Item 1.01 Entry into a Material Definitive Agreement.
On January 7, 2022, ImmunityBio, Inc., a Delaware corporation (the "Company,"
"we" or "us"), entered into a Purchase Agreement (the "Agreement") with Athenex,
Inc., a Delaware corporation ("Seller"), pursuant to which Seller will sell,
assign and transfer to us all of Seller's rights, and we will assume all of
Seller's duties and obligations under, various third-party agreements (the
"Facility Agreements"), subject to the terms and conditions of the Agreement,
relating to an approximately 409,000 square foot, newly constructed cGMP ISO
Class 5 high potency pharmaceutical manufacturing facility located at 3805
Lakeshore Drive East, Dunkirk, New York (the "Dunkirk Facility").
The Dunkirk Facility is a state-of-the-art, full-scale manufacturing facility
and includes clean rooms for upstream and downstream manufacturing activities,
and also includes fill-finish and lyophilization capabilities, to increase
capacity and the ability to scale production associated with certain of the
Company's product candidates. These state-of-the-art facilities will
substantially expand and diversify the Company's existing manufacturing capacity
and are expected to accelerate the Company's ability to develop, prove and bring
to market its key products and therapies in a competitive and regulated market.
The Facility Agreements include, without limitation, the Fort Schuyler
Management Corporation Lease, dated as of October 1, 2021, by and between Fort
Schuyler Management Corporation, a not-for-profit corporation affiliated with
the State of New York ("FSMC"), as landlord, and Seller, as tenant (the "Lease
Agreement"), the Agreement for Medical Technology Research, Development,
Innovation and Commercialization Alliance, effective as of May 1, 2015, by and
between FSMC and Seller, as amended (the "Alliance Agreement"), and certain
additional agreements entered into with each of the New York State Urban
Development Corporation d/b/a Empire State Development ("ESD") and the County of
Chautauqua Industrial Development Agency ("CCIDA").
The Lease Agreement was entered into pursuant to the Alliance Agreement, under
which FSMC agreed to generate funding from the State of New York, to be
administered through FSMC or an affiliate thereof, for the construction and
build-out of the Dunkirk Facility and purchase of related equipment. The State
of New York has made significant investments in the 409,000 square foot,
state-of-the-art Dunkirk Facility. The Dunkirk Facility, as well as equipment
purchased using the aforementioned grant funding, is owned by the FSMC and will
be leased to us pursuant to the Lease Agreement and other Facility Agreements.
Upon the closing of the Agreement (the "Closing"), our annual lease payment will
be $2.00 per year for an initial 10-year term, with the option for us to renew
under the same terms and conditions for an additional 10-year term. As part of
the assumed obligations under the Facility Agreements, we will have a commitment
to spend an aggregate of $1.52 billion on operational expenses during the
initial 10-year term, and an additional $1.50 billion on operational expenses if
we elect to renew the lease for the additional 10-year term. We will also be
committed to hiring 450 employees at the Dunkirk Facility within the first five
years of operations, with 300 such employees to be hired within the first
two-and-a-half years of operations, following the commencement of the Seller's
lease on October 1, 2021. The agreements with the CCIDA provided for certain
sales tax exemption savings during the development of the Dunkirk Facility and
provide for certain property tax savings over the next 20 years, subject to
certain terms and conditions including performance of certain of the
aforementioned obligations. Failure to satisfy the obligations over the lease
term may give rise to certain rights and remedies of governmental authorities
including, for example, termination of the Lease Agreement and other Facility
Agreements and potential recoupment of a percentage of the grant funding and
other benefits received, subject to the terms and conditions of the applicable
agreements.
The Closing is subject to the receipt of all necessary consents and approvals,
including, without limitation, the consent of FSMC, ESD and CCIDA, and a lender
of Seller, and other customary conditions. Upon Closing, in addition to assuming
the obligations of Seller under the Facility Agreements, we will pay Seller an
amount equal to its costs and obligations incurred with respect to the
construction, build-out and equipment purchases for the Dunkirk Facility outside
of the grants referenced above, which is currently estimated to be approximately
$38,000,000, subject to adjustment at Closing and not to exceed $40,000,000.
Upon Closing, we will be responsible for all operating costs and expenses for
the Dunkirk Facility and Seller's obligations under the Facility Agreements.
ImmunityBio and Seller have also entered into a preliminary agreement, pursuant
to which Seller, or one of its affiliates, will have the ability to manufacture
its 503B products at the Dunkirk Facility at prices to be determined on a
product-by-product basis, provided that the pricing will not exceed our costs
plus a 15% margin, and the parties expect to enter into a definitive preferred
contract manufacturing agreement. Seller has not assigned any of its rights to
its corporate headquarters in Buffalo, New York, under the Agreement and it will
retain all of its rights and obligations with respect to its corporate
headquarters.
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The Agreement contains customary representations and warranties, covenants,
agreements and indemnification obligations of the Company and the Seller. The
foregoing summary of the Agreement does not purport to be complete and is
qualified in its entirety by reference to the full text of the Agreement, a copy
of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and
incorporated herein by reference. The Company intends to file any other material
agreements relating to the Dunkirk Facility that it will be assuming at Closing
with its Annual Report on Form 10-K for the period ending December 31, 2021 or
its Quarterly Report on Form 10-Q for the period ending March 31, 2022.
