Item 1.01 Entry into a Material Definitive Agreement
On April 19,
2023, Blue Water Vaccines Inc., a Delaware corporation (the “Company”), entered into an Asset Purchase Agreement (the "Purchase
Agreement") with Veru Inc., a Wisconsin corporation (the "Seller"). Pursuant to, and subject to the terms and conditions
of, the Purchase Agreement, the Company purchased substantially all of the assets related to the Seller’s ENTADFITM
business (the “ENTADFITM Business”)
and assumed certain liabilities of the Seller (the “Transaction”). The Transaction closed on April 19, 2023.
Terms of
the Transaction
The Company
purchased substantially all of the Seller’s assets, rights and property related to the ENTADFITM Business
for a total possible consideration of $100,000,000 (as described below). The ENTADFITM Business
capitalizes on the demonstrable success of the FDA-approved drug ENTADFITM for
treating benign prostatic hyperplasia and counteracting negative sexual side effects seen in men on alternative BPH therapies.
Furthermore,
in connection with the Transaction, the Company assumed royalty and milestone obligations under an asset purchase agreement for
tadalafil-finasteride combination entered into by the Seller and Premier Consulting on December 11, 2017 (the “Camargo Obligations”).
The Camargo Obligations assumed by the Company include a 6% royalty on all sales of tadalafil-finasteride and sales milestone payments
of up to $22.5 million.
Pursuant to
the terms of the Purchase Agreement, the Company provided the Seller with upfront consideration totaling $20,000,000, consisting of (i)
$6.0 million paid upon the closing of the Transaction, (ii) an additional $4.0 million that the Company is obligated to pay the Seller
during the Seller’s fiscal year 2023, and (iii) an additional $10 million that the Company is obligated to pay the Seller in installments
during the Seller’s fiscal year 2024.
Additionally, the terms of the Purchase Agreement
require the Company to pay the Seller up to an additional $80 million based on the Company’s net sales from the ENTADFITM
business after closing (the "Milestone Payments"). The Milestone Payments are payable as follows: (i) $10 million is payable
if the Company’s annual net sales from the ENTADFITM business equal or exceed $100 million, (ii) $20 million is
payable if the Company’s annual net sales from the ENTADFITM business equal or exceed $200 million, and (3) $50 million
is payable if annual net sales from the ENTADFITM business equal or exceed $500 million. No more than one Milestone Payment
shall be made for the achievement of each net sales milestone. There can be no assurance that the net sales milestones for payment of
any of the Milestone Payments will be reached.
The Company and the Purchaser made customary representations
and warranties, and agreed to certain customary covenants, in the Purchase Agreement. Subject to
certain exceptions and limitations, each party has agreed to indemnify the other for breaches of representations, warranties and covenants
and for certain other matters.
Non-Competition
Agreements
In connection
with the Transaction, and pursuant to the Purchase Agreement, the Company entered into non-competition and non-solicitation agreements
(the “Non-Competition Agreements”) with two of the Seller’s key stockholders and employees (the “Restricted Parties”).
The Non-Competition Agreements generally prohibit the Restricted Parties from either directly or indirectly engaging in the Restricted
Business (as such term is defined in the Purchase Agreement) for a period of five (5) years from the closing of the Transaction.
The description of the Purchase Agreement and the
Non-Competition Agreements set forth herein is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy
of which is attached as Exhibit 10.1 hereto and is being filed herewith, and to the full text of the form of Non-Competition Agreement,
a copy of which is attached as Exhibit 10.2 hereto and is being filed herewith.