealth of Pennsylvania, in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (“AAA”),
by one arbitrator mutually agreed upon by the parties (or, if no agreement can be reached within 30 days after names of potential
arbitrators have been proposed by the AAA, then by one arbitrator having relevant experience who is chosen by the AAA). Any award or
finding will be confidential. The arbitrator may not award attorneys’ fees to either party unless a statute or contract at
issue specifically authorizes such an award. Any award entered by the arbitrators will be final, binding and non-appealable and
judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This
arbitration provision will be specifically enforceable. Each party will be responsible for its own expenses relating to the
conduct
of the arbitration (including reasonable attorneys’ fees and expenses) and will share equally the fees of the arbitrator.
21.
Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not the meaning
of this Agreement.
22.
Notices. All notices, demands or other communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered in person, by e-mail or fax, by United States mail, certified or registered with return receipt requested, or
by a nationally recognized overnight courier service, or otherwise actually delivered: (a) if to Executive, at the most recent address
contained in the Company’s personnel files; (b) if to the Company, to the attention of its Legal Department at the address of its
principal executive office; or (c) or at such other address as may have been furnished by such person in writing to the other party. Any
such notice, demand or communication shall be deemed given on the date given, if delivered in person, e-mailed or faxed, on the date received,
if given by registered or certified mail, return receipt requested or by overnight delivery service, or three days after the date mailed,
if otherwise given by first class mail, postage prepaid.
23. Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures
of more than one party, but all of which taken together will constitute one and the same Agreement.
[Signature Page Follows]
This Agreement has been executed
and delivered on the date first above written.
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CENTURY
THERAPEUTICS, INC.
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By:
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/s/ Osvaldo Flores, Ph.D.
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Name:
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Osvaldo Flores, Ph.D.
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Title:
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President and Chief Executive Officer
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EXECUTIVE
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Hyam
Levitsky, M.D.
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By:
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/s/ Luis Borges, Ph.D.
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Name:
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Luis Borges, Ph.D.
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[Signature Page to Employment Agreement]
Exhibit 10.34
EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive Employment
Agreement (the “Agreement”), dated May 26, 2021, is made and entered into by and between CENTURY THERAPEUTICS, INC.,
a Delaware corporation (the “Company”) and ADRIENNE FARID (“Executive”), and will become effective
on the first date that the Company’s common stock is traded on a national stock exchange or national market system (the “Effective
Date”).
Introduction
WHEREAS, Executive is currently
employed by the Company as its Chief Operations Officer in accordance with the terms and conditions of that certain offer letter by and between the Company and Executive dated January 29, 2019 (the “Prior Agreement”); and
WHEREAS, the parties desire
to replace the Prior Agreement with this Agreement, effective as of the Effective Date.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:
1. Position.
Executive will serve as the Chief Operations Officer of the Company and will report directly to the Chief Executive Officer of the
Company or his or her delegate. In addition to performing the duties and responsibilities associated with that position, from time
to time the Company may assign to Executive other duties and responsibilities reasonable and consistent with such position.
Executive agrees to devote her full business time and best efforts to the performance of her duties and to the furtherance of the
Company’s interests. Executive also agrees that during her employment with the Company, she will not engage in any other
employment, consulting or business services without the written consent of the Company; provided, however, that without such
consent, Executive may engage in charitable or public service, so long as such activities do not interfere with the performance of
her duties and obligations to the Company.
2. Term. Executive’s employment pursuant to this Agreement will commence on the Effective Date and will continue
until terminated in accordance with Section 8 hereof. Notwithstanding the foregoing, if the Company’s common stock has not
commenced trading on a national stock exchange or national market system on or prior to December 31, 2022, this Agreement shall be null
and void.
3. Place
of Performance. Executive will perform services hereunder at the principal executive offices of the Company in a location to
be determined by the board of directors of the
Company (the “Board”); provided, however, that Executive may be
required to travel from time to time for business purposes.
4. Salary. This is a full-time exempt position. The Company will pay Executive a salary at an annual rate of $437,800
(“Base Salary”), payable in accordance with the Company’s standard payroll schedule and subject to applicable
deductions and withholdings. The Base Salary shall be reviewed on an annual basis by the Compensation Committee of the Board (the “Committee”)
and may be adjusted from time to time by the Committee.
5.
Annual Bonus. For each calendar year ending during her employment, Executive will have the opportunity to earn an
annual bonus with a target amount of 40% of the Base Salary in effect at the end of the applicable year (the “Target
Bonus”). The actual bonus payable to Executive, if any,
with respect to any year may be more or less than the Target Bonus and will be determined by the Committee, in its sole discretion, based
on the achievement of corporate and/or personal objectives established by the Committee. Except as
otherwise provided herein or determined by the Committee, payment of any otherwise earned bonus will be conditioned on Executive’s
continued service through the date that annual bonuses are paid to the Company’s executive officers generally with respect to the
applicable year.
6.
Equity Incentives. Executive may receive additional equity awards, at times and on terms determined by the Committee
in its discretion.
7. Benefits; Business Expenses.
(a) Executive shall be entitled to participate in Company benefit plans that are generally available to other employees of the Company
of similar rank and tenure, in accordance with and subject to the terms and conditions of such plans, as in effect from time to time.
(b) The
Company will pay or reimburse Executive for all reasonable business expenses incurred or paid by Executive in the performance of her
duties and responsibilities for the Company in accordance with the expense reimbursement policies of the Company, as may be amended from
time to time.
8. Termination.
(a) Executive’s
employment hereunder shall terminate on the earliest of: (i) on the date set forth in a written notice to Executive from the Board
that Executive’s employment with the Company has been or will be terminated, (ii) on the date not less than 30 days following
written notice from Executive to the Company that Executive is resigning from the Company, (iii) on the date of Executive’s
death, or (iv) on the date set forth in a written notice to Executive from the Board that Executive’s employment is terminated
on account of Executive’s Disability, as determined by the Board. Notwithstanding the foregoing, in the event that Executive
gives notice of termination to the Company, the Company may unilaterally accelerate the date of termination
and such acceleration
shall not constitute a termination by the Company for purposes of this Agreement.
(b) Upon cessation of Executive’s employment for any reason, unless otherwise consented to in writing by the Board, Executive
will resign immediately from any and all officer, director and other positions Executive then holds with the Company and its affiliates
and agrees to execute such documents as may be requested by the Company to confirm that resignation.
(c) Upon any cessation of Executive’s employment with the Company, Executive will be entitled only to such compensation and benefits
as described in Section 9 below.
(d) Executive
agrees that, following any cessation of her employment and subject to reimbursement of her reasonable expenses, she will cooperate with
the Company and its counsel with respect to any matter (including litigation, investigations, or governmental proceedings) in which Executive
was in any way involved during her employment with the Company. Executive agrees to render such cooperation in a timely manner on reasonable
notice from the Company, provided the Company exercises reasonable efforts to limit and schedule the need for Executive’s cooperation
so as not to materially interfere with her other professional obligations.
(e) Executive agrees that, upon any cessation of her employment, she will deliver to the Company (and will not retain in her possession
or control, or deliver to anyone else) all property and equipment of the Company, including without limitation (i) all keys, books, records,
computer hardware, software, cellphones, access cards, credit cards and identification, and (ii) all other Company materials (including
copies thereof), including without limitation any records, data, notes, reports, proposals, lists or correspondence.
9. Rights Upon Termination.
(a)
Termination without Cause or Resignation for Good Reason. If Executive’s employment by the Company ceases due
to a termination by the Company without Cause (as defined below) or a resignation by Executive for Good Reason (as defined below):
(i) the Company shall pay to Executive all accrued and unpaid Base Salary through the date of such cessation of employment at the time
such Base Salary would otherwise be paid according to the Company’s usual payroll practices;
(ii) to the extent then unpaid, the Company shall pay to Executive the annual bonus (if any) earned with respect to the fiscal year
ended immediately prior to the cessation of Executive’s employment;
(iii) the Company shall make monthly severance payments equal to one-twelfth of Executive’s Base Salary as in effect immediately
prior to such cessation of employment (or, if such cessation is due to the Good Reason described in clause (ii) of that definition, the
Base Salary in effect immediately prior to such material diminution) for a period equal to the Severance Period;
(iv) if Executive validly elects to receive continuation coverage under the Company’s group health plan (if any) pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse Executive the applicable
premium otherwise payable for COBRA continuation coverage for herself and her eligible dependents for the Severance Period, to the extent
such premium exceeds the monthly amount charged to active similarly-situated employees of the Company for the same coverage; and
(v) to the extent such cessation of employment occurs within three (3) months prior to or twelve (12) months following a
Change in Control (as defined below), (x) the Company shall pay to Executive an amount equal to the Target Bonus, and (y) all outstanding
equity awards that are subject to vesting solely based on the passage of time and Executive’s continued employment shall become
vested upon the later of the date of Executive’s cessation of employment and the Change in Control.
Except as otherwise provided in this Section
9(a), all compensation and benefits will cease at the time of Executive’s cessation of employment and the Company will have
no further liability or obligation by reason of such cessation of employment. The payments and benefits described in this Section 9(a)
are in lieu of, and not in addition to, any other severance arrangement maintained by the Company. Notwithstanding any provision of this
Agreement, the payments and benefits described in Section 9(a)(ii) - 9(a)(v) are conditioned on Executive’s execution and
delivery to the Company and the expiration of all applicable statutory revocation periods, by the 60th day following the effective
date of Executive’s cessation of employment, of a general release of claims against the Company and its affiliates (which shall
have customary exclusions relating to Executive’s equity in the Company, any claims that Executive may have relating to accrued
vested benefits under the Company’s benefit plans, subject to the terms and conditions of such plans, and any claims for indemnification
in Executive’s role as an officer and director of the Company) in a form and manner satisfactory to the Company (the “Release”)
and on Executive’s continued compliance with the provisions of the Proprietary Information and Assignment Agreement (defined below).
