Item 8.01 Other Events.
On September 21, 2022, PhaseBio Pharmaceuticals, Inc. (the "Company") received a
notice (the "Program Transfer Notice") from SFJ Pharmaceuticals X, Ltd., an SFJ
Pharmaceuticals Group company ("SFJ"), notifying the Company that pursuant to
Section 3.20 of the Co-Development Agreement entered into on January 9, 2020, by
and between the Company and SFJ (the "Co-Development Agreement"), pursuant to
which SFJ provided funding to the Company to support development of bentracimab
(also known as PB2452), SFJ has elected to cause the Company's business related
to bentracimab to be transferred to SFJ as a result of the Company's failure to
remedy its Going Concern Condition within the Going Concern Cure Period (each as
defined in the Co-Development Agreement). Pursuant to Section 3.20 of the
Co-Development Agreement, SFJ is demanding that the Company execute a Program
Transfer Agreement (in the form attached to the Co-Development Agreement) within
ten days following the delivery of the Program Transfer Notice. The Company
believes that Delaware law requires approval by the Company's stockholders of
any such transfer because bentracimab currently represents substantially all of
the Company's assets.
The Going Concern Condition resulted from the Company's issuance of financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2021, which contained an explanatory paragraph relating to
the Company's substantial doubt about its ability to continue as a going
concern. Since that time, the Company has been engaged in numerous efforts to
address the Going Concern Condition. Among these efforts, the Company engaged a
financial advisor in the first quarter of 2022 to help identify potential third
parties interested in partnering with the Company to advance the clinical and,
if approved, commercial development of bentracimab. Through that process, the
Company received several offers for the licensing and/or acquisition of certain
commercial rights to bentracimab that the Board of Directors of the Company
found compelling. Each offer, however, would have required SFJ to refrain from
(1) terminating the Co-Development Agreement and (2) asserting accelerated
termination payment obligations by the Company. As a result, the Company was
unable to move forward with any such alternatives.
In parallel, the Company had also been engaged in discussions and negotiations
with SFJ since early 2022 regarding the potential transfer of the bentracimab
program assets to SFJ on mutually acceptable terms. The potential transaction,
which was initially proposed by SFJ, was expressly made subject to approval by
the Company's stockholders. After extensive discussions the parties were unable
to reach agreement, and SFJ withdrew from the negotiations and delivered the
Program Transfer Notice the day after the Going Concern Cure Period expired.
Such Program Transfer Notice does not contemplate that the Company's
stockholders would have the opportunity to approve the transfer of the
bentracimab program assets to SFJ.
As a result of the foregoing, the Board of Directors of the Company is
considering all potential actions that may be in the best interests of the
Company and its stakeholders in response to the Program Transfer Notice,
including legal and/or restructuring alternatives.
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