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to a minimum floor amount ranging from $5.0 million to $8.0 million during the first 18 calendar quarters (the payment of the 2.0% of the annual worldwide net sales starting from the 19th calendar quarter shall be referred to as the “Royalty Payment”). Cytokinetics’ obligation to pay the Royalty Payment will continue after maturity of the Loan; |
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Scenario 2: If the Phase 3 clinical trial of omecamtiv mecarbil is successful by June 30, 2028 but Cytokinetics has not received the marketing approval from the FDA for omecamtiv mecarbil on or prior to December 31, 2029, Cytokinetics is required to pay RP 18 equal quarterly cash payments totaling 237.5% of the principal amount of the Loan commencing on March 31, 2030 ; |
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Scenario 3: If the Phase 3 clinical trial of omecamtiv mecarbil is not successful by June 30, 2028, Cytokinetics is required to pay RP 22 equal quarterly cash payments totaling 227.5% of the principal amount of the Loan commencing on September 30, 2028; and |
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Scenario 4: If the Phase 3 clinical trial of omecamtiv mecarbil has not been initiated by June 30, 2026, Cytokinetics is required to pay RP 22 equal quarterly cash payments totaling 227.5% of the principal amount of the Loan commencing on September 30, 2026; |
(the aggregate amount to be paid by Cytokinetics with respect to each scenario is referred to as the “Scheduled Payment Amount”).
The interest of the Loan is included in the Scheduled Payment Amount for each scenario.
In each scenario, Cytokinetics may prepay the Loan in full (but not in part) at any time at its option by paying an amount equal to the unpaid portion of Scheduled Payment Amount for the outstanding Loan; provided that, in scenario 1, Cytokinetics would be required to continue to pay the Royalty Payment after such prepayment.
In addition, upon the occurrence of a change of control of Cytokinetics, the Loan is repayable in full at the option of either Cytokinetics or the lender in an amount equal to (x) depending on when such change of control occurs, 150.0% to 237.5% of the principal amount of the Loan minus (y) the then paid Scheduled Payment Amount.
The 2024 DFA contains customary representations and warranties and customary affirmative and negative covenants applicable to Cytokinetics and its subsidiaries, including, among other things, restrictions on dispositions, mergers, indebtedness, encumbrances, distributions, stock repurchases, investments and transactions with affiliates. The 2024 DFA also includes customary events of default, including but not limited to the nonpayment of principal or interest, violations of covenants, material adverse changes, attachment, levy, restraint on business, cross-defaults on material indebtedness, bankruptcy, delisting, material judgments, misrepresentations, governmental approvals, payment defaults under other royalty purchase agreements and development funding agreements with RP or RPI. Upon an event of default or simultaneously with payment in full of the term loans in the 2022 DFA, the lenders may, among other things, accelerate the Loan (with the amount payable between 227.5% and 237.5% of the principal amount (less amounts previously paid) in the case of other events of default).
CK-586 Revenue Participation Right Purchase Agreement
In addition, on May 22, 2024, Cytokinetics entered into a CK-586 Revenue Participation Right Purchase agreement (the “CK-586 RPA”) with RPI, pursuant to which RPI purchased rights to certain revenue streams from worldwide net sales of Cytokinetics’ proprietary small molecule cardiac myosin inhibitor product known as CK-586, by Cytokinetics, its affiliates or licensees, in exchange for up to $200 million in consideration, $50 million of which will be paid upfront and, following the initiation of the first Phase 3 clinical trial (or the Phase 3 portion of the first Phase 2b/3 clinical trial) in heart failure with preserved ejection fraction in humans for CK-586, at RPI’s sole discretion, up to in aggregate $150 million in quarterly payments to fund 50.0% of the research and development cost of CK-586.
Pursuant to the CK-586 RPA, RPI purchased the right to receive a percentage of net sales ranging from 1.0% to up to 4.5% for annual worldwide net sales of CK-586 (depending on the aggregate amounts funded by RPI), subject to reduction in certain circumstances, and will receive a 0.75x milestone payment upon market approval of CK-586 by the FDA, or if market