On April 26, 2023 (the “Closing Date”), Eterna Therapeutics Inc., a Delaware corporation (the “Company”), entered into an asset purchase agreement (the “Purchase Agreement”), together with Exacis Biotherapeutics Inc. (“Exacis”), the stockholders party thereto (the “Stockholders”) and, with respect to specified provisions therein, Factor Bioscience Limited (“Factor”).  Pursuant to the Purchase Agreement, the Company acquired from Exacis substantially all of Exacis’ intellectual property assets (the “Purchased Assets”), including all of Exacis’ right, title and interest in and to an exclusive license agreement by and between Exacis and Factor (the “Purchased License”).  The Company assumed none of Exacis’ liabilities, other than liabilities under the Purchased License that accrue subsequent to the Closing Date.

 

In consideration for the Purchased Assets, on the Closing Date, the Company issued to Exacis an aggregate of 69,343 shares of the Company’s common stock, par value $0.005 per share (“Common Stock”), which shares are subject to a 12-month lockup, pursuant to which Exacis may not sell or otherwise transfer such shares.  The Company additionally agreed to make the following contingent payments:  (i) if, at any time during the three-year period commencing on the Closing Date and ending on the three-year anniversary of the Closing Date, the Company’s market capitalization equals or exceeds $100.0 million for at least ten consecutive trading days, then the Company will issue to Exacis a number of shares of Common Stock equal to (x) $2.0 million divided by (y) the quotient of $100.00 million divided by the number of the Company’s then issued and outstanding shares of Common Stock; (ii) if, at any time during the three-year period commencing on the Closing Date and ending on the three-year anniversary of the Closing Date, the Company’s market capitalization equals or exceeds $200.0 million for at least ten consecutive trading days, then the Company will issue to Exacis a number of additional shares of Common Stock equal to (x) $2.0 million divided by (y) the quotient of $200.00 million divided by the number of the Company’s then issued and outstanding shares of Common Stock; and (iii) during the five-year period commencing on the Closing Date and ending on the five-year anniversary of the Closing Date (the “Five-Year Period”), the Company will pay or deliver to Exacis 20% of all cash or other consideration (collectively, “License Consideration”) actually received by the Company during the Five-Year Period from (i) third-party licensees or sublicensees of the intellectual property rights acquired by the Company from Exacis pursuant to the Purchase Agreement, or (ii) subject to certain exceptions, the sale of such intellectual property rights; provided, that the License Consideration shall not in any event exceed $45.0 million.

 

The Purchase Agreement contains customary representations and warranties of the parties thereto, and Exacis and the Stockholders have agreed to five-year non-competition and non-solicitation covenants in favor of the Company.

 

In the Purchase Agreement, Exacis represented to the Company that it is an “accredited investor”, as defined in Rule 501 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and the Company’s offer and sale of the shares of Common Stock described above have been made in reliance upon the exemptions from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof and Rule 506(b) of Regulation D promulgated thereunder.

 

Dr. Matthew Angel, the Company’s President and Chief Executive Officer, is the co-founder, President, CEO, and a director of Factor Bioscience Inc., which is the parent of Factor and a wholly owned subsidiary of Factor Bioscience LLC, the latter of which is the majority stockholder of Exacis.  Dr. Gregory Fiore, one of the Company’s directors, is the Chief Executive Officer and a 10% stockholder of Exacis.  The Purchase Agreement and the transactions contemplated thereby were approved by the audit committee of the Company’s board of directors (the “Board”), as well as by all of the Company’s disinterested directors, comprising a majority of the Board.

 

The foregoing description of the Purchase Agreement is only a summary and is qualified in its entirety by reference to the full text of the Purchase Agreement, a copy of which is filed herewith as Exhibit 10.1 and incorporated herein by reference.

 

The Purchase Agreement is filed with this Current Report on Form 8-K to provide securityholders with information regarding its terms.  It is not intended to provide any other factual information about the Company, Exacis or any other party thereto.  The representations, warranties and covenants contained in the Purchase Agreement were made solely for purposes of such agreement and as of specific dates, are solely for the benefit of the parties to the Purchase Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purpose of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to securityholders.  Securityholders should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Exacis or any other party thereto.  Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures, except to the extent required by law.

 

 

The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference in this Item 3.02.