Item 1.01 Entry into a Material Definitive Agreement
As previously disclosed, on June 10, 2019, Insys Therapeutics, Inc. (the “Company”) and its subsidiaries (collectively, the “Debtors”) filed voluntary petitions (the “Bankruptcy Petitions,” and the cases commenced thereby, the “Chapter 11 Cases”) for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). On July 2, 2019, the Bankruptcy Court entered an order that, among other things, established bidding procedures to sell substantially all of the Debtors’ assets in accordance with Section 363 of the Bankruptcy Code (“Section 363”). Also as previously disclosed, on September 17, 2019, the Debtors filed the Joint Chapter 11 Plan Liquidation of Insys Therapeutics, Inc. and Its Affiliated Debtors (the “Plan”) and the related disclosure statement (the “Disclosure Statement”) with the Bankruptcy Court. The Plan and Disclosure Statement are subject to approval by the Bankruptcy Court. As previously disclosed, in connection with the Chapter 11 Cases and the Company’s winding down of its operations, the Company consummated, on August 29, 2019, the transactions contemplated by the Asset Purchase Agreement with Hikma Pharmaceuticals USA Inc., dated August 5, 2019, and, on September 26, 2019, the Company consummated the transactions contemplated by the Asset Purchase Agreement with BTcP Pharma, LLC, dated as of September 1, 2019. The Company has also entered into an Asset Purchase Agreement, dated as of September 25, 2019 (the “Pharmbio Purchase Agreement”), by and between the Company and Pharmbio Korea, Inc.
As previously disclosed, on August 6, 2019, the Company entered into an Asset Purchase Agreement with Chilion Group Holdings US, Inc., a Delaware corporation (“Chilion”), pursuant to which the Company agreed to sell, transfer and assign to Chilion, pursuant to Section 363, the Company’s CBD formulations across current pre-clinical, clinical, third-party grants and investigator initiated study activities (including any future activities or indications), THC programs of SYNDROS® oral dronabinol solution (the “Syndros Products”) and Buprenorphine products and related equipment and other assets (collectively, the “Transferred Assets”), in consideration for a purchase price of $12,200,000 in cash that would be payable at the closing of the transaction.
On October 23, 2019, the Company and Chilion entered into an Amendment No. 1 to Asset Purchase Agreement (the “Purchase Agreement Amendment”), which amends the previously announced Asset Purchase Agreement (as amended, modified and/or supplemented from time to time, the “Chilion Purchase Agreement”), dated August 6, 2019, to provide for, among other things: (a) the Company’s agreement to sell, transfer and assign to Chilion certain additional equipment and intellectual property, and an additional lease agreement for the Company’s Ellis facility, in consideration for an additional $105,000 in cash that would be payable at the closing of the transaction; and (b) in consideration for the incremental costs and expenses and other burdens resulting from the deferral of the closing of the transaction as a result of delays in Chilion’s procurement of its financing for the consummation of the transaction, Chilion’s: (i) payment to the Company of $856,797.26 in cash concurrently with the execution of the Purchase Agreement Amendment; (ii) payment to the U.S. Food and Drug Administration, or to the Company as reimbursement, of an amount in cash at the closing of the transaction equal to the aggregate amount of fees then payable pursuant to the Prescription Drug User Fee Act in respect of the Syndros Products; (iii) reimbursement to the Company in cash at the closing of the transaction for any and all reasonable third-party costs and expenses up to $100,000 in the aggregate incurred by the Company following the execution of the Purchase Agreement Amendment in connection with the Company’s performance under a corporate integrity agreement; and (iv) reimbursement to the Company in cash at the closing of the transaction for any and all reasonable costs and expenses up to $200,000 in the aggregate incurred by the Company for certain professional services performed by the Company’s advisors. The Purchase Agreement Amendment also provides for certain other negotiated modifications to the scope of the equipment, intellectual property and contracts that comprise the Transferred Assets, the agreement of the Company and Chilion to use best efforts to cause the closing of the transaction to occur as soon as reasonably possible and no later than October 31, 2019, and the Company’s entry at the closing of the transaction into a transition services agreement with Chilion.
The foregoing descriptions of the Chilion Purchase Agreement in its original form and the Purchase Agreement Amendment do not purport to be complete and are qualified in their entirety by reference to, respectively, the full text of the Chilion Purchase Agreement in its original form filed as Exhibit 2.2 to the Current Report on Form 8-K that was filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 8, 2019, and the Purchase Agreement Amendment attached hereto as Exhibit 2.1, both of which are incorporated herein by reference.