The above description of the Agreement has been included to provide information
regarding the terms of the Agreement. It is not intended to provide any other
information about the Company or the Seller. The representations, warranties and
covenants contained in the Agreement were made solely for the benefit of the
parties to the Agreement. In addition, such representations, warranties and
covenants (i) are intended as a way of allocating the risk between the parties
to the Agreement and not as statements of fact, and (ii) may apply standards of
materiality in a way that is different from what may be viewed as material by
our stockholders or other investors. Accordingly, the Agreement is included with
this filing only to provide investors with information regarding the terms of
the Dunkirk Facility Transaction. Moreover, information concerning the subject
matter of the representations and warranties may change after the date of the
Agreement, which subsequent information may or may not be fully reflected in
public disclosures.
Item 7.01 Regulation FD Disclosure.
The Company issued a press release announcing this transaction on January 12,
2022. A copy of the press release is furnished as Exhibit 99.1 to this Current
Report on Form 8-K and is incorporated herein by reference.
The information in this Item 7.01 of this report is being furnished and shall
not be deemed filed for purposes of Section 18 of the Exchange Act of 1934, as
amended (the "Exchange Act"), nor will it be incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the Exchange Act, except
as expressly set forth by specific reference in such filing.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, such as
statements regarding the closing of ImmunityBio's acquisition of the leasehold
interest in the Dunkirk Facility and certain related assets from Athenex (the
"Dunkirk Facility Transaction"), the scale of production capacity for the
Dunkirk Facility, the ability of ImmunityBio to meet its obligations to
applicable governmental authorities under the Facilities Agreements, and the
acceleration of ImmunityBio's ability to develop its product candidates as a
result of the Dunkirk Facility Transaction, among others. Statements in this
Current Report on Form 8-K that are not statements of historical fact are
considered forward-looking statements, which are usually identified by the use
of words such as "anticipates," "believes," "continues," "could," "estimates,"
"expects," "intends," "may," "plans," "potential," "predicts," "projects,"
"seeks," "should," "will," and variations of such words or similar expressions.
Statements of past performance, efforts, or results of our preclinical and
clinical trials, about which inferences or assumptions may be made, can also be
forward-looking statements and are not indicative of future performance or
results. Forward-looking statements are neither forecasts, promises nor
guarantees, and are based on the current beliefs of ImmunityBio's management as
well as assumptions made by and information currently available to ImmunityBio.
Such information may be limited or incomplete, and ImmunityBio's statements
should not be read to indicate that it has conducted a thorough inquiry into, or
review of, all potentially available relevant information. Such statements
reflect the current views of ImmunityBio with respect to future events and are
subject to known and unknown risks, including business, regulatory, economic and
competitive risks, uncertainties, contingencies and assumptions about
ImmunityBio, including, without limitation, (i) the ability of ImmunityBio and
Athenex to close the Dunkirk Facility Transaction on time or at all, (ii) the
ability of ImmunityBio to continue its planned preclinical and clinical
development of its development programs, and the timing and success of any such
continued preclinical and clinical development and planned regulatory
submissions, (iii) ImmunityBio's ability to retain and hire key personnel,
including in connection with the Dunkirk Facility Transaction, (iv)
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ImmunityBio's ability to obtain additional financing to fund its operations and
complete the development and commercialization of its various product
candidates, (v) ImmunityBio's ability to successfully commercialize its product
candidates and uncertainties around regulatory reviews and approvals,
(vi) ImmunityBio's ability to scale its manufacturing and commercial supply
operations for its product candidates and future approved products,
(vii) ImmunityBio's ability to obtain, maintain, protect and enforce patent
protection and other proprietary rights for its product candidates and
technologies, (viii) ImmunityBio's ability to comply with the obligations
assumed in connection with the Dunkirk Facility Transaction, and (ix) the
unknown future impact of the COVID-19 pandemic on certain clinical trials or
their milestones and/or ImmunityBio's business operations or operating expenses.
More details about these and other risks that may impact ImmunityBio's business
are described under the heading "Risk Factors" in the Company's Form 8-K filed
with the U.S. Securities and Exchange Commission ("SEC") on March 10, 2021, Form
10-Q filed with the SEC on November 12, 2021 and in subsequent filings made by
ImmunityBio with the SEC, which are available on the SEC's website at
www.sec.gov. ImmunityBio cautions you not to place undue reliance on any
forward-looking statements, which speak only as of the date hereof. ImmunityBio
does not undertake any duty to update any forward-looking statement or other
information in this Current Report on Form 8-K, except to the extent required by
law.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit Number Description
10.1* Purchase Agreement, by and between Athenex, Inc. and
ImmunityBio, Inc. dated as of January 7, 2022
99.1 Press Release dated January 12, 2022
104 Cover Page Interactive Data File (embedded within the Inline
XBRL document)
* Schedules and similar attachments have been omitted pursuant to Item 601(a)(5)
of Regulation S-K. The Company will furnish a copy of any omitted schedule or
similar attachment to the Securities and Exchange Commission upon request.
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