Subject to Section 10 below (to the extent
applicable) and provided the Release requirement described above has been timely satisfied: (x) the payment described in Section 9(a)(ii)
will be paid on the later of the sixty-fifth (65th) day following Executive’s cessation of employment (the “Settlement
Date”), or the date such annual bonus would have otherwise been paid, absent Executive’s cessation of employment; (y)
the payments described in Section 9(a)(iii) and 9(a)(iv) will commence to be paid on the Settlement Date, provided that the initial
payment will include any payments that, but for the above-described timing rule, would have otherwise been paid since the date of Executive’s
cessation of employment; and (z) the payment of an amount equal to the Target Bonus described in Section 9(a)(v) will be paid on
the later of the Settlement Date or the tenth (10th) day following the Change in Control.
(b) Other
Terminations. If Executive’s employment with the Company ceases for any reason other than as described in Section
9(a) above (including but not limited to (i) termination by the Company for Cause, (ii) resignation by Executive without Good
Reason, (iii) termination as a result of Executive’s Disability, or (iv) Executive’s death), then the Company’s
obligation to Executive will be limited solely to the payment of accrued and unpaid Base Salary through the date of such cessation
of employment. All compensation and benefits will cease at the time of such cessation of employment and, except as otherwise
provided by COBRA, the Company will have no further liability or obligation by reason of such termination. The foregoing will not be
construed to limit Executive’s right to payment or reimbursement for claims incurred prior to the date of such termination
under any insurance contract funding an employee benefit plan, policy or arrangement of the Company in accordance with the terms of
such insurance contract.
10.
Section 409A.
(a)
The parties intend for this Agreement to comply with or be exempt from Section 409A of the Code, and all provisions of this Agreement
will be interpreted and applied accordingly. Nonetheless, the Company does not guaranty the tax treatment of any compensation payable
to Executive.
(b) Notwithstanding anything to the contrary in this Agreement, no portion of the benefits or payments to be made under Section
9(a) above will be payable until Executive has a “separation from service” from the Company within the meaning of Section
409A of the Code. In addition, to the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any successor provision)
is necessary to avoid the application of an additional tax under Section 409A of the Code to payments due to Executive upon or following
her “separation from service,” then notwithstanding any other provision of this Agreement (or any otherwise applicable plan,
policy, agreement or arrangement), any such payments that are otherwise due within six months following Executive’s “separation
from service” (taking into account the preceding sentence of this paragraph) will be deferred without interest and paid to Executive
in a lump sum immediately following that six month period. This paragraph should not be construed to prevent the application of Treas.
Reg. § 1.409A-1(b)(9)(iii) (or any successor provision) to amounts payable hereunder. For purposes of the application of Section
409A of the Code, each payment in a series of payments will be deemed a separate payment.
(c) Notwithstanding anything in this Agreement to the contrary, to the extent an expense, reimbursement or in-kind benefit provided
to Executive pursuant to this Agreement or otherwise constitutes a “deferral of compensation” within the meaning of Section 409A
of the Code: (i) the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive during any calendar
year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive in any other calendar
year, (ii) the reimbursements for expenses for which Executive is entitled to be reimbursed shall be made on or before the last
day of the calendar year following the calendar year in which the applicable expense is incurred, and (iii) the right to payment
or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.
11. Section
280G. Notwithstanding any contrary provision of this Agreement (or any plan, policy, agreement or other arrangement covering
Executive), if any payment, right or benefit paid, provided or due to Executive, whether pursuant to this Agreement or otherwise
(each, a “Payment,” and collectively, the “Total Payments”), would subject Executive to the excise tax
imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments will be reduced to the minimum
extent necessary to avoid the imposition of the Excise Tax, but only if (i) the amount of such Total Payments, as so reduced, is
greater than or equal to (ii) the amount of such Total Payments without reduction (in each case, determined on an after-tax basis).
Any reduction of the Total Payments required by this paragraph will be implemented by determining the Parachute Ratio (as
defined below) for each Payment and then by reducing the Payments in order, beginning with the Payment with the highest Parachute
Ratio. For Payments with the same Parachute Ratio, later Payments will be reduced before earlier Payments. For Payments with the
same Parachute Ratio and the same time of payment, each Payment will be reduced proportionately. For purposes of this paragraph,
“Parachute Ratio” means a fraction, (x) the numerator of which is the value of the applicable Payment, as calculated for
purposes of Section 280G of the Code, and (y) the denominator of which is the economic value of the applicable Payment.
12. Certain Definitions.
For purposes of this Agreement:
(a) “Cause” means (i) conduct by Executive constituting a material act of misconduct in connection with the performance
of Executive’s duties, including, without limitation, a material misappropriation of funds or property of the Company or any of
its subsidiaries or affiliates; (ii) the commission by Executive of any felony or a misdemeanor involving moral turpitude, deceit, dishonesty
or fraud, or any conduct by Executive that would reasonably be expected to result in material injury or reputational harm to the Company
or any of its subsidiaries and affiliates; (iii) continued material non-performance by Executive of her duties hereunder (other than by
reason of Executive’s physical or mental illness, incapacity or disability) which has continued for more than 10 days following
written notice of such non-performance from the Board; (iv) a material breach by Executive of the Proprietary Information and Assignment
Agreement (defined below), any other agreement with the Company or its affiliates, or of any duty owed to the Company or its affiliates,
which breach is not cured (if curable) within 10 days after the delivery of written notice thereof; (v) a material violation by Executive
of the Company’s written employment policies, including policies prohibiting sexual harassment, which violation is not cured (if
curable) within 10 days after the delivery of written notice thereof; (vi) alcohol abuse or use of controlled substances (other than prescription
drugs taken in accordance with a physician’s prescription); or (vii) failure to cooperate with a bona fide internal investigation
or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction
or failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to
cooperate or to produce documents or other materials in connection with such investigation. For avoidance of doubt, a termination of Executive’s
employment due to her Disability will not constitute a termination without Cause.
(b) “Change in Control” shall mean the occurrence of a “change in control event” with respect to the
Company, within the meaning of Treas. Reg. § 1.409A-3(i)(5)(i).
(c) “Code” means the Internal Revenue Code of 1986, as amended.
(d) “Disability”
means a condition entitling Executive to benefits under the Company’s long term disability plan, policy or arrangement; provided,
however, that if no such
plan, policy or arrangement is then maintained by the Company and applicable to Executive,
“Disability” will mean Executive’s inability to perform her duties under this Agreement due to a mental or
physical condition (other than alcohol or substance abuse) that can be expected to result in death or that can be expected to last
(or has already lasted) for a continuous period of 90 days or more, or for 120 days in any 180 consecutive-day period. Termination
as a result of a Disability will not be construed as a termination by the Company “without Cause.”
(e) “Good Reason”
means: (i) a material diminution in Executive’s title, responsibilities, authority or duties; (ii) a material diminution in Executive’s
Base Salary, except for across-the-board salary reductions similarly affecting all or substantially all C-level executives of the Company;
(iii) a change of more than 50 miles in the geographic location at which Executive provide services to the Company; or (iv) the material
breach of this Agreement by the Company; provided, however, that no such event will constitute Good Reason unless (x) Executive provides
the Company with written objection to such event within 60 days after the initial occurrence thereof, (y)
such event is not reversed or corrected by the Company within 30 days of its receipt of such written
objection, and (z) Executive separates from service within 60 days following the expiration of that cure period.
(f) “Severance Period” means nine (9) months. Notwithstanding the foregoing, with respect to a cessation of employment
due to a termination by the Company without Cause or resignation by Executive for Good Reason that occurs (in either case) within three
(3) months prior to a Change in Control or twelve (12) months following a Change in Control, “Severance Period” shall mean
twelve (12) months.
13. Company Policies. Executive will comply with all policies of the Company in effect from time to time, including (without
limitation) policies regarding ethics, personal conduct, stock ownership, securities trading, clawback and hedging and pledging of securities.
14. Indemnification. In addition to any rights to indemnification to which Executive may be entitled under the Company’s
governing documents, the Company shall obtain and maintain an appropriate level of Directors and Officers Liability insurance coverage
for Executive’s benefit on the same terms as applicable to other directors and C-level executives of the Company.
15. Proprietary Information and Assignment Agreement. On the same date this Agreement is executed, Executive will execute
the Proprietary Information and Assignment Agreement attached hereto as Exhibit A (the “Proprietary Information and Assignment
Agreement”).
16. No Conflicting Agreements. Executive represents and warrants that she is not a party to or otherwise bound by any
agreement or restriction that could conflict with, or be violated by,
the performance of her duties to the Company or her obligations under this Agreement. Executive will not use or misappropriate
any intellectual property, trade secrets or confidential information belonging to any third party.
17. Taxes.
All compensation payable to Executive are subject to reduction to reflect applicable withholding and payroll taxes and other
deductions required by law. Executive hereby acknowledges that the Company does not have a duty to design its compensation policies
in a
manner that minimizes Executive’s tax liabilities, and Executive not make any claim against the Company or its board of
directors related to tax liabilities arising from her compensation.
18. Entire Agreement; Assignment; Amendment.
(a) This Agreement, together with the Proprietary Information and Assignment Agreement, constitute the final and entire agreement of
the parties with respect to the matters covered hereby and replace and supersede all prior agreements, discussions, negotiations, representations
or understandings (whether written, oral or implied) relating to Executive’s employment by the Company, including without limitation
the Prior Agreement.
