Hi kogarahboy
A redacted version of the contract can be found in Acadia’s 2018 Annual Report, which can be found here. The link to the contract (Exhibit 10.26) can be found on p. 26 of the Annual Report.
In answer to your question about protection against non-payment of milestones etc. by bank guarantees, I didn’t see such an inclusion.
However, there are remedies available to Neuren.
There’s the (minor) threat of interest being added…
Clause 13.1 If ACADIA fails to pay any undisputed amount payable under this Agreement on the due date for payment, ACADIA must pay interest on the amount unpaid at the rate of […***…]% per annum above the current Citibank N.A. published prime rate. This interest must be paid on demand.
….which doesn’t impact any other rights or remedies that Neuren might have.
Clause 13.3 Neuren’s right to require payment of interest under this clause 13.3 does not affect any other rights and remedies it may have in relation to any failure to pay an amount due under this Agreement.
Dispute resolution is dealt with in Section 25 of the contract. It’s pretty standard –there’s the obligation to first attempt resolution through negotiation followed by going to arbitration if that is unsuccessful.
But possibly the biggest deterrent to non-payment of milestones by Acadia (imo) is Sections 19 and 20 (Termination and Rights on Termination)
Clause 19.3 Either party may terminate this Agreement with immediate effect by giving notice to the other party (“Defaulting Party”if:
(a) the Defaulting Party breaches any provision of this Agreement requiring the payment of a monetary amount and fails to remedy the breach within 30 Business Days after receiving notice requiring it to do so with respect to any undisputed payment amounts
In answer to your question about whether Neuren is entitled to pull Fragile X away from Acadia for doing nothing with it, and do something with it elsewhere, my reading is no.
I base my opinion on Clause 3.8 which relates to failure to develop or commercialize and also on the warranties provided by Acadia in Section 9.
Ironically, if Acadia failed to pay due milestones (as you fear), Neuren would have the right to terminate the licence agreement. Neuren would then be entitled to have trofinetide returned, leaving it free for development/licensing in any indication, including Fragile X.
For this reason, I am not too concerned about Acadia failing to make milestone payments. Nor am I too concerned that Acadia will run out of money/fail to access more money. The Baker Bros still own 25-30% of the company and, while their investment fund has recently taken a hit (along with the entire biotech sector), it’s still valued at over US$25bn.
All my opinion only - I am not qualified in contract law. I recommend reading of the contract document in full before drawing one’s own conclusions.
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