SLXP » Topics » Item 1.01. Entry into a Material Definitive Agreement.

This excerpt taken from the SLXP 8-K filed Sep 11, 2006.

Item 1.01. Entry into a Material Definitive Agreement.

On September 5, 2006, Salix Pharmaceuticals, Inc. entered into a Development and License Agreement with Debiovision Inc., the Canadian subsidiary of DebioPharm S.A., for the exclusive worldwide license to manufacture, sell, market and distribute SANVAR® IR in the United States and its territories. SANVAR IR (immediate release formulation) is a somatostatin analog that Salix intends to develop as a treatment for acute esophageal variceal bleeding.

The license also covers any combination product and up to three new products that contain the licensed technology as an active ingredient (excluding the existing slow release formulation of SANVAR), provided the development of any combination or new product began during the agreement’s initial term. Salix and Debiovision will appoint a joint steering committee to manage and oversee the commercialization of any product under the agreement.

Salix may request that the license be expanded to cover countries other than the United States and Debiovision must negotiate such request in good faith.

For a limited period of time, Salix has the right of first negotiation to an exclusive upfront, milestone and royalty bearing license in the United States and its territories for the commercialization of the slow release formulation of SANVAR. During this time, Salix also has the right of first negotiation of a supply agreement for the slow release formulation of SANVAR, which Debiovision retains the right to manufacture.

Salix has the right, subject to Debiovision’s consent, to co-promote SANVAR IR and any combination, new or generic product covered by the license. No co-promoter may sell any product or be a party to any manufacturing agreement for any product to which Salix is a party. Salix does not have the right to sublicense the technology.

As partial consideration for the exclusive U.S. license, Salix may have to pay Debiovision up to an aggregate of $14,000,000 in non-refundable license fees over the course of the agreement. These fees consist of an upfront fee and fees due upon the achievement of regulatory and sales performance milestones. Salix will also pay Debiovision a per unit royalty on each unit of SANVAR IR supplied to Salix by an approved manufacturer and a percentage royalty on net sales of SANVAR IR. These two royalties will convert to a higher royalty, subject to a dollar floor, in the event the sales price of the product is less than a specified dollar amount. Salix will pay a royalty, depending on whether the product includes a Salix or a Debiovision improvement, on net sales of combination product, and a royalty on net sales of generic product. For any SANVAR IR and its active pharmaceutical ingredient obtained by Salix from a manufacturer approved by Debiovision, the unit and net sales royalties for SANVAR IR, combined with an agreed upon per unit cost of goods price, shall be capped. If this cap is exceeded, the excess shall be applied to unit royalties on SANVAR IR due in the subsequent quarter. In addition, the royalty due to Debiovision on sales of SANVAR IR is subject to an annual minimum payment. This annual minimum payment terminates upon the introduction of a generic product for SANVAR IR in the United States by anyone other than Salix, with pro rata payment due for the portion of such year prior to such introduction.

 

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The agreement will expire on the later of (1) a number of years after launch of SANVAR IR in the United States, (2) a number of years after launch of any combination product and (3) the expiration of the last patent rights to a product. Either party may terminate for the other’s insolvency. Debiovision may terminate at any time due to a material breach of the agreement by Salix, with a 30-day cure period, or Salix’s failure to launch SANVAR IR within a period of time after its anticipated launch date, except where the failure is due to the fault of Debiovision or an approved manufacturer. Salix may terminate the agreement if Debiovision is in material breach of the agreement, with a 30-day cure period. Salix also may terminate for no reason at any time, with six months notice, provided if it had already launched the product, it must pay all remaining unpaid license fees, and the minimum payment, if any, due for that year. Either party may terminate if SANVAR IR is no longer commercially viable in the United States due to a material change in or withdrawal of its NDA by the FDA, if SANVAR IR fails to obtain all regulatory approvals for sale in the United States, or if the NDA approval is not in a form anticipated by the parties and as a result of which the anticipated sales are materially less than those anticipated on the date of the agreement.