(b)
The rights and obligations of Executive hereunder are personal and may not be assigned. The Company may assign this Agreement,
and its rights and obligations hereunder, to any entity to which the Company transfers substantially all of its assets (or an affiliate
thereof). Notwithstanding any other provision of this Agreement, any such assignment of this Agreement by the Company will not entitle
Executive to severance benefits under Section 9(a) or otherwise, whether or not Executive accepts employment with the assignee.
(c) This Agreement may be amended or modified only by a written instrument signed by a duly authorized officer of the Company and Executive.
19.
Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State
of Delaware, without regard to its choice of law provisions.
20. Arbitration.
In the event of any dispute under the provisions of this Agreement or otherwise regarding Executive’s employment or
compensation (other than a dispute in which the primary relief sought is an injunction or other equitable remedy, such as an action
to enforce compliance with the Proprietary Information and Assignment Agreement), the parties shall be required to have the dispute,
controversy or claim settled by arbitration in Philadelphia County, Commonwealth of Pennsylvania, in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (“AAA”),
by one arbitrator mutually agreed upon by the parties (or, if no agreement can be reached within 30 days after names of potential
arbitrators have been proposed by the AAA, then by one arbitrator having relevant experience who is chosen by the AAA). Any award or
finding will be confidential. The arbitrator may not award attorneys’ fees to either party unless a statute or contract at
issue specifically authorizes such an award. Any award entered by the arbitrators will be final, binding and non-appealable and
judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This
arbitration provision will be specifically enforceable. Each party will be responsible for its own expenses relating to the
conduct
of the arbitration (including reasonable attorneys’ fees and expenses) and will share equally the fees of the arbitrator.
21.
Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not the meaning
of this Agreement.
22.
Notices. All notices, demands or other communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered in person, by e-mail or fax, by United States mail, certified or registered with return receipt requested, or
by a nationally recognized overnight courier service, or otherwise actually delivered: (a) if to Executive, at the most recent address
contained in the Company’s personnel files; (b) if to the Company, to the attention of its Legal Department at the address of its
principal executive office; or (c) or at such other address as may have been furnished by such person in writing to the other party. Any
such notice, demand or communication shall be deemed given on the date given, if delivered in person, e-mailed or faxed, on the date received,
if given by registered or certified mail, return receipt requested or by overnight delivery service, or three days after the date mailed,
if otherwise given by first class mail, postage prepaid.
23. Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures
of more than one party, but all of which taken together will constitute one and the same Agreement.
[Signature Page Follows]
This Agreement has been executed
and delivered on the date first above written.
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CENTURY
THERAPEUTICS, INC.
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By:
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/s/ Osvaldo Flores, Ph.D.
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Name:
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Osvaldo Flores, Ph.D.
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Title:
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President and Chief Executive Officer
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EXECUTIVE
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Hyam
Levitsky, M.D.
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By:
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/s/ Adrienne Farid, Ph.D.
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Name:
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Adrienne Farid, Ph.D.
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[Signature Page to Employment Agreement]
Exhibit 10.35
EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive Employment
Agreement (the “Agreement”), dated May 26, 2021, is made and entered into by and between CENTURY THERAPEUTICS, INC.,
a Delaware corporation (the “Company”) and GREGORY RUSSOTTI (“Executive”), and will become effective
on the first date that the Company’s common stock is traded on a national stock exchange or national market system (the “Effective
Date”).
Introduction
WHEREAS, Executive is currently
employed by the Company as its Chief Technology Officer in accordance with the terms and conditions of that certain offer letter by and between the Company and Executive dated June 30, 2019 (the “Prior Agreement”); and
WHEREAS, the parties desire
to replace the Prior Agreement with this Agreement, effective as of the Effective Date.
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties
agree as follows:
1. Position.
Executive will serve as the Chief Technology Officer of the Company and will report directly to the Chief Executive Officer
of the Company or his or her delegate. In addition to performing the duties and responsibilities associated with that position, from
time to time the Company may assign to Executive other duties and responsibilities reasonable and consistent with such position. Executive
agrees to devote his full business time and best efforts to the performance of his duties and to the furtherance of the Company’s
interests. Executive also agrees that during his employment with the Company, he will not engage in any other employment, consulting
or business services without the written consent of the Company; provided, however, that without such consent, Executive may engage in
charitable or public service, so long as such activities do not interfere with the performance of his duties and obligations to the Company.
2. Term. Executive’s employment pursuant to this Agreement will commence on the Effective Date and will continue
until terminated in accordance with Section 8 hereof. Notwithstanding the foregoing, if the Company’s common stock has not
commenced trading on a national stock exchange or national market system on or prior to December 31, 2022, this Agreement shall be null
and void.
3. Place
of Performance. Executive’s primary worksite will be as follows: (a) until the Company’s New Jersey manufacturing
site opens, Executive will work at the Company’s principal executive offices (up to three days per week, on average, as requested
by the Company) and remotely from home (for the remainder of his time), and (b) after the Company’s New Jersey manufacturing site
opens, Executive will work primarily at that New Jersey manufacturing site. In addition, Executive may be required to travel from time
to time for business purposes. Executive’s worksite assignment will be subject to change based on the Company’s business needs
and other factors, including the Company’s assessment of the effectiveness of the arrangement, as determined by the Company in its
sole discretion.
4. Salary.
This is a full-time exempt position. The Company will pay Executive a salary at an annual rate of $430,700 (“Base Salary”),
payable in accordance with the Company’s standard payroll schedule and subject to applicable deductions and withholdings. The Base
Salary shall be reviewed on an annual basis by the Compensation Committee (the “Committee”) of the Board
of Directors (the "Board") and may be adjusted from time to time by the Committee.
5.
Annual Bonus. For each calendar year ending during his employment, Executive will have the opportunity to earn an
annual bonus with a target amount of 40% of the Base Salary in effect at the end of the applicable year (the “Target
Bonus”). The actual bonus payable to Executive, if any,
with respect to any year may be more or less than the Target Bonus and will be determined by the Committee, in its sole discretion, based
on the achievement of corporate and/or personal objectives established by the Committee. Except as
otherwise provided herein or determined by the Committee, payment of any otherwise earned bonus will be conditioned on Executive’s
continued service through the date that annual bonuses are paid to the Company’s executive officers generally with respect to the
applicable year.
6.
Equity Incentives. Executive may receive additional equity awards, at times and on terms determined by the Committee
in its discretion.
7. Benefits; Business Expenses.
(a) Executive shall be entitled to participate in Company benefit plans that are generally available to other employees of the Company
of similar rank and tenure, in accordance with and subject to the terms and conditions of such plans, as in effect from time to time.
(b) The
Company will pay or reimburse Executive for all reasonable business expenses incurred or paid by Executive in the performance of his
duties and responsibilities for the Company in accordance with the expense reimbursement policies of the Company, as may be amended from
time to time.
8. Termination.
(a) Executive’s
employment hereunder shall terminate on the earliest of: (i) on the date set forth in a written notice to Executive from the Board
that Executive’s employment with the Company has been or will be terminated, (ii) on the date not less than 30 days following
written notice from Executive to the Company that Executive is resigning from the Company, (iii) on the date of Executive’s
death, or (iv) on the date set forth in a written notice to Executive from the Board that Executive’s employment is terminated
on account of Executive’s Disability, as determined by the Board. Notwithstanding the foregoing, in the event that Executive
gives notice of termination to the Company, the Company may unilaterally accelerate the date of termination
and such acceleration
shall not constitute a termination by the Company for purposes of this Agreement.
(b) Upon cessation of Executive’s employment for any reason, unless otherwise consented to in writing by the Board, Executive
will resign immediately from any and all officer, director and other positions Executive then holds with the Company and its affiliates
and agrees to execute such documents as may be requested by the Company to confirm that resignation.
(c) Upon any cessation of Executive’s employment with the Company, Executive will be entitled only to such compensation and benefits
as described in Section 9 below.
(d) Executive
agrees that, following any cessation of his employment and subject to reimbursement of his reasonable expenses, he will cooperate with
the Company and its counsel with respect to any matter (including litigation, investigations, or governmental proceedings) in which Executive
was in any way involved during his employment with the Company. Executive agrees to render such cooperation in a timely manner on reasonable
notice from the Company, provided the Company exercises reasonable efforts to limit and schedule the need for Executive’s cooperation
so as not to materially interfere with his other professional obligations.
(e) Executive agrees that, upon any cessation of his employment, he will deliver to the Company (and will not retain in his possession
or control, or deliver to anyone else) all property and equipment of the Company, including without limitation (i) all keys, books, records,
computer hardware, software, cellphones, access cards, credit cards and identification, and (ii) all other Company materials (including
copies thereof), including without limitation any records, data, notes, reports, proposals, lists or correspondence.
(f) Executive acknowledges
that, pursuant to Section 4 of the Prior Agreement, he previously received a signing bonus in the gross amount of $100,000 (the “Signing
Bonus”). Executive agrees that, upon a cessation of his employment due to a termination by the Company with Cause (as defined
below) or resignation by Executive without Good Reason (as defined below), in either case, prior to February 17, 2022, Executive will
repay the Signing Bonus to the Company within thirty (30) days of such date of termination as follows:
(i) if such cessation of employment
is due to a termination by the Company for Cause, then Executive will repay the entire gross amount of the Signing Bonus; or
(ii) if such cessation of employment
is due to a resignation by Executive without Good Reason, then Executive will repay a pro rata portion of the gross amount of the Signing
Bonus calculated by multiplying (A) the quotient obtained by dividing (1) the number of days between Executive’s date of termination
and February 17, 2022, by (2) 730, and (B) the Signing Bonus.
9. Rights Upon Termination.
(a)
Termination without Cause or Resignation for Good Reason. If Executive’s employment by the Company ceases due
to a termination by the Company without Cause or a resignation by Executive for Good Reason:
(i) the Company shall pay to Executive all accrued and unpaid Base Salary through the date of such cessation of employment at the time
such Base Salary would otherwise be paid according to the Company’s usual payroll practices;
(ii) to the extent then unpaid, the Company shall pay to Executive the annual bonus (if any) earned with respect to the fiscal year
ended immediately prior to the cessation of Executive’s employment;
(iii) the Company shall make monthly severance payments equal to one-twelfth of Executive’s Base Salary as in effect immediately
prior to such cessation of employment (or, if such cessation is due to the Good Reason described in clause (ii) of that definition, the
Base Salary in effect immediately prior to such material diminution) for a period equal to the Severance Period;
(iv) if Executive validly elects to receive continuation coverage under the Company’s group health plan (if any) pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse Executive the applicable
premium otherwise payable for COBRA continuation coverage for himself and his eligible dependents for the Severance Period, to the extent
such premium exceeds the monthly amount charged to active similarly-situated employees of the Company for the same coverage; and
(v) to the extent such cessation of employment occurs within three (3) months prior to or twelve (12) months following a
Change in Control (as defined below), (x) the Company shall pay to Executive an amount equal to the Target Bonus, and (y) all outstanding
equity awards that are subject to vesting solely based on the passage of time and Executive’s continued employment shall become
vested upon the later of the date of Executive’s cessation of employment and the Change in Control.
Except as otherwise provided in this Section
9(a), all compensation and benefits will cease at the time of Executive’s cessation of employment and the Company will have
no further liability or obligation by reason of such cessation of employment. The payments and benefits described in this Section 9(a)
are in lieu of, and not in addition to, any other severance arrangement maintained by the Company. Notwithstanding any provision of this
Agreement, the payments and benefits described in Section 9(a)(ii) - 9(a)(v) are conditioned on Executive’s execution and
delivery to the Company and the expiration of all applicable statutory revocation periods, by the 60th day following the effective
date of Executive’s cessation of employment, of a general release of claims against the Company and its affiliates (which shall
have customary exclusions relating to Executive’s equity in the Company, any claims that Executive may have relating to accrued
vested benefits under the Company’s benefit plans, subject to the terms and conditions of such plans, and any claims for indemnification
in Executive’s role as an officer and director of the Company) in a form and manner satisfactory to the Company (the “Release”)
and on Executive’s continued compliance with the provisions of the Proprietary Information and Assignment Agreement (defined below).
Subject to Section 10 below (to the extent
applicable) and provided the Release requirement described above has been timely satisfied: (x) the payment described in Section 9(a)(ii)
will be paid on the later of the sixty-fifth (65th) day following Executive’s cessation of employment (the “Settlement
Date”), or the date such annual bonus would have otherwise been paid, absent Executive’s cessation of employment; (y)
the payments described in Section 9(a)(iii) and 9(a)(iv) will commence to be paid on the Settlement Date, provided that the initial
payment will include any payments that, but for the above-described timing rule, would have otherwise been paid since the date of Executive’s
cessation of employment; and (z) the payment of an amount equal to the Target Bonus described in Section 9(a)(v) will be paid on
the later of the Settlement Date or the tenth (10th) day following the Change in Control.
(b) Other
Terminations. If Executive’s employment with the Company ceases for any reason other than as described in Section
9(a) above (including but not limited to (i) termination by the Company for Cause, (ii) resignation by Executive without Good
Reason, (iii) termination as a result of Executive’s Disability, or (iv) Executive’s death), then the Company’s
obligation to Executive will be limited solely to the payment of accrued and unpaid Base Salary through the date of such cessation
of employment. All compensation and benefits will cease at the time of such cessation of employment and, except as otherwise
provided by COBRA, the Company will have no further liability or obligation by reason of such termination. The foregoing will not be
construed to limit Executive’s right to payment or reimbursement for claims incurred prior to the date of such termination
under any insurance contract funding an employee benefit plan, policy or arrangement of the Company in accordance with the terms of
such insurance contract.
10.
Section 409A.
(a)
The parties intend for this Agreement to comply with or be exempt from Section 409A of the Code, and all provisions of this Agreement
will be interpreted and applied accordingly. Nonetheless, the Company does not guaranty the tax treatment of any compensation payable
to Executive.
(b) Notwithstanding anything to the contrary in this Agreement, no portion of the benefits or payments to be made under Section
9(a) above will be payable until Executive has a “separation from service” from the Company within the meaning of Section
409A of the Code. In addition, to the extent compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any successor provision)
is necessary to avoid the application of an additional tax under Section 409A of the Code to payments due to Executive upon or following
his “separation from service,” then notwithstanding any other provision of this Agreement (or any otherwise applicable plan,
policy, agreement or arrangement), any such payments that are otherwise due within six months following Executive’s “separation
from service” (taking into account the preceding sentence of this paragraph) will be deferred without interest and paid to Executive
in a lump sum immediately following that six month period. This paragraph should not be construed to prevent the application of Treas.
Reg. § 1.409A-1(b)(9)(iii) (or any successor provision) to amounts payable hereunder. For purposes of the application of Section
409A of the Code, each payment in a series of payments will be deemed a separate payment.
(c) Notwithstanding anything in this Agreement to the contrary, to the extent an expense, reimbursement or in-kind benefit provided
to Executive pursuant to this Agreement or otherwise constitutes a “deferral of compensation” within the meaning of Section 409A
of the Code: (i) the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive during any calendar
year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive in any other calendar
year, (ii) the reimbursements for expenses for which Executive is entitled to be reimbursed shall be made on or before the last
day of the calendar year following the calendar year in which the applicable expense is incurred, and (iii) the right to payment
or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit.
11. Section
280G. Notwithstanding any contrary provision of this Agreement (or any plan, policy, agreement or other arrangement covering
Executive), if any payment, right or benefit paid, provided or due to Executive, whether pursuant to this Agreement or otherwise
(each, a “Payment,” and collectively, the “Total Payments”), would subject Executive to the excise tax
imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments will be reduced to the minimum
extent necessary to avoid the imposition of the Excise Tax, but only if (i) the amount of such Total Payments, as so reduced, is
greater than or equal to (ii) the amount of such Total Payments without reduction (in each case, determined on an after-tax basis).
Any reduction of the Total Payments required by this paragraph will be implemented by determining the Parachute Ratio (as
defined below) for each Payment and then by reducing the Payments in order, beginning with the Payment with the highest Parachute
Ratio. For Payments with the same Parachute Ratio, later Payments will be reduced before earlier Payments. For Payments with the
same Parachute Ratio and the same time of payment, each Payment will be reduced proportionately. For purposes of this paragraph,
“Parachute Ratio” means a fraction, (x) the numerator of which is the value of the applicable Payment, as calculated for
purposes of Section 280G of the Code, and (y) the denominator of which is the economic value of the applicable Payment.
12. Certain Definitions.
For purposes of this Agreement:
(a) “Cause” means (i) conduct by Executive constituting a material act of misconduct in connection with the performance
of Executive’s duties, including, without limitation, a material misappropriation of funds or property of the Company or any of
its subsidiaries or affiliates; (ii) the commission by Executive of any felony or a misdemeanor involving moral turpitude, deceit, dishonesty
or fraud, or any conduct by Executive that would reasonably be expected to result in material injury or reputational harm to the Company
or any of its subsidiaries and affiliates; (iii) continued material non-performance by Executive of his duties hereunder (other than by
reason of Executive’s physical or mental illness, incapacity or disability) which has continued for more than 10 days following
written notice of such non-performance from the Board; (iv) a material breach by Executive of the Proprietary Information and Assignment
Agreement (defined below), any other agreement with the Company or its affiliates, or of any duty owed to the Company or its affiliates,
which breach is not cured (if curable) within 10 days after the delivery of written notice thereof; (v) a material violation by Executive
of the Company’s written employment policies, including policies prohibiting sexual harassment, which violation is not cured (if
curable) within 10 days after the delivery of written notice thereof; (vi) alcohol abuse or use of controlled substances (other than prescription
drugs taken in accordance with a physician’s prescription); or (vii) failure to cooperate with a bona fide internal investigation
or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction
or failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to
cooperate or to produce documents or other materials in connection with such investigation. For avoidance of doubt, a termination of Executive’s
employment due to his Disability will not constitute a termination without Cause.
(b) “Change in Control” shall mean the occurrence of a “change in control event” with respect to the
Company, within the meaning of Treas. Reg. § 1.409A-3(i)(5)(i).
(c) “Code” means the Internal Revenue Code of 1986, as amended.
(d) “Disability”
means a condition entitling Executive to benefits under the Company’s long term disability plan, policy or arrangement; provided,
however, that if no such
plan, policy or arrangement is then maintained by the Company and applicable to Executive,
“Disability” will mean Executive’s inability to perform his duties under this Agreement due to a mental or
physical condition (other than alcohol or substance abuse) that can be expected to result in death or that can be expected to last
(or has already lasted) for a continuous period of 90 days or more, or for 120 days in any 180 consecutive-day period. Termination
as a result of a Disability will not be construed as a termination by the Company “without Cause.”
(e) “Good
Reason” means: (i) a material diminution in Executive’s title, responsibilities, authority or duties; (ii) a
material diminution in Executive’s Base Salary, except for across-the-board salary reductions similarly affecting all or
substantially all C-level executives of the Company; or (iii) the material breach of this Agreement by the Company; provided, however, that no
such event will constitute Good Reason unless (x) Executive provides the Company with written objection to such event within 60 days
after the initial occurrence thereof, (y) such event is not reversed or corrected by the
Company within 30 days of its receipt of such written objection, and (z) Executive separates from service within 60 days following
the expiration of that cure period.
(f) “Severance Period” means nine (9) months. Notwithstanding the foregoing, with respect to a cessation of employment
due to a termination by the Company without Cause or resignation by Executive for Good Reason that occurs (in either case) within three
(3) months prior to a Change in Control or twelve (12) months following a Change in Control, “Severance Period” shall mean
twelve (12) months.
13. Company Policies. Executive will comply with all policies of the Company in effect from time to time, including (without
limitation) policies regarding ethics, personal conduct, stock ownership, securities trading, clawback and hedging and pledging of securities.
14. Indemnification. In addition to any rights to indemnification to which Executive may be entitled under the Company’s
governing documents, the Company shall obtain and maintain an appropriate level of Directors and Officers Liability insurance coverage
for Executive’s benefit on the same terms as applicable to other directors and C-level executives of the Company.
15. Proprietary Information and Assignment Agreement. On the same date this Agreement is executed, Executive will execute
the Proprietary Information and Assignment Agreement attached hereto as Exhibit A (the “Proprietary Information and Assignment
Agreement”).
16. No Conflicting Agreements. Executive represents and warrants that he is not a party to or otherwise bound by any
agreement or restriction that could conflict with, or be violated by,
the performance of his duties to the Company or his obligations under this Agreement. Executive will not use or misappropriate
any intellectual property, trade secrets or confidential information belonging to any third party.
17. Taxes.
All compensation payable to Executive are subject to reduction to reflect applicable withholding and payroll taxes and other
deductions required by law. Executive hereby acknowledges that the Company does not have a duty to design its compensation policies
in a
manner that minimizes Executive’s tax liabilities, and Executive not make any claim against the Company or its board of
directors related to tax liabilities arising from his compensation.
18. Entire Agreement; Assignment; Amendment.
(a) This Agreement, together with the Proprietary Information and Assignment Agreement, constitute the final and entire agreement of
the parties with respect to the matters covered hereby and replace and supersede all prior agreements, discussions, negotiations, representations
or understandings (whether written, oral or implied) relating to Executive’s employment by the Company, including without limitation
the Prior Agreement.
(b)
The rights and obligations of Executive hereunder are personal and may not be assigned. The Company may assign this Agreement,
and its rights and obligations hereunder, to any entity to which the Company transfers substantially all of its assets (or an affiliate
thereof). Notwithstanding any other provision of this Agreement, any such assignment of this Agreement by the Company will not entitle
Executive to severance benefits under Section 9(a) or otherwise, whether or not Executive accepts employment with the assignee.
(c) This Agreement may be amended or modified only by a written instrument signed by a duly authorized officer of the Company and Executive.
19.
Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State
of Delaware, without regard to its choice of law provisions.
20. Arbitration.
In the event of any dispute under the provisions of this Agreement or otherwise regarding Executive’s employment or
compensation (other than a dispute in which the primary relief sought is an injunction or other equitable remedy, such as an action
to enforce compliance with the Proprietary Information and Assignment Agreement), the parties shall be required to have the dispute,
controversy or claim settled by arbitration in Philadelphia County, Commonwealth of Pennsylvania, in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (“AAA”),
by one arbitrator mutually agreed upon by the parties (or, if no agreement can be reached within 30 days after names of potential
arbitrators have been proposed by the AAA, then by one arbitrator having relevant experience who is chosen by the AAA). Any award or
finding will be confidential. The arbitrator may not award attorneys’ fees to either party unless a statute or contract at
issue specifically authorizes such an award. Any award entered by the arbitrators will be final, binding and non-appealable and
judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This
arbitration provision will be specifically enforceable. Each party will be responsible for its own expenses relating to the
conduct
of the arbitration (including reasonable attorneys’ fees and expenses) and will share equally the fees of the arbitrator.
21.
Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not the meaning
of this Agreement.
22.
Notices. All notices, demands or other communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered in person, by e-mail or fax, by United States mail, certified or registered with return receipt requested, or
by a nationally recognized overnight courier service, or otherwise actually delivered: (a) if to Executive, at the most recent address
contained in the Company’s personnel files; (b) if to the Company, to the attention of its Legal Department at the address of its
principal executive office; or (c) or at such other address as may have been furnished by such person in writing to the other party. Any
such notice, demand or communication shall be deemed given on the date given, if delivered in person, e-mailed or faxed, on the date received,
if given by registered or certified mail, return receipt requested or by overnight delivery service, or three days after the date mailed,
if otherwise given by first class mail, postage prepaid.
23. Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures
of more than one party, but all of which taken together will constitute one and the same Agreement.
[Signature Page Follows]
This Agreement has been executed
and delivered on the date first above written.
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CENTURY
THERAPEUTICS, INC.
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By:
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/s/ Osvaldo Flores, Ph.D.
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Name:
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Osvaldo Flores, Ph.D.
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Title:
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President and Chief Executive Officer
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EXECUTIVE
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Hyam
Levitsky, M.D.
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By:
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/s/ Gregory Russotti, Ph.D.
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Name:
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Gregory Russotti, Ph.D.
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[Signature Page to Employment Agreement]
Exhibit
10.36
CENTURY THERAPEUTICS,
INC.
February 16, 2021
Via e-mail
Joseph Jimenez
122 Pepperwood Ct
Danville, CA 94506
joe.jimenez@aditumbio.com
Dear Joe:
Following our recent discussions,
I am very pleased to invite you to serve as Chairman of the Board of Directors (the “Board”) of Century Therapeutics,
Inc. (f/k/a Century Therapeutics, LLC, the “Company”), on the terms and subject to the conditions set forth below.
1. Appointment.
Upon your acceptance of this letter, in connection with the conversion of the Company from a Delaware limited liability company to a
Delaware corporation (which is anticipated to occur on or before February 24, 2021) (the “Conversion”), your nomination
to serve as Chairman of the Board will be submitted to the other members of the Board for approval. In connection with your appointment,
you shall hold office until such time that your successor is duly elected and qualified, or until your earlier death, retirement, resignation
or removal from office. The terms and obligations under this letter agreement shall remain in full force and effect until your earlier
death, retirement, resignation or removal from the Board; provided that the obligations under Section 6 shall survive indefinitely.
2. Duties.
As an independent director, you will be expected to attend the meetings of the Board and the Committees of the Board on which you serve,
as regularly or specially called. Board meetings are scheduled upon prior consultation with directors and are typically held in Philadelphia,
PA. You may attend and participate at each such meeting via teleconference, video conference or in person.
3. Fiduciary Obligations; Governance: The Company is governed by Delaware law. The structure, practices and authority of the
Board, including matters relating to the size and composition of the Board, the election and removal of directors, requirements relating
to Board action and the appointment of executive officers, effective as of the Conversion, will be governed by the Company’s Amended
and Restated Certificate of Incorporation and Bylaws, as each may be amended from time to time (the “Organizational Documents”).
4. Compensation.
As consideration for your service as a member of the Board, the Company will pay you the following compensation:
(a)
Equity Award. Subject to the approval of the Board, upon the closing of an equity financing resulting in gross proceeds
to the Company of at least $155,000,000 (the “Series C Financing”), the Company will grant to you a one-time nonqualified
stock option exercisable for the purchase of 683,601 shares of the Company’s common stock, par value $0.0001
per share (the “Common
Stock”) (the “Option”), which, together with existing awards previously granted to you by the Company, brings
your equity ownership in the Company following the closing of the Series C Financing to 1% of the Company measured on a fully diluted
basis. The Option will: (i) be subject to the terms and conditions of the Century Therapeutics, Inc. 2018 Stock Option and Grant Plan
(as amended, restated or otherwise modified from time to time, the “Plan”) and the Non-Qualified Stock Option Agreement
by and between you and the Company (the “Award Agreement”), (ii) have an exercise price per share equal to the fair
market value per share of Common Stock on the date of the grant, as determined by the Board, and (iii) be subject to vesting requirements
such that 25% of the shares of Common Stock underlying the Option shall vest on the first anniversary of the date of grant, and thereafter,
the remaining 75% of the shares of Common Stock underlying the Option shall vest in 36 substantially equal monthly installments, in each
case if you continue to provide services to the Company as of the applicable vesting date; provided, however, that any then-unvested
portion of the Option shall automatically vest upon the closing of a Sale Event (as defined in the Plan) if you continue to provide services
to the Company through such event.
(b) Annual
Retainer. Subject to approval by the Board, for so long as you continue to serve as a director of the Company, you shall be entitled
to receive an annual retainer of $50,000, payable on a quarterly basis. Such retainer shall be pro-rated for any partial year.
5. Expenses. The Company will pay or reimburse the reasonable, authorized expenses incurred by you in the discharge of your
duties as a director, in accordance with the general practices and policies of the Company and upon the submission of appropriate documentation.
6. Indemnification; Insurance. As a director, you will be entitled to indemnification under the Company’s Organizational
Documents and that certain Indemnification Agreement by and between the Company and you, effective as of August 19, 2019 (as the same
may be amended, restated, modified, superseded or replaced from time to time, the “Indemnification Agreement”). In
addition, the Company will also carry director and officer liability insurance and you will be a covered person under any such policy
maintained by the Company during the term of your service on the Board.
7. Proprietary
Information. In your capacity as a Board member the Company will you with information of a private, secret or confidential nature
concerning the Company’s business, business relationships or financial affairs (collectively, “Proprietary Information”).
In consideration for the Company sharing with you the Company’s Proprietary Information, you agree that you will not disclose any
Proprietary Information to any person or entity other than employees or advisors of the Company or use the same for any purposes (other
than in the performance of your duties as a member of the Board) without written approval by an officer of the Company, either during
or after you serve as a member of the Board, unless and until such Proprietary Information has become public knowledge without your fault.
All such materials or copies thereof and all tangible property of the Company in your custody or possession shall be delivered to the
Company or destroyed, at the Company’s election, upon the earlier of (i) the Company’s request or (ii) termination of your
service on the Board. After such delivery or destruction, you shall not retain any such materials or copies thereof or any such tangible
property.
You agree that your obligations not to disclose or to use Proprietary Information and materials containing
Proprietary Information and to return materials and tangible property also extends to such types of information, materials and tangible
property of customers of the Company or suppliers to the Company or other third parties who may have disclosed or entrusted the same to
you or the Company.
8. Obligations
to Third Parties. You represent that your service as a member of the Board does not and will not breach any agreement you have with
any current or former employer or any other person (including without limitation any nondisclosure or non-competition agreement), and
that you will not disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging
to any current or previous employer or others.
9. Relationship
of the Parties. Nothing contained in this letter agreement shall be construed to create an employer/employee, joint venture, partnership,
or principal-agent relationship between you and the Company.
10. Governing
Law; Consent to Jurisdiction. This letter agreement shall be interpreted according to and governed by the law of the State of Delaware
applicable to agreements made and performed within the State of Delaware without reference to its choice of law rules. The parties to
this Agreement hereby consent to the jurisdiction of the courts located in New Castle County, Delaware for any proceeding arising out
of or relating to this letter agreement.
11. Entire
Agreement. This letter agreement and the Indemnification Agreement constitute the entire understanding between the parties with respect
to the subject matter hereof and supersedes any and all prior understandings, statements, warranties, representations and agreements,
both oral and written, relating hereto.
12. Severability.
If any term of this letter agreement is held invalid, illegal, or unenforceable by a court of competent jurisdiction, that term shall
be severed and the remaining terms shall continue in full force.
13. Counterparts.
This letter agreement may be executed in counterparts, including by facsimile signature, each of which shall be deemed an original but
all of which taken together shall constitute one and the same instrument.
[remainder of page intentionally left blank]
If you are in agreement with
the terms described above, please return a countersigned copy of this letter to me. We look forward to your continued participation as
a member of the Board.
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Very truly yours,
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/s/ Osvaldo Flores
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Osvaldo Flores, Ph.D.
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President & Chief Executive Officer
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ACCEPTED AND AGREED TO:
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/s/ Joseph Jimenez
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Feb 16 2021
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Exhibit 10.37
CENTURY THERAPEUTICS,
INC.
February 25, 2021
Via e-mail
Cynthia Butitta
21 Montage Way
Laguna Beach, CA
92651
E-mail:cynthiabutitta@gmail.com
Dear Cynthia:
Following our recent discussions,
I am very pleased to invite you to serve as member of the Board of Directors (the “Board”) of Century Therapeutics,
Inc. (f/k/a Century Therapeutics, LLC, the “Company”), on the terms and subject to the conditions set forth below.
1. Appointment.
Upon your acceptance of this letter, following the conversion of the Company from a Delaware limited liability company to a Delaware
corporation (which is anticipated to occur on or before February 25, 2021) (the “Conversion”), and the consummation
of an equity financing resulting in gross proceeds to the Company of at least $160,000,000 (the “Series C Financing”),
your nomination and election as an independent director will be submitted to the stockholders of the Company for approval. Following
your nomination and election, you shall hold office until such time that your successor is duly elected and qualified, or until your
earlier death, retirement, resignation or removal from office. The terms and obligations under this letter agreement shall remain in
full force and effect until your earlier death, retirement, resignation or removal from the Board; provided that the obligations under
Section 6 shall survive indefinitely.
2. Duties.
As an independent director, you will be expected to attend the meetings of the Board and the Committees of the Board on which you serve,
as regularly or specially called. Board meetings are scheduled upon prior consultation with directors and are typically held in Philadelphia,
PA. You may attend and participate at each such meeting via teleconference, video conference or in person.
3. Fiduciary
Obligations; Governance. The Company is governed by Delaware law. The structure, practices and authority of the Board, including
matters relating to the size and composition of the Board, the election and removal of directors, requirements relating to Board action
and the appointment of executive officers, effective as of the Conversion, will be governed by the Company’s Amended and Restated
Certificate of Incorporation and Bylaws, as each may be amended from time to time (the “Organizational Documents”).
4. Compensation.
As consideration for your service as a member of the Board, the Company will pay you the following compensation:
(a) Equity Award. Subject to the approval of the Board, upon the closing of the Series C Financing, the Company will grant
to you a one-time nonqualified stock option exercisable for the purchase of 375,465 shares of the Company’s common stock, par value
$0.0001
per share (the “Option”), which,
following the closing of the Series C Financing, is equal to 0.3% of the Company measured on a fully diluted basis. The Option will: (i)
be subject to the terms and conditions of the Century Therapeutics, Inc. 2018 Stock Option and Grant Plan (as amended, restated or otherwise
modified from time to time, the “Plan”) and the Non-Qualified Stock Option Agreement by and between you and the Company
(the “Award Agreement”), (ii) have an exercise price per share equal to the fair market value per share of Common Stock
on the date of the grant, as determined by the Board, and (iii) be subject to vesting requirements such that 25% of the shares of Common
Stock underlying the Option shall vest on the first anniversary of the date of grant, and thereafter, the remaining 75% of the shares
of Common Stock underlying the Option shall vest in 36 substantially equal monthly installments, in each case if you continue to provide
services to the Company as of the applicable vesting date; provided, however, that any then-unvested portion of the Option shall automatically
vest upon the closing of a Sale Event (as defined in the Plan) if you continue to provide services to the Company through such event.
(b) Annual
Retainer. Subject to approval by the Board, for so long as you continue to serve as a director of the Company, you shall be entitled
to receive an annual retainer of $25,000, payable on a quarterly basis. Such retainer shall be pro-rated for any partial year.
5. Expenses.
The Company will pay or reimburse the reasonable, authorized expenses incurred by you in the discharge of your duties as a director,
in accordance with the general practices and policies of the Company and upon the submission of appropriate documentation.
6.
Indemnification; Insurance. As a director, you will be entitled to indemnification under the Company’s Organizational
Documents and an Indemnification Agreement to be entered into between the Company and you (the “Indemnification Agreement”).
In addition, the Company will also carry director and officer liability insurance and you will be a covered person under any such policy
maintained by the Company during the term of your service on the Board.
7. Proprietary Information. You agree that all information, whether or not in writing, of a private, secret or confidential
nature concerning the Company’s business, business relationships or financial affairs (collectively, “Proprietary Information”)
is and shall be the exclusive property of the Company. In consideration for the Company sharing with you the Company’s Proprietary
Information, you agree (a) that you will not disclose any Proprietary Information to any person or entity other than employees or advisors
of the Company or use the same for any purposes (other than in the performance of your duties as a member of the Board) without written
approval by an officer of the Company, either during or after you serve as a member of the Board, unless and until such Proprietary Information
has become public knowledge without your fault, and (b) that any materials containing Proprietary Information which shall come into your
custody or possession shall be and are the exclusive property of the Company to be used only in the performance of your duties for the
Company. All such materials or copies thereof and all tangible property of the Company in your custody or possession shall be delivered
to the Company or destroyed, at the Company’s election, upon the earlier of (i) the Company’s request or (ii) termination
of your service on the Board. After such delivery or destruction, you shall not retain any such materials or copies thereof or any such
tangible property. You agree that your
obligations not to disclose or to use Proprietary Information and materials containing Proprietary
Information and to return materials and tangible property also extends to such types of information, materials and tangible property
of customers of the Company or suppliers to the Company or other third parties who may have disclosed or entrusted the same to you or
the Company.
8. Obligations
to Third Parties. You represent that your service as a member of the Board does not and will not breach any agreement you have with
any current or former employer or any other person (including without limitation any nondisclosure or non-competition agreement), and
that you will not disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging
to any current or previous employer or others.
9. Relationship
of the Parties. Nothing contained in this letter agreement shall be construed to create an employer/employee, joint venture, partnership,
or principal-agent relationship between you and the Company.
10.
Governing Law; Consent to Jurisdiction. This letter agreement shall be interpreted according to and governed by the law
of the State of Delaware applicable to agreements made and performed within the State of Delaware without reference to its choice of law
rules. The parties to this Agreement hereby consent to the jurisdiction of the courts located in New Castle County, Delaware for any proceeding
arising out of or relating to this letter agreement.
11.
Entire Agreement. This letter agreement and the Indemnification Agreement constitute the entire understanding between the
parties with respect to the subject matter hereof and supersedes any and all prior understandings, statements, warranties, representations
and agreements, both oral and written, relating hereto.
12.
Severability. If any term of this letter agreement is held invalid, illegal, or unenforceable by a court of competent jurisdiction,
that term shall be severed and the remaining terms shall continue in full force.
13.
Counterparts. This letter agreement may be executed in counterparts, including by facsimile signature, each of which shall
be deemed an original but all of which taken together shall constitute one and the same instrument.
[remainder of page intentionally left blank]
If you are in agreement with
the terms described above, please return a countersigned copy of this letter to me. We look forward to your participation as a member
of the Board.
|
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Very truly yours,
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|
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/s/ Osvaldo Flores
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Osvaldo Flores, Ph.D.
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President & Chief Executive Officer
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ACCEPTED AND AGREED TO:
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/s/ Cynthia Butitta
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February 25, 2021
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Cynthia Butitta
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Date
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Exhibit 10.38
Kimberly L. Blackwell MD
[***]
Via email – [***]
RE: Director Engagement Offer Letter
Dear Kimberly:
Following our recent discussions,
I am very pleased to invite you to serve as member of the Board of Directors (the “Board”) of Century Therapeutics,
Inc. (the “Company”), on the terms and subject to the conditions set forth below.
1.
Appointment. Upon your acceptance of this letter, your nomination and election as an independent director will be submitted
to the Company’s Board and stockholders for approval. Following your nomination and election, you shall hold office until such time
that your successor is duly elected and qualified, or until your earlier death, retirement, resignation or removal from office. The terms
and obligations under this letter agreement shall remain in full force and effect until your earlier death, retirement, resignation or
removal from the Board; provided that the obligations under Section 6 shall survive indefinitely.
2.
Duties. As an independent director, you will be expected to attend the meetings of the Board and the Committees of the Board
on which you serve, as regularly or specially called. Board meetings are scheduled upon prior consultation with directors and are typically
held in Philadelphia, PA. You may attend and participate at each such meeting via teleconference, video conference or in person.
3.
Fiduciary Obligations; Governance. The Company is governed by Delaware law. The structure, practices and authority of the
Board, including matters relating to the size and composition of the Board, the election and removal of directors, requirements relating
to Board action and the appointment of executive officers, are governed by the Company’s Amended and Restated Certificate of Incorporation
and Bylaws, as each may be amended from time to time (the “Organizational Documents”).
4.
Compensation. As consideration for your service as a member of the Board, the Company will pay you the following compensation:
|
|
A.
|
Initial Equity Award. Subject to the approval of the Board, upon your
appointment to the Board, the Company will grant to you a one-time nonqualified stock option exercisable for the purchase of 250,310 shares
of the Company’s common stock, par value $0.0001 per share (the “Option”), which is equal to 0.2% of the Company
measured on a fully diluted basis as of immediately following the Company’s recent Series C financing which closed on February 25,
2021. The Option will: (i) be subject to the terms and conditions of the Century Therapeutics, Inc. 2018 Stock Option and Grant Plan (as
amended, restated or otherwise modified from time to time, the “Plan”) and the Non-Qualified Stock Option Agreement
by and between you and the Company (the “Award
|
Agreement”), (ii) have an exercise price per
share equal to the fair market value of the Company’s common stock on the date of grant ($2.89 per share) and (iii) be subject
to vesting requirements such that 25% of the shares of Common Stock underlying the Option shall vest on the first anniversary of the
grant date, and thereafter, the remaining 75% of the shares of Common Stock underlying the Option shall vest in 36 substantially equal
monthly installments, in each case if you continue to provide services to the Company as of the applicable vesting date; provided, however,
that any then-unvested portion of the Option shall automatically vest upon the closing of a Sale Event (as defined in the Plan) if you
continue to provide services to the Company through such event.
|
|
B.
|
Annual
Retainer and Equity Awards. Subject to approval by the Board, for so long as you continue to serve as a director of the Company,
you shall be entitled to receive an annual retainer of $25,000, payable on a quarterly basis. Such retainer shall be pro-rated for any
partial year.
|
5.
Expenses. The Company will pay or reimburse the reasonable, authorized expenses incurred by you in the discharge of your
duties as a director, in accordance with the general practices and policies of the Company and upon the submission of appropriate documentation.
6.
Indemnification; Insurance. As a director, you will be entitled to indemnification under the Company’s Organizational
Documents and an Indemnification Agreement to be entered into between the Company and you (the “Indemnification Agreement”).
In addition, the Company will also carry director and officer liability insurance and you will be a covered person under any such policy
maintained by the Company during the term of your service on the Board.
7.
Proprietary Information. You agree that all information, whether or not in writing, of a private, secret or confidential
nature concerning the Company’s business, business relationships or financial affairs (collectively, “Proprietary Information”)
is and shall be the exclusive property of the Company. In consideration for the Company sharing with you the Company’s Proprietary
Information, you agree (a) that you will not disclose any Proprietary Information to any person or entity other than employees or advisors
of the Company or use the same for any purposes (other than in the performance of your duties as a member of the Board) without written
approval by an officer of the Company, either during or after you serve as a member of the Board, unless and until such Proprietary Information
has become public knowledge without your fault, and (b) that any materials containing Proprietary Information which shall come into your
custody or possession shall be and are the exclusive property of the Company to be used only in the performance of your duties for the
Company. All such materials or copies thereof and all tangible property of the Company in your custody or possession shall be delivered
to the Company or destroyed, at the Company’s election, upon the earlier of (i) the Company’s request or (ii) termination
of your service on the Board. After such delivery or destruction, you shall not retain any such materials or copies thereof or any such
tangible property. You agree that your obligations not to disclose or to use Proprietary Information and materials containing Proprietary
Information and to return materials and tangible property also extends to such types of information,
materials and tangible property of customers of
the Company or suppliers to the Company or other third parties who may have disclosed or entrusted the same to you or the Company.
8.
Obligations to Third Parties. You represent that your service as a member of the Board does not and will not breach any
agreement you have with any current or former employer or any other person (including without limitation any nondisclosure or non-competition
agreement), and that you will not disclose to the Company or induce the Company to use any confidential or proprietary information or
material belonging to any current or previous employer or others.
9.
Relationship of the Parties. Nothing contained in this letter agreement shall be construed to create an employer/employee,
joint venture, partnership, or principal-agent relationship between you and the Company.
10.
Governing Law; Consent to Jurisdiction. This letter agreement shall be interpreted according to and governed by the law
of the State of Delaware applicable to agreements made and performed within the State of Delaware without reference to its choice of law
rules. The parties to this Agreement hereby consent to the jurisdiction of the courts located in New Castle County, Delaware for any proceeding
arising out of or relating to this letter agreement.
11.
Entire Agreement. This letter agreement and the Indemnification Agreement constitute the entire understanding between the
parties with respect to the subject matter hereof and supersedes any and all prior understandings, statements, warranties, representations
and agreements, both oral and written, relating hereto.
12.
Severability. If any term of this letter agreement is held invalid, illegal, or unenforceable by a court of competent jurisdiction,
that term shall be severed and the remaining terms shall continue in full force.
13.
Counterparts. This letter agreement may be executed in counterparts, including by facsimile signature, each of which shall
be deemed an original but all of which taken together shall constitute one and the same instrument.
[remainder of page intentionally
left blank]
|
3675 Market Street, Philadelphia, PA 19104
|
If you are in agreement with
the terms described above, please return a countersigned copy of this letter to me. We look forward to your participation as a member
of the Board.
|
|
Very truly yours,
|
|
|
|
|
|
/s/ Osvaldo Flores,
Ph.D.
|
|
|
Name:
|
Osvaldo Flores, Ph.D.
|
|
|
Title:
|
Chief Executive Officer
|
Accepted and Agreed to:
|
/s/ Kimberly L. Blackwell, M.D.
|
|
May 19, 2021
|
|
Kimberly L. Blackwell, M.D.
|
|
Date
|
Exhibit 10.39
Alessandro Riva, MD
[ *** ]
Via email – [***]
RE: Director Engagement Offer Letter
Dear Alessandro:
Following our recent discussions,
I am very pleased to invite you to serve as member of the Board of Directors (the “Board”) of Century Therapeutics,
Inc. (the “Company”), on the terms and subject to the conditions set forth below.
1.
Appointment. Upon your acceptance of this letter, your nomination and election as an independent director will be submitted
to the Company’s Board and stockholders for approval. Following your nomination and election, you shall hold office until such
time that your successor is duly elected and qualified, or until your earlier death, retirement, resignation or removal from office.
The terms and obligations under this letter agreement shall remain in full force and effect until your earlier death, retirement, resignation
or removal from the Board; provided that the obligations under Section 6 shall survive indefinitely.
2.
Duties. As an independent director, you will be expected to attend the meetings of the Board and the Committees of the
Board on which you serve, as regularly or specially called. Board meetings are scheduled upon prior consultation with directors and are
typically held in Philadelphia, PA. You may attend and participate at each such meeting via teleconference, video conference or in person.
3.
Fiduciary Obligations; Governance. The Company is governed by Delaware law. The structure, practices and authority
of the Board, including matters relating to the size and composition of the Board, the election and removal of directors, requirements
relating to Board action and the appointment of executive officers, are governed by the Company’s Amended and Restated Certificate
of Incorporation and Bylaws, as each may be amended from time to time (the “Organizational Documents”).
4.
Compensation. As consideration for your service as a member of the Board, the Company will pay you the following compensation:
|
|
A.
|
Initial Equity Award. Subject to the approval of the Board, upon your
appointment to the Board, the Company will grant to you a one-time nonqualified stock option exercisable for the purchase of 250,310 shares
of the Company’s common stock, par value $0.0001 per share (the “Option”), which is equal to 0.2% of the Company
measured on a fully diluted basis as of immediately following the Company’s recent Series C financing which closed on February 25,
2021. The Option will: (i) be subject to the terms and conditions of the Century Therapeutics, Inc. 2018 Stock Option and Grant Plan (as
amended, restated or otherwise modified from time to time, the “Plan”) and the Non-Qualified Stock Option Agreement
by and between you and the Company (the “Award
|
Agreement”), (ii) have an exercise price per
share equal to the fair market value of the Company’s common stock on the date of grant ($2.89 per share) and (iii) be subject
to vesting requirements such that 25% of the shares of Common Stock underlying the Option shall vest on the first anniversary of the
grant date, and thereafter, the remaining 75% of the shares of Common Stock underlying the Option shall vest in 36 substantially equal
monthly installments, in each case if you continue to provide services to the Company as of the applicable vesting date; provided, however,
that any then-unvested portion of the Option shall automatically vest upon the closing of a Sale Event (as defined in the Plan) if you
continue to provide services to the Company through such event.
|
|
B.
|
Annual
Retainer and Equity Awards. Subject to approval by the Board, for so long as you continue to serve as a director of the Company,
you shall be entitled to receive an annual retainer of $25,000, payable on a quarterly basis. Such retainer shall be pro-rated for any
partial year.
|
5. Expenses.
The Company will pay or reimburse the reasonable, authorized expenses incurred by you in the discharge of your duties as a director,
in accordance with the general practices and policies of the Company and upon the submission of appropriate documentation.
6. Indemnification;
Insurance. As a director, you will be entitled to indemnification under the Company’s Organizational Documents and an Indemnification
Agreement to be entered into between the Company and you (the “Indemnification Agreement”). In addition, the Company
will also carry director and officer liability insurance and you will be a covered person under any such policy maintained by the Company
during the term of your service on the Board.
7. Proprietary
Information. You agree that all information, whether or not in writing, of a private, secret or confidential nature concerning the
Company’s business, business relationships or financial affairs (collectively, “Proprietary Information”) is
and shall be the exclusive property of the Company. In consideration for the Company sharing with you the Company’s Proprietary
Information, you agree (a) that you will not disclose any Proprietary Information to any person or entity other than employees or advisors
of the Company or use the same for any purposes (other than in the performance of your duties as a member of the Board) without written
approval by an officer of the Company, either during or after you serve as a member of the Board, unless and until such Proprietary Information
has become public knowledge without your fault, and (b) that any materials containing Proprietary Information which shall come into your
custody or possession shall be and are the exclusive property of the Company to be used only in the performance of your duties for the
Company. All such materials or copies thereof and all tangible property of the Company in your custody or possession shall be delivered
to the Company or destroyed, at the Company’s election, upon the earlier of (i) the Company’s request or (ii) termination
of your service on the Board. After such delivery or destruction, you shall not retain any such materials or copies thereof or any such
tangible property. You agree that your obligations not to disclose or to use Proprietary Information and materials containing Proprietary
Information and to return materials and tangible property also extends to such types of information,
materials and tangible property of customers of
the Company or suppliers to the Company or other third parties who may have disclosed or entrusted the same to you or the Company.
8. Obligations
to Third Parties. You represent that your service as a member of the Board does not and will not breach any agreement you have with
any current or former employer or any other person (including without limitation any nondisclosure or non-competition agreement), and
that you will not disclose to the Company or induce the Company to use any confidential or proprietary information or material belonging
to any current or previous employer or others.
9. Relationship of the Parties. Nothing contained in this letter agreement shall be construed to create an employer/employee,
joint venture, partnership, or principal-agent relationship between you and the Company.
10. Governing
Law; Consent to Jurisdiction. This letter agreement shall be interpreted according to and governed by the law of the State of Delaware
applicable to agreements made and performed within the State of Delaware without reference to its choice of law rules. The parties to
this Agreement hereby consent to the jurisdiction of the courts located in New Castle County, Delaware for any proceeding arising out
of or relating to this letter agreement.
11. Entire Agreement. This letter agreement and the Indemnification Agreement constitute the entire understanding between the
parties with respect to the subject matter hereof and supersedes any and all prior understandings, statements, warranties, representations
and agreements, both oral and written, relating hereto.
12. Severability.
If any term of this letter agreement is held invalid, illegal, or unenforceable by a court of competent jurisdiction, that term shall
be severed and the remaining terms shall continue in full force.
13. Counterparts.
This letter agreement may be executed in counterparts, including by facsimile signature, each of which shall be deemed an original but
all of which taken together shall constitute one and the same instrument.
[remainder of page intentionally
left blank]
|
3675 Market Street, Philadelphia, PA 19104
|
If you are in agreement with
the terms described above, please return a countersigned copy of this letter to me. We look forward to your participation as a member
of the Board.
|
|
Very truly yours,
|
|
|
|
|
|
/s/ Osvaldo Flores, Ph.D.
|
|
|
Name: Osvaldo Flores, Ph.D.
|
|
|
Title: Chief Executive Officer
|
|
Accepted and Agreed
to:
|
|
|
|
|
|
|
|
/s/ Alessandro Riva, M.D.
|
|
May 19, 2021
|
|
Alessandro Riva, M.D.
|
|
Date
|
Exhibit 21.1
SUBSIDIARIES
OF CENTURY THERAPEUTICS, INC.
|
Subsidiary
|
|
Ownership percentage
|
|
|
State or Country of Incorporation
|
|
Century Therapeutics Canada ULC
|
|
|
100
|
%
|
|
British Columbia, Canada
|
|
|
|
|
|
|
|
|
|
Exhibit 23.1
Consent
of Independent Registered Public Accounting Firm
We consent to the reference to our firm under
the caption “Experts” and to the use of our report dated May 5, 2021 in the Registration Statement (Form S-1) and related
Prospectus of Century Therapeutics, Inc. for the registration of shares of its common stock.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
May 28, 2021
![[MISSING IMAGE: LG_CENTURYTHERAP-4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_LG_CENTURYTHERAP-4CLR.JPG)
![[MISSING IMAGE: TM218551D3-PH_CORECHAR4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_CORECHAR4CLR.JPG)
![[MISSING IMAGE: TM218551D3-PH_OURUSE4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_OURUSE4CLR.JPG)
![[MISSING IMAGE: TM218551D3-PH_CAMELID4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_CAMELID4CLR.JPG)
![[MISSING IMAGE: TM218551D3-FC_EVOLUTION4C.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-FC_EVOLUTION4C.JPG)
![[MISSING IMAGE: TM218551D3-PH_STAGES4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_STAGES4CLR.JPG)
![[MISSING IMAGE: TM218551D3-PH_DEVELOP4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_DEVELOP4CLR.JPG)
![[MISSING IMAGE: TM218551D3-PH_END4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_END4CLR.JPG)
![[MISSING IMAGE: TM218551D3-PH_SINGLE4C.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_SINGLE4C.JPG)
![[MISSING IMAGE: TM218551D3-PH_ENGINEER4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_ENGINEER4CLR.JPG)
![[MISSING IMAGE: TM218551D3-PH_CRISPR4C.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_CRISPR4C.JPG)
![[MISSING IMAGE: TM218551D3-PH_ALLOEVAT4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_ALLOEVAT4CLR.JPG)
![[MISSING IMAGE: TM218551D3-LC_ILLUSTRAT4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-LC_ILLUSTRAT4CLR.JPG)
![[MISSING IMAGE: TM218551D3-PH_FUTURE4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_FUTURE4CLR.JPG)
![[MISSING IMAGE: TM218551D3-PH_PHENOTYPEBWLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_PHENOTYPEBWLR.JPG)
![[MISSING IMAGE: TM218551D3-LC_OURINKCELLS4C.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-LC_OURINKCELLS4C.JPG)
![[MISSING IMAGE: TM218551D3-LC_OUCARINK4C.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-LC_OUCARINK4C.JPG)
![[MISSING IMAGE: TM218551D3-LC_ROBUST4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-LC_ROBUST4CLR.JPG)
![[MISSING IMAGE: TM218551D3-LC_TGBLI4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-LC_TGBLI4CLR.JPG)
![[MISSING IMAGE: TM218551D3-BC_ADDITION4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-BC_ADDITION4CLR.JPG)
![[MISSING IMAGE: TM218551D3-PHT_IPSDERI4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PHT_IPSDERI4CLR.JPG)
![[MISSING IMAGE: TM218551D3-LC_DIFFERENTBWLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-LC_DIFFERENTBWLR.JPG)
![[MISSING IMAGE: TM218551D3-LC_KILLCD194CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-LC_KILLCD194CLR.JPG)
![[MISSING IMAGE: TM218551D3-LC_TIPSCBWLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-LC_TIPSCBWLR.JPG)
![[MISSING IMAGE: TM218551D3-LC_TARGETCEL4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-LC_TARGETCEL4CLR.JPG)
![[MISSING IMAGE: TM218551D3-PH_CARCONST4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_CARCONST4CLR.JPG)
![[MISSING IMAGE: TM218551D3-ORG_ELIMIN4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-ORG_ELIMIN4CLR.JPG)
![[MISSING IMAGE: TM218551D3-LC_EXPRESS4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-LC_EXPRESS4CLR.JPG)
![[MISSING IMAGE: TM218551D3-BC_SAFETY4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-BC_SAFETY4CLR.JPG)
![[MISSING IMAGE: TM218551D3-ORG_LEADDISC4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-ORG_LEADDISC4CLR.JPG)
![[MISSING IMAGE: TM218551D3-BC_TRANSGEN4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-BC_TRANSGEN4CLR.JPG)
![[MISSING IMAGE: TM218551D3-BC_AVERA4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-BC_AVERA4CLR.JPG)
![[MISSING IMAGE: TM218551D3-LC_SERIAL4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-LC_SERIAL4CLR.JPG)
![[MISSING IMAGE: TM218551D3-LC_TUMORGROW4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-LC_TUMORGROW4CLR.JPG)
![[MISSING IMAGE: TM218551D3-BC_ELIMIN4C.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-BC_ELIMIN4C.JPG)
![[MISSING IMAGE: TM218551D6-PH_MULTI4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D6-PH_MULTI4CLR.JPG)
![[MISSING IMAGE: TM218551D3-BC_CARTCELLS4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-BC_CARTCELLS4CLR.JPG)
![[MISSING IMAGE: TM218551D3-PH_CD133TARG4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-PH_CD133TARG4CLR.JPG)
![[MISSING IMAGE: TM218551D3-LC_TUMOR4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-LC_TUMOR4CLR.JPG)
![[MISSING IMAGE: TM218551D6-PH_HOMEO4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D6-PH_HOMEO4CLR.JPG)
![[MISSING IMAGE: TM218551D3-ORG_EFFECT4CLR.JPG]](https://content.edgar-online.com/edgar_conv_img/2021/05/28/0001104659-21-074278_TM218551D3-ORG_EFFECT4CLR.JPG)