Item 1.01. Entry into a Material Definitive Agreement.
On December 4, 2020, DURECT Corporation ("DURECT") entered into an Asset
Purchase Agreement (the "Agreement") with Evonik Corporation (the "Buyer"),
pursuant to which the Buyer agreed to purchase certain assets (the "Transferred
Assets") related to DURECT's LACTEL® Absorbable Polymers product line (the
"Business"). Under the terms of the Asset Purchase Agreement, the Buyer agreed
to pay DURECT the sum of $15 million subject to certain adjustments, and also
agreed to assume certain liabilities with respect to the Transferred Assets.
The final purchase price shall be equal to $15 million plus (i) the 2020 EBITDAS
Milestone and (ii) plus or minus an adjustment based on the year-end net working
capital of the Business. The 2020 EBITDAS Milestone means an amount equal to the
lesser of (a) ten times the amount obtained by subtracting an agreed upon amount
from the Acquired Product Line 2020 EBITDAS (which is derived from DURECT's good
faith calculations of earnings of the Business for the year ended December 31,
2020 pursuant to a pre-agreed methodology) and (b) an agreed upon maximum
amount. In the event the actual EBITDAS of the Acquired Product Line for the
year ended December 31, 2020, is less than an agreed upon amount, then the
amount of the 2020 EBITDAS Milestone shall be zero.
In the Agreement, DURECT and the Buyer made certain customary representations
and warranties and agreed to certain customary covenants. Specifically, (i)
before the closing of the transaction (the "Closing"), DURECT will be subject to
certain business conduct restrictions with respect to the Business and (ii) for
five years following the Closing, DURECT will be prohibited from directly
competing with the Business, subject to certain exceptions as described in the
Agreement. The Agreement provides that DURECT and the Buyer will indemnify each
other for losses arising from certain breaches of the Agreement and for certain
other liabilities. DURECT and the Buyer also expect to enter into a transition
services agreement upon the Closing.
The Closing is expected to occur by the first quarter of 2021 pending the
satisfaction of certain customary closing conditions.
The foregoing description of the Agreement does not purport to be complete and
is qualified in its entirety by reference to the Agreement itself, which is
attached hereto as Exhibit 10.1 and incorporated herein by reference.
A copy of the press release announcing the transaction is attached hereto as
Item 9.01 Financial Statements and Exhibits
99.1 Press Release of DURECT Corporation dated December 7, 2020
104 Cover Page Interactive Data File (embedded within the Inline XBRL
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