Salix does not have any material relationship with Debiovision or its affiliates other than the agreement.

A copy of the press release announcing the agreement is attached to this current report on Form 8-K as exhibit 99.1. A copy of the agreement will be filed as an exhibit to Salix’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2006.

This excerpt taken from the SLXP 8-K filed Jul 5, 2006.

Item 1.01. Entry into a Material Definitive Agreement.

On June 28, 2006, Salix Pharmaceuticals, Inc. entered into a License Agreement with Cedars-Sinai Medical Center, or CSMC, for the right to use U.S. Patent No. 6,861,053 and U.S. Patent Application No. 11/234,516 relating to methods of diagnosing and treating irritable bowel syndrome and other disorders caused by small intestinal bacterial overgrowth. Under the agreement, CSMC grants Salix an exclusive worldwide license to make, have made, use, sell and have sold and import licensed products related to the use of Rifaximin, with a right to sublicense. CSMC also grants Salix a nonexclusive license to use any unpublished research and development information, know-how and technical data of CSMC as necessary to exploit all rights granted to Salix with respect to Rifaximin, with a right to sublicense.

As partial consideration in the exclusive worldwide license, Salix will pay CSMC a license fee of an aggregate $1,200,000, payable over time. Part of the $1,200,000 is considered an up-front, non-refundable and irrevocable licensing fee. The balance is considered a pre-paid, non-refundable and irrevocable royalty applicable as credit towards royalty amounts due and payable to CSMC, if any, under the agreement. Salix will also pay CSMC low single digit percentage royalties on net sales of licensed products after receipt of an U.S. Food and Drug Administration approval on the use of Rifaximin as an indication for irritable bowel syndrome.

The term of the agreement continues on a country-by-country basis until the expiration of the last to expire of the patent rights in each country in which a patent has been issued. CSMC can terminate the agreement prior to the expiration due to a material breach of the agreement by Salix with a 90-day cure period, or automatically upon Salix entering into a liquidating bankruptcy, being adjudged insolvent, liquidating, dissolving or the business being placed in the hands of a receiver, assignee or trustee. If, however, any such action is involuntary, then Salix has 30 days to reverse the action.

A copy of the agreement is attached to this current report on Form 8-K as Exhibit 10.55 and is incorporated herein by reference. A copy of the press release announcing the agreement is attached to this current report on Form 8-K as exhibit 99.1.

This excerpt taken from the SLXP 8-K filed Jun 16, 2006.

Item 1.01. Entry into a Material Definitive Agreement.

On June 15, 2006, the stockholders of Salix Pharmaceuticals, Ltd. approved an amendment to Salix’s 2005 Stock Plan to increase the number of shares of common stock reserved for issuance thereunder from 1,562,689 to 3,062,689.

A copy of the Salix’s 2005 Stock Plan as amended is attached as Exhibit 10.51 hereto.

This excerpt taken from the SLXP 8-K filed Jan 27, 2006.

Item 1.01. Entry into a Material Definitive Agreement.

 

On January 24, 2006, the Compensation Committee of the Company’s Board of Directors approved an increase in the salary of Carolyn J. Logan, a director of the Company and its President and Chief Executive Officer, from $430,000 to $600,000. In determining compensation for the Chief Executive Officer, the Committee considered comparative financial and compensation data of selected peer companies, Ms Logan’s guidance of the Company in completing the acquisition of InKine Pharmaceutical Company and Ms. Logan’s continued leadership of the Company’s growth.

 

This excerpt taken from the SLXP 8-K filed Jan 5, 2006.

Item 1.01 Entry into a Material Definitive Agreement.

 

On December 30, 2005, the Board of Directors of Salix Pharmaceuticals, Ltd., upon recommendation of its Compensation Committee, approved the immediate vesting of all outstanding stock options pursuant to Salix’s 1996 Stock Option Plan and 2004 Stock Plan. As a result of the accelerated vesting, previously unvested options to purchase approximately 3.6 million shares of common stock, with a weighted average exercise price of $16.79 per share, vested in full effective December 30, 2005. Options to purchase approximately 0.5 million of the previously unvested shares are held by executive officers of Salix and members of Salix’s Board of Directors.

 

Salix made the decision to approve the acceleration of the vesting of the stock options primarily to reduce compensation expense that is expected to be recorded in conjunction with Salix’s adoption of Financial Accounting Standards Board Statement No. 123, “Share Based Payment (revised 2004)” (FAS 123R). Salix will be required to apply the expense recognition provisions of FAS 123R beginning in the first quarter of 2006. FAS 123R requires companies to record non-cash compensation expense as stock options vest.

 

Accelerated options to purchase approximately 1.8 million shares had exercise prices higher than the $17.73 per share closing price of our stock on Nasdaq on December 29, 2005, the last trading day before the Board’s action. Accordingly, Salix expects to record a one-time non-cash compensation charge of approximately $0.4 million in the fourth quarter of fiscal 2005 as a result of the acceleration.

 

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, discussion relative to the stock-based compensation expenses. These forward-looking statements are subject to business and economic risks and uncertainties, and our actual results of operations may differ materially from those contained in the forward-looking statements.

 

This excerpt taken from the SLXP 8-K filed Dec 13, 2005.

Item 1.01 Entry into a Material Definitive Agreement.

 

On December 7, 2005, Salix Pharmaceuticals, Inc., a subsidiary of Salix Pharmaceuticals, Ltd., entered into a License and Supply Agreement with Norgine B.V., granting Salix the exclusive rights to sell a patent-protected, liquid PEG bowel cleansing product, NRL944, in the United States. The product is currently under review at the U.S. Food and Drug Administration (FDA) to obtain marketing approval for bowel cleansing prior to colonoscopy, intestinal surgery and barium enema X-ray examinations. The product has patent protection until 2013, and additional patent protection pending that, if issued, will provide patent protection until 2023.

 

Pursuant to the terms of the agreement, Salix is required to make an up-front payment and regulatory and sales performance milestone payments to Norgine. Over the life of the agreement, these payments by Salix could total as much as $37 million, with the majority contingent upon achievement of regulatory and sales performance milestones. In addition, the agreement calls for Norgine to supply Salix with the product and Salix to pay Norgine royalties on net sales.

 

Salix and Norgine do not have any relationship between them except for the agreement.

 

A copy of the agreement is attached to this report as Exhibit 10.53. A copy of the press release announcing the execution of the agreement with Norgine is attached to this report as Exhibit 99.1.

 

This excerpt taken from the SLXP 8-K filed Jun 24, 2005.

Item 1.01 Entry into a Material Definitive Agreement.

 

Agreement and Plan of Merger

 

On June 23, 2005, Salix Pharmaceuticals, Ltd. and InKine Pharmaceutical Company, Inc. entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which Salix will acquire InKine. A copy of the Merger Agreement is attached hereto as Exhibit 2.1. A copy of the press release announcing the execution of the Merger Agreement is attached hereto as Exhibit 99.1. The description of the Merger Agreement set forth herein and in the attached press release is qualified in its entirety by reference to Exhibit 2.1.

 

The merger will take the form of a tax-free stock-for-stock merger and is expected to be completed in the fourth quarter of 2005. Under the terms of the agreement, InKine shareholders will receive newly issued shares of Salix common stock for each InKine share owned based on an exchange ratio. This exchange ratio will equal $3.55 divided by the average (rounded to the nearest cent) of the per share closing prices of Salix common stock as reported by NASDAQ during the 40 trading days ending two days prior to the closing of the transaction; however, if this average is greater than $20.44, then the exchange ratio will be 0.1737, and if this average is less than $16.00, then the exchange ratio will be 0.2219. Cash will be paid for fractional shares.

 

The transaction is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, approval of InKine’s stockholders and approval of Salix’s stockholders. In association with the transaction, Salix anticipates it may incur charges associated with purchase accounting which will be detailed following its closing.

 

Certain officers and directors of Salix and InKine have signed agreements pursuant to which they agree to vote shares beneficially owned by them in favor of the merger.

 

Forward-Looking Statements

 

This filing contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations of future events. Such statements include, but are not limited to, the timing of completion of the transaction and potential purchase accounting charges. These statements are just predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include receipt of regulatory and stockholder approval, integration of the two companies post-closing, market acceptance for the transaction and approved products, management of rapid growth, risks of regulatory review and clinical trials, intellectual property risks, and the need to acquire additional products. The reader is referred to the documents that Salix and InKine file from time to time with the Securities and Exchange Commission. Salix and InKine do not undertake any obligation to publicly release the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.


Where to Find Additional Information

 

In connection with the merger between Salix and InKine, Salix intends to file with the SEC a registration statement on Form S-4, containing a joint proxy statement/prospectus and other relevant materials. INVESTORS AND SECURITY HOLDERS OF SALIX AND INKINE ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND THE OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT SALIX, INKINE AND THE MERGER. The joint proxy statement/prospectus and other relevant materials (when they become available), and any other documents filed by Salix or InKine with the SEC, may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents (when they are available) filed with the SEC by Salix by directing a request to: Salix Pharmaceuticals, Ltd., 1700 Perimeter Park Drive, Morrisville, North Carolina 27560, Attn: Investor Relations. Investors and security holders may obtain free copies of the documents filed with the SEC by InKine by contacting InKine Pharmaceutical Company, Inc., 1787 Sentry Parkway West, Building 18, Suite 440, Blue Bell, Pennsylvania 19422, Attn: Investor Relations.

 

Participants in the Merger Solicitation

 

Salix, InKine and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of Salix and InKine in favor of the merger. Information about the executive officers and directors of Salix and their ownership of Salix common stock is set forth in the proxy statement for Salix’s 2005 Annual Meeting of Stockholders, which was filed with the SEC on April 29, 2005. Information about the executive officers and directors of InKine and their ownership of InKine common stock is set forth in the proxy statement for InKine’s 2005 Annual Meeting of Stockholders, which was filed with the SEC on May 2, 2005. Investors and stockholders may obtain more detailed information regarding the direct and indirect interests of Salix, InKine and their respective executive officers and directors in the merger by reading the joint proxy statement/prospectus regarding the merger when it becomes available.

 

This excerpt taken from the SLXP 8-K filed Mar 8, 2005.

Item 1.01. Entry into a Material Definitive Agreement.

 

On March 2, 2005, Salix Pharmaceuticals, Inc., a subsidiary of Salix Pharmaceuticals, Ltd., entered into a co-promotion agreement with Altana Pharma US, Inc. to promote XIFAXAN (rifaximin) tablets 200 mg. Altana will utilize one of its sales forces with approximately 250 representatives to promote XIFAXAN. XIFAXAN is a gastrointestinal-selective, oral antibiotic for the treatment of travelers’ diarrhea caused by non-invasive strains of E. coli in patients 12 years of age and older.

 

Under the terms of the agreement, Altana will have the exclusive right to promote XIFAXAN in the United States to physicians other than those already identified and called upon by Salix. Salix and Altana will jointly develop a marketing plan involving promotional materials, sales training and providing samples to Altana. Salix will pay Altana during the contract term a co-promotion fee based on the amount of XIFAXAN sold as a result of Altana’s marketing efforts.

 

The agreement will terminate on December 31, 2006 unless earlier terminated. Each party may terminate upon 90 days written notice or upon breach of the other party.

 

Salix and Altana do not have any relationship between them other than the agreement.

 

A copy of the press release announcing the execution of the agreement with Altana is attached as an exhibit to this report.

 

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