Item 3. Legal Proceedings
ITEM 3.
LEGAL PROCEEDINGS
Our
arbitration proceeding with REGENXBIO Inc. (“REGENXBIO”) regarding the former license agreement between us and REGENXBIO
relating to use of the AAV9 capsid in our MPS IIIA, MPS IIIB, CLN1 (which has now been sold to Taysha Gene Therapies), and CLN3 programs
terminated in the fourth quarter of 2021. The license terminated on May 2, 2020, and on May 25, 2020, we filed an arbitration claim with
the American Arbitration Association (“AAA”) alleging that REGENXBIO materially breached the license agreement prior to termination
and seeking, among other things, a declaration that as a result of REGENXBIO’s material breach, we were not responsible for payments
totaling $28 million (which would otherwise have been due in 2020) plus accrued interest. REGENXBIO disputed our arbitration claim and
filed a counterclaim seeking payment of these amounts. An arbitration hearing before a tribunal of three AAA arbitrators was held on
March 8 and March 9, 2021. On July 13, 2021, the tribunal found in favor of REGENXBIO in connection with the parties’ arbitration
claims and counterclaims. The tribunal awarded REGENXBIO $28.0 million plus interest.
On
August 9, 2021, we filed a second arbitration claim with the AAA asserting that a settlement had been reached before the tribunal’s
award in the first arbitration was issued. On September 14, 2021, REGENXBIO filed its answer, a counterclaim seeking attorney fees and
costs, and a request for permission to file a case dispositive motion. A preliminary hearing was held on November 1, 2021, during which
the AAA tribunal set timetables for discovery and for REGENXBIO’s filing of its case dispositive motion. Those timetables were
formalized in a procedural order issued by the tribunal on November 8, 2021. Under the schedule set by the tribunal, REGENXBIO’s
opening brief in support of its case dispositive motion was filed on November 8, 2021, briefing was scheduled to be completed on December
29, 2021, and oral argument was scheduled for January 14, 2022. REGENXBIO had also filed suit in the New York State Supreme Court Commercial
Division seeking enforcement of the original arbitration award, and we had requested that the Court stay that proceeding until the second
arbitration is complete. Oral argument on our request for a stay was set for March 10, 2022.
On
November 12, 2021, we entered into a settlement agreement (the “Settlement Agreement”) with REGENXBIO to resolve all current
disputes between the parties, including the aforementioned AAA arbitration and New York State Supreme Court action. In accordance with
the Settlement Agreement, we agreed to pay REGENXBIO a total of $30 million, payable as follows: (1) $20 million that was paid in 2021
after execution of the Settlement Agreement, (2) $5 million on the first anniversary of the effective date of the Settlement Agreement,
and (3) $5 million upon the earlier of: (i) the third anniversary of the effective date of the Settlement Agreement or (ii) the closing
of a Strategic Transaction, as defined in the Settlement Agreement.
ITEM 4.
MINE SAFETY DISCLOSURES
Not
applicable.
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