<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED September 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-22669
---------
AURORA BIOSCIENCES CORPORATION
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-0669859
- ---------------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11010 Torreyana Road, San Diego, CA 92121
- ---------------------------------------- ---------------------
(Address of principal executive offices) (Zip code)
(619) 452-5000
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(Registrant's telephone number, including area code)
11149 N. Torrey Pines Road, La Jolla, CA 92037
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding at
Class October 31, 1997
----- ----------------
<S> <C> <C>
Common Stock, $.001 par value 17,029,885
</TABLE>
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AURORA BIOSCIENCES CORPORATION
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Balance Sheets - September 30, 1997 (Unaudited) and December 31, 1996..........3
Statements of Operations (Unaudited) - Three and nine months ended
September 30, 1997 and 1996....................................................4
Statements of Cash Flows (Unaudited) - Nine months ended
September 30, 1997 and 1996....................................................5
Notes to Financial Statements (Unaudited) - September 30, 1997.................6
ITEM 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations..........................................................8
PART II. OTHER INFORMATION
ITEM 2. Changes in Securities and Use of Proceeds.............................11
ITEM 6. Exhibits and Reports on Form 8-K......................................11
SIGNATURE..............................................................................12
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
AURORA BIOSCIENCES CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ ------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 29,346,325 $ 3,914,038
Investment securities, available-for-sale 16,255,344 9,252,870
Accounts receivable under collaborative agreements 2,615,694 1,116,523
Prepaid expenses 546,667 228,029
Other current assets 2,980,707 169,175
------------ ------------
Total current assets 51,744,737 14,680,635
Equipment, furniture and leaseholds, net 3,793,788 1,901,515
Notes receivable from officers and employees 290,000 200,000
Other assets 1,028,614 732,374
------------ ------------
$ 56,857,139 $ 17,514,524
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 844,102 $ 299,819
Accrued compensation 205,432 319,770
Unearned revenue 427,501 250,000
Capital lease obligations, current portion 845,077 350,247
------------ ------------
Total current liabilities 2,322,112 1,219,836
Capital lease obligations, less current portion 2,293,689 1,110,897
Stockholders' equity:
Convertible preferred stock, $.001 par value; 7,500,000
and 25,000,000 shares authorized, none and 9,915,973 shares
issued and outstanding at September 30, 1997 and
December 31, 1996, respectively -- 9,916
Common stock, $.001 par value, 50,000,000 shares
authorized, 17,018,141 and 2,865,156 shares issued and
outstanding at September 30, 1997 and December 31,
1996, respectively 17,018 2,865
Additional paid-in capital 60,436,426 18,887,790
Deferred compensation (3,319,484) (371,573)
Accumulated deficit (4,892,622) (3,345,207)
------------ ------------
Total stockholders' equity 52,241,338 15,183,791
------------ ------------
$ 56,857,139 $ 17,514,524
============ ============
</TABLE>
Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See accompanying notes.
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<PAGE> 4
AURORA BIOSCIENCES CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
------------------------------- -------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue:
Screening systems $ 2,604,056 $ -- $ 3,852,056 $ --
Screening services 922,907 -- 2,270,407 --
License fees 487,500 -- 1,462,500 --
------------ ------------ ------------ ------------
Total revenue 4,014,463 -- 7,584,963 --
Operating expenses:
Cost of screening systems 996,771 -- 3,263,254 --
Cost of screening services 567,437 -- 1,374,198 --
Research and development 1,289,841 1,457,514 3,132,912 2,435,683
General and administrative 829,440 388,613 2,223,820 808,510
------------ ------------ ------------ ------------
Total operating expenses 3,683,489 1,846,127 9,994,184 3,244,193
------------ ------------ ------------ ------------
Income (loss) from operations 330,974 (1,846,127) (2,409,221) (3,244,193)
Interest income 666,338 186,676 1,098,180 416,883
Interest expense (100,553) (13,742) (236,374) (13,742)
------------ ------------ ------------ ------------
Net income (loss) $ 896,759 $ (1,673,193) $ (1,547,415) $ (2,841,052)
============ ============ ============ ============
Net income (loss) per share $ 0.05 $ (0.13) $ (0.10) $ (0.27)
============ ============ ============ ============
Shares used in computing
net income (loss) per share 17,576,501 13,180,819 14,751,188 10,711,591
============ ============ ============ ============
</TABLE>
See accompanying notes.
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<PAGE> 5
AURORA BIOSCIENCES CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended September 30,
-------------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (1,547,415) $ (2,841,052)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation and amortization 616,977 46,062
Amortization of deferred compensation 572,493 --
Change in operating assets and liabilities:
Accounts receivable under collaborative agreements (1,499,171) --
Prepaid expenses and other current assets (3,130,170) (713,033)
Accounts payable and accrued compensation 429,945 299,440
Unearned revenue 177,501 --
------------ ------------
Net cash used in operating activities (4,379,840) (3,208,583)
------------ ------------
INVESTING ACTIVITIES:
Purchases of investment securities (14,472,855) (12,139,632)
Sales and maturities of investment securities 7,470,381 1,500,000
Purchases of equipment, furniture and leaseholds (382,867) (312,362)
Notes receivable from officers and employees (90,000) (23,331)
Other assets (296,240) (133,822)
------------ ------------
Net cash used in investing activities (7,771,581) (11,109,147)
------------ ------------
FINANCING ACTIVITIES:
Issuance (cost) of convertible preferred stock, net (36,528) 15,617,650
Issuance of common stock, net 38,068,997 78,013
Issuance of notes payable -- 449,997
Principal payments on capital lease obligations (448,761) (47,768)
------------ ------------
Net cash provided by financing activities 37,583,708 16,097,892
------------ ------------
Net increase in cash and cash equivalents 25,432,287 1,780,162
Cash and cash equivalents at beginning of period 3,914,038 11,119
------------ ------------
Cash and cash equivalents at end of period $ 29,346,325 $ 1,791,281
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 236,374 $ 13,742
============ ============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Equipment acquired under capital leases $ 2,126,383 $ 991,319
============ ============
Conversion of notes payable to convertible preferred stock $ -- $ 924,997
============ ============
</TABLE>
See accompanying notes.
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<PAGE> 6
AURORA BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of Aurora Biosciences
Corporation ("Aurora" or the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, considered
necessary for a fair presentation have been included. Interim results
are not necessarily indicative of results for a full year. These
financial statements should be read in conjunction with the audited
financial statements and footnotes thereto for the year ended December
31, 1996, included in the Company's prospectus dated June 19, 1997,
filed with the Securities and Exchange Commission.
2. STOCKHOLDERS' EQUITY
On June 19, 1997, the Company completed an initial public offering of
4,000,000 shares of common stock at $10.00 per share, with the Company
receiving proceeds, net of underwriting discounts and commissions, of
$37.2 million. On July 23, 1997, the Company sold an additional 150,184
shares of common stock in connection with the partial exercise of an
over-allotment option granted to the underwriters for net proceeds of
$1.4 million.
3. NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed using the weighted average
number of common shares and dilutive common stock equivalents
outstanding during the periods, as adjusted for the effects of certain
rules of the Securities and Exchange Commission for the periods prior to
the Company's initial public offering.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted
on December 31, 1997. At that time the Company will be required to
change the method currently used to compute earnings per share and to
restate all prior periods. Under the new requirements for calculating
basic earnings per share, the dilutive effect of stock options will be
excluded. The impact of the adoption of Statement No. 128 on the
calculation of earnings per share is not expected to be material.
4. COLLABORATIVE AGREEMENTS
The Company entered into a collaborative agreement in September 1997
with Warner-Lambert Company ("Warner-Lambert") regarding the development
and installation of the Company's ultra-high throughput screening
("UHTS") system. Under the terms of the agreement, the Company will
develop and separately install three components to be integrated into
one complete UHTS system at Warner-Lambert's Parke-Davis pharmaceutical
research facility. In return, Warner-Lambert is obligated to make
certain payments to the Company in the form of non-refundable up-front
fees, milestone payments, delivery or installation payments and ongoing
research and co-development funding. The Company is obligated to provide
service and support for the installed UHTS system for a limited period
of time.
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<PAGE> 7
AURORA BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
The Company and Warner-Lambert will also co-develop high throughput
screening assays for use by Warner-Lambert or by the Company in
connection with screening services to be performed for Warner-Lambert.
In addition to certain payments to be made by Warner-Lambert for the use
of these assays, assay technologies and screening services,
Warner-Lambert will also make certain milestone and royalty payments to
the Company if Warner-Lambert develops and commercializes compounds
identified using co-developed high throughput screening assays.
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<PAGE> 8
AURORA BIOSCIENCES CORPORATION
SEPTEMBER 30, 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Form 10-Q contains certain statements of a forward-looking nature relating
to future events or the future financial performance of the Company. Such
statements are only predictions and actual events or results may differ
materially. Factors that could cause or contribute to such differences include,
without limitation, those discussed in this Item 2 as well as those discussed in
the Company's prospectus dated June 19, 1997 relating to the Company's initial
public offering.
OVERVIEW
Aurora Biosciences Corporation ("Aurora" or the "Company") designs and develops
proprietary drug discovery systems, services and technologies to accelerate and
enhance the discovery of new medicines. The Company is developing an integrated
technology platform comprised of a portfolio of proprietary fluorescent assay
technologies and an ultra-high throughput screening ("UHTS") system designed to
allow assay miniaturization and to overcome many of the limitations associated
with the traditional drug discovery process.
Although the Company was profitable for the quarter ended September 30, 1997,
the Company had an accumulated deficit of $4.9 million as of September 30, 1997.
The Company's ability to achieve sustained profitability will depend in part on
its ability to successfully develop its UHTS system, provide screen development
and screening services to pharmaceutical and biotechnology companies, achieve
acceptable performance specifications for the UHTS system and gain industry
acceptance of its systems, services and technologies. Payments from corporate
collaborators and interest income are expected to be the only sources of revenue
for the foreseeable future. Royalties or other revenue from commercial sales of
products developed from any compounds identified by using the Company's
technologies are not expected for at least several years, if at all. Payments
under collaborative agreements will be subject to significant fluctuation in
both timing and amount. Furthermore, the Company will continue to follow a
strategy of investing in new technologies to expand its core drug discovery
capabilities. Accordingly, the Company's results of operations for any period
may not be comparable to the results of operations for any other period.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996
Revenue from screening systems, screening services and license fees totaled
$2,604,000, $923,000 and $488,000, respectively, for the three months ended
September 30, 1997, and $3,852,000, $2,270,000 and $1,463,000, respectively, for
the nine months ended September 30, 1997. There was no revenue recorded for the
three and nine months ended September 30, 1996. The 1997 revenue from screening
systems primarily resulted from the Company's September 1997 collaborative
agreement with Warner-Lambert as well as previous collaborative agreements with
Bristol-Myers Squibb Pharmaceutical Research Institute ("Bristol-Myers Squibb"),
Eli Lilly and Company ("Eli Lilly"), Roche Bioscience Corporation ("Roche
Bioscience") and the Company's technology alliance with Packard Instrument
Company. Screening services revenue in 1997 resulted from the Company's
collaborative agreements with Bristol-Myers Squibb, Eli Lilly, Roche Bioscience
and Allelix Biopharmaceuticals, Inc. ("Allelix Biopharmaceuticals"). License
fees revenue in 1997 resulted from the Company's collaborative agreements with
Bristol-Myers Squibb and Eli Lilly.
Cost of screening systems and cost of screening services totaled $997,000 and
$567,000, respectively, for the three months ended September 30, 1997 and
$3,263,000 and $1,374,000, respectively, for the nine months ended September 30,
1997. There was no cost of screening systems or cost of screening
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<PAGE> 9
AURORA BIOSCIENCES CORPORATION
SEPTEMBER 30, 1997
services for the three and nine months ended September 30, 1996, as the Company
had not yet entered into any collaborations with members of its UHTS system
syndicate and had not yet begun to develop screens or perform screening services
as part of other collaborations.
Research and development expenses remained relatively constant at $1,290,000 for
the three months ended September 30, 1997 compared to $1,458,000 for the three
months ended September 30, 1996. This was primarily because efforts to develop
Aurora's UHTS system during the three months ended September 30, 1997 were
shared with members of the Company's UHTS system syndicate, including
Bristol-Myers Squibb and Eli Lilly and Company. Research and development
expenses increased to $3,133,000 for the nine months ended September 30, 1997
from $2,436,000 for the nine months ended September 30, 1996, despite the fact
that efforts to develop Aurora's UHTS system were shared with members of the
Company's UHTS system syndicate in 1997. The increase was attributable to
increased research and development personnel expenses, increased equipment,
depreciation and facilities expenses in connection with the expansion of
operations, the purchase of laboratory supplies and payments under technology
development and license agreements related to continued investment in new
technology.
General and administrative expenses increased to $829,000 from $389,000 for the
three months ended September 30, 1997 and 1996, respectively, and increased to
$2,224,000 from $809,000 for the nine months ended September 30, 1997 and 1996,
respectively. The increases were attributable to increased management and
administrative personnel expenses, increased depreciation and facilities
expenses in connection with the expansion of operations and legal and
professional fees incurred in connection with the overall scale-up of the
Company's operations and business development efforts.
Net interest income increased to $566,000 from $173,000 for the three months
ended September 30, 1997 and 1996, respectively, and increased to $862,000 for
the nine months ended September 30, 1997 from $403,000 for the same period in
1996. These increases reflected interest earned on increased cash and investment
balances resulting from receipts under collaborative agreements and the
Company's initial public offering in June 1997. Interest income was partially
offset by interest expense incurred on capital lease obligations entered into
during the second half of 1996 and the first nine months of 1997.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, Aurora held cash, cash equivalents and investment
securities available-for-sale of $45.6 million and working capital of $49.4
million. The Company has funded its operations to date primarily through the
issuance of equity securities with aggregate net proceeds of $57.0 million,
receipts from corporate collaborations and strategic technology alliances of
$7.7 million, capital equipment lease financing of $3.7 million and interest
income of $1.7 million through September 30, 1997.
The Company has entered into various strategic technology agreements with third
parties regarding the development of instrumentation technology which require
the Company to make future payments totaling approximately $840,000 through 1998
if all milestones are met. In addition, the Company has entered into license
agreements with third parties regarding certain inventions and technologies for
which the Company is obligated to make future payments totaling $750,000 over
the next seven years.
To date, all revenue received by the Company has been from collaborations,
interest earned on cash and investment balances and technology alliances. The
Company expects that substantially all revenue for the foreseeable future will
come from collaborators and interest income.
The Company has entered into collaborative agreements with Bristol-Myers Squibb,
Eli Lilly, Warner-Lambert, Roche Bioscience and Allelix Biopharmaceuticals. The
Company's ability to achieve
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<PAGE> 10
AURORA BIOSCIENCES CORPORATION
SEPTEMBER 30, 1997
sustained profitability will be dependent in part upon its ability to enter into
additional corporate collaborations. Although the Company is actively seeking to
enter into additional collaborative agreements, there can be no assurance that
the Company will be able to negotiate such additional collaborative agreements
on acceptable terms, if at all, or that such current or future collaborative
agreements will be successful and provide the Company with expected benefits.
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<PAGE> 11
AURORA BIOSCIENCES CORPORATION
SEPTEMBER 30, 1997
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On June 18, 1997, the Company's Form S-1 registration statement (File no.
333-23407) was declared effective by the Securities and Exchange Commission. The
registration statement, as amended, covered the offering of 4,000,000 shares of
the Company's Common Stock, $.001 par value. The offering commenced on June 18,
1997 and the sale to the public of 4,000,000 shares of Common Stock at $10.00
per share was completed on June 24, 1997 for an aggregate price of $40,000,000.
The registration statement covered an additional 600,000 shares of Common Stock
that the underwriters had the option to purchase solely to cover
over-allotments. The managing underwriters for the offering were Alex. Brown &
Sons, Inc., Hambrecht & Quist and Robertson, Stephens & Company. On July 23,
1997, the underwriters exercised their option to purchase 150,184 additional
shares of Common Stock. The offering was terminated on July 24, 1997, at which
time the remaining 449,816 shares of Common Stock covered by the registration
statement were deregistered. A total of 4,150,184 shares of Common Stock were
sold in the offering at an aggregate price of $41,501,840.
All of the shares sold in the offering were sold by the Company.
Expenses incurred by the Company through September 30, 1997 in connection with
the issuance and distribution of Common Stock in the offering included
underwriting discounts and commissions of $2,905,129 and other expenses of
$579,311. Total offering expenses of $3,484,440 resulted in net offering
proceeds to the Company of $38,017,400. No expenses were paid to directors,
officers or affiliates of the Company or 10% owners of any class of equity
securities of the Company.
Of the net offering proceeds to the Company of $38.0 million, through September
30, 1997 approximately $4.4 million was used for general corporate purposes,
approximately $1.8 million was used for facilities expansion and improvements
and approximately $400,000 was used for enhancement of internal research and
development capabilities. No payments were made to directors, officers or
affiliates of the Company or 10% owners of any class of equity securities of the
Company, other than compensation payments to officers of the Company.
Approximately $31.4 million of the net offering proceeds remain as working
capital, primarily in the form of cash and cash equivalents with approximately
$7.0 million held as temporary investments.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.26 First Amendment, dated September 1, 1997, to Multi-Tenant
Industrial Lease between the Registrant and AEW/LBA Acquisition
Co. II, LLC
10.27* Collaborative Research and License Agreement dated September
22, 1997 between the Registrant and Warner-Lambert Company
11.1 Statement regarding Computation of Net Income (Loss) per Share
27.1 Financial Data Schedule
* Confidential Treatment has been requested with respect to certain
portions of this exhibit. Omitted portions have been filed separately
with the Securities and Exchange Commission.
(b) Reports on Form 8-K filed during the quarter ended September 30, 1997:
None
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<PAGE> 12
AURORA BIOSCIENCES CORPORATION
SEPTEMBER 30, 1997
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
Aurora Biosciences Corporation
Date: November 14, 1997 By: /s/ Deborah J. Tower
--------------------------------------------
Deborah J. Tower
Vice President, Finance and Administration
on behalf of the Registrant and as Registrant's
Principal Financial and Accounting Officer)
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<PAGE> 1
EXHIBIT 10.26
FIRST AMENDMENT TO MULTI-TENANT INDUSTRIAL LEASE
(TRIPLE NET)
This FIRST AMENDMENT TO MULTI-TENANT INDUSTRIAL LEASE (TRIPLE NET) (the "FIRST
AMENDMENT") is entered into as of September 1, 1997, by and between AEW/LBA
ACQUISITION CO. II, LLC, a California limited liability company ("LANDLORD") and
AURORA BIOSCIENCES CORPORATION, a Delaware corporation ("TENANT").
R E C I T A L S :
A. Landlord and Tenant entered into that certain Multi-Tenant Industrial Lease
(Triple Net) dated April 7, 1997 (the "LEASE") for certain premises (the
"ORIGINAL PREMISES") located within a multi-tenant industrial building located
at 11010 Torreyana Road, La Jolla, California 92037. All terms not otherwise
defined in this First Amendment shall have the same meanings as set forth in the
Lease.
B. Tenant desires to expand the Original Premises to include all of the rentable
square footage located on the second (2nd) floor of the Building (the "EXPANSION
PREMISES").
C. Landlord and Tenant desire to amend the Lease to provide for the inclusion of
the Expansion Premises into the Premises upon the terms set forth herein.
A G R E E M E N T :
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. EXPANSION PREMISES. Section 1.5 of the Summary is amended to include the
Expansion Premises within the definition of the Premises.
2. MONTHLY OPERATING EXPENSE CHARGE. Section 1.6 of the Summary is amended to
increase Tenant's Share from 67.73% to 100%.
3. RENT. Section 1.9 of the Summary is deleted and the following is substituted
therefor:
<TABLE>
<CAPTION>
YEAR ANNUAL BASE RENT MONTHLY BASIC RENT
---- ---------------- ------------------
<S> <C> <C>
1* $1,632,888.00 $136,074.00**
2 $1,608,075.60 $134,006.30
3 $1,732,848.90 $144,404.08
4 $1,783,965.10 $148,663.76
5 $1,838,165.70 $153,180.48
6 $1,893,787.90 $157,815.66
7 $1,949,169.70 $162,430.81
8 $2,007,764.10 $167,313.68
9 $2,067,911.70 $172,325.98
10 $2,131,363.80 $177,613.65
11 $2,194,759.20 $182,896.60
</TABLE>
* Plus any partial month at the beginning of the Term.
** Notwithstanding the foregoing, Monthly Basic Rent for each of the months of
October, November and December of 1997 shall be $34,074.00.
4. RIGHT OF FIRST REFUSAL. Tenant's right of first refusal under Section 1.4 of
the Lease is deleted.
5. VERIFICATION OF RENTABLE SQUARE FEET OF PREMISES. Section 1.5 of the Lease is
deleted. The parties stipulate that, for purposes of the Lease, the Premises and
the Building contain 81,204 rentable square feet.
6. MANAGEMENT FEE. The Management Fee for the first two (2) years of the Term
shall be Thirty-Eight Thousand Nine Hundred Seventy-Seven and 92/100 Dollars
($38,977.92). Thereafter, the Management Fee will be equal to two percent (2%)
of the Annual Basic Rent, as otherwise set forth in Section 3.4 of the Lease.
7. LANDLORD'S REPAIR OBLIGATIONS. Section 11.3 of the Lease is amended by
deleting clause (b) of the first sentence. Except as provided in Paragraph 8
below, Landlord is no longer responsible for
<PAGE> 2
the repair, maintenance or replacement of the plumbing, heating, ventilating,
air conditioning, sprinkler or electrical systems within the Building.
8. TENANT'S REPAIR OBLIGATIONS. Tenant's obligations under Section 11.4 are
amended to include the following items: plumbing, heating, ventilating, air
conditioning, sprinkler and electrical systems within the Building (the "BASIC
ELEMENTS"). Notwithstanding the foregoing, if any item of the Basic Elements
cannot be repaired other than at a cost which is in excess of sixty percent
(60%) of the cost of replacing such item of the Basic Elements (and the need for
such repair is not the result of any act, neglect, fault or omission of Tenant
or Tenant's Parties), then such item of the Basic Elements shall be replaced by
Landlord at Landlord's initial cost, and Tenant shall pay Landlord as Tenant's
prorata share thereof and as additional rent, each month during the remainder of
the Term on the date on which Monthly Basic Rent is due, an amount equal to the
product of multiplying the cost of such replacement by a fraction, the numerator
of which is one (1), and the denominator of which is the number of months of the
useful life of such replacement as such useful life is specified pursuant to
Federal income tax regulations or guidelines for depreciation thereof (including
interest on the unamortized balance as is then commercially reasonable in the
judgment of Landlord and Tenant), with Tenant reserving the right to prepay its
obligation at any time.
9. BROKERS. The provisions of Section 8 of the Lease concerning brokers applies
to this First Amendment and the Expansion Premises.
10. CONSTRUCTION ALLOWANCE. The Construction Allowance under Paragraph 6 of the
Work Letter Agreement is increased to Three Million Four Hundred Ten Thousand,
Five Hundred Fifteen Dollars ($3,410,515.00).
11. SPECIFIC IMPROVEMENTS BY LANDLORD. Landlord will, at its sole cost, perform
the following work in the Building: (i) remove the liebert air conditioning
units in the computer room and repair any associated damage to the roof
resulting therefrom; (ii) monocoat the steel beams in the Building as necessary;
(iii) cause the elevators and stairwells to comply with the Act (but without
regard to any alterations to be made by Tenant); and (iv) improve the restrooms
on the second (2nd) floor of the Building in accordance with Landlord's standard
design criteria for the Building and in accordance with the Act.
12. SPECIFIC TENANT IMPROVEMENTS. Tenant shall, at its sole cost (but subject to
reimbursement from the Construction Allowance), (i) be responsible for any
cosmetic improvements to the elevator cabs, subject to Landlord's approval of
the plans therefor and (ii) improve the lobby area of the Building, in
accordance with plans approved by Landlord, concurrently with the construction
of the Tenant Improvements.
13. CONTINUED EFFECTIVENESS OF LEASE. Except as provided herein, the Lease
remains in full force and effect.
IN WITNESS WHEREOF, the parties have executed this First Amendment as of the day
and year first above written.
"TENANT" AURORA BIOSCIENCES CORPORATION,
a Delaware corporation
By: /s/ Deborah J. Tower
Sr. Director, Finance and Administration
"LANDLORD" AEW/LBA ACQUISITION CO. II, LLC,
a California limited liability company
By: LBA, Inc., a California corporation,
its agent
By: /s/ Phil Belling
Principal
-2-
<PAGE> 1
EXHIBIT 10.27
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
BETWEEN
WARNER-LAMBERT COMPANY
AND
AURORA BIOSCIENCES CORPORATION
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 24b-2 under the
Securities Exchange Act.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. SYSTEM DEVELOPMENT AND DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1. System Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. COLLABORATIVE SCREEN PROGRAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1. Collaborative Screen Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2. Access to the Aurora Reporter System Technology and Aurora Reporter System Patent Rights. . . . . . 16
3.3. Supply of Reporters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.4. Ownership of Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.5. Development of Products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.6. Laboratory Facilities and Personnel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4. SERVICE AND SUPPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1. Service and Support. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5. INTELLECTUAL PROPERTY RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.1. Grant of Rights from Aurora to PD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2. Grant of Rights from PD to Aurora. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3. Ownership of Intellectual Property and Property . . . . . . . . . . . . . . . . . . . . . . . . . 19
6. PAYMENTS OF ROYALTIES, ACCOUNTING FOR ROYALTIES AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . 20
6.1. Payment and Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2. Currency of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3. Taxes Withheld. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4. Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5. Trade Secret Royalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7. INTELLECTUAL PROPERTY ENFORCEMENT AND DEFENSE OF INFRINGEMENT CLAIMS . . . . . . . . . . . . . . . . . . 23
7.1. Intellectual Property Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2. Defense of Infringement Claims Pertaining to PD Hits, Development Compounds and Products. . . . . . 23
7.3. Defense of Infringement Claims Pertaining to Aurora Technology and Aurora Patent Rights. . . . . . 23
8. TREATMENT OF CONFIDENTIAL INFORMATION; PUBLICITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.1. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.2. Publication of Results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.3. Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9. PATENT PROSECUTION AND COPYRIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.1. Patents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.2. Copyrights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10. WARRANTIES AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.1. Mutual Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.2. