Item 1.03. Bankruptcy or Receivership.
Chapter 11 Filing
On December 11, 2022, Clovis Oncology, Inc. (the “Company”) and its subsidiaries, Clovis Oncology UK Limited and Clovis Oncology Ireland Limited (together with the Company, the “Debtors”) filed voluntary petitions (the “Bankruptcy Petitions”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (such court, the “Court” and such cases, the “Cases”). The Debtors have filed a motion with the Court seeking joint administration of the Cases under the caption In re Clovis Oncology, Inc., et al. The Debtors will continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court. To ensure their ability to continue operating in the ordinary course of business, the Debtors have filed various “first day” motions with the Bankruptcy Court requesting customary relief, including authority to obtain debtor-in-possession financing and pay employee wages and benefits, that will enable the Debtors to transition into Chapter 11 protection without material disruption to their ordinary course operations. The Company has engaged Perella Weinberg Partners L.P. to advise on its strategic options, including the process to sell its assets in connection with the Cases.
The Company cannot be certain that holders of the Company’s common stock will receive any payment or other distribution on account of those shares in the Cases.
Purchase and Assignment Agreement
On December 11, 2022, prior to the filing of the Bankruptcy Petitions, the Company entered into a “stalking horse” purchase and assignment agreement (the “Purchase and Assignment Agreement”) with Novartis Innovative Therapies AG (“Novartis”) to sell substantially all of the rights of the Company to its pipeline targeted radionuclide therapy clinical development program, FAP-2286, as a therapeutic agent, including the Company’s in-licensing agreement with 3B Pharmaceuticals GmbH (the “Transferred Assets”) for an upfront payment of $50,000,000 (the “Upfront Payment”) and up to an additional $333,750,000 upon the successful achievement of specified development and regulatory milestones and up to $297,000,000 in later sales related milestones. Novartis has agreed to use Commercially Reasonable Efforts (as defined in the Purchase and Assignment Agreement) to develop and commercialize FAP-2286. The transaction is part of a sale process under Section 363 of the Bankruptcy Code that will be subject to approval by the Court and compliance with agreed upon and Court-approved bidding procedures allowing for the submission of higher or otherwise better offers, and other agreed-upon conditions. In accordance with the sale process under Section 363 of the Bankruptcy Code, notice of the proposed sale to Novartis will be given to third parties and competing bids will be solicited. The Company will manage the bidding process and evaluate the bids, in consultation with its advisors and as overseen by the Court.
Pursuant to the terms of the Purchase and Assignment Agreement, Novartis and the Company entered into an escrow agreement with Citibank (the “Escrow Agent”), pursuant to which Novartis deposited into escrow with the Escrow Agent $5,000,000 (such amount, the “Deposit”) against the Upfront Payment.
The Purchase and Assignment Agreement contains customary representations and warranties of the parties and is subject to a number of closing conditions, including, among others, (i) the accuracy of representations and warranties of the parties; (ii) expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (iii) material compliance with the obligations of the parties set forth in the Purchase and Assignment Agreement, including achievement of certain milestones by the Company related to the Cases and the sales process on a timely basis; (iv) no Material Adverse Effect (as defined in the Purchase and Assignment Agreement) having occurred to the Transferred Assets; and (v) payment of cure costs in respect of any assigned contract that is part of the Transferred Assets.
2