On October 1, 2020, AcelRx Pharmaceuticals, Inc., a Delaware corporation (the “Company”), entered into a Promotion Agreement (the “Promotion Agreement”) with La Jolla Pharmaceutical Company, a California corporation (“La Jolla”), and Tetraphase Pharmaceuticals, Inc., a Delaware corporation and wholly-owned subsidiary of La Jolla (“Tetraphase”), effective as of September 30, 2020, pursuant to which the Company, La Jolla and Tetraphase restructured their co-promotion arrangement, with La Jolla agreeing to detail and promote DSUVIA® (sufentanil sublingual tablet 30 mcg) and AcelRx and Tetraphase agreeing to terminate the Co-Promotion Agreement between them (as amended, the “Co-Promotion Agreement”). The Company will not detail and promote XERAVA™ (eravacycline) under the Promotion Agreement.
Under the terms of the Promotion Agreement, La Jolla is responsible for maintaining compliance under the agreed marketing and promotion plan and achieving a minimum number of sales calls per calendar quarter. The La Jolla promotion activities will be overseen by a joint marketing and sales committee, which will be responsible for developing marketing plans for the products, provided, that AcelRx will be responsible for developing the marketing strategy for, creating the promotional materials for, and handling sales and distribution of, its products.
The Promotion Agreement has a two-year term. The Company may terminate the Promotion Agreement upon 30 days’ notice. After one year, La Jolla may terminate the Promotion Agreement upon 30 days’ notice, and may do so earlier in the event of a change of control and change in management of the Company. Additionally, either party may terminate the Promotion Agreement in the event of an uncured material breach or insolvency event of the other party and in the event of other specified circumstances relating to the Company’s products, such as safety.
The Company will pay La Jolla a revenue share on net sales of its products in the sales territories covered by the Promotion Agreement, other than sales to certain excluded accounts. These sales territories do not overlap with the territories covered by the Company’s sales force. If La Jolla fails to meet its detailing requirements in the Promotion Agreement in a given calendar quarter, it will pay the Company a royalty on net sales of XERAVA™ (eravacycline) in the United States during such quarter.
The foregoing description of the Promotion Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Promotion Agreement, which will be filed with the Company’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2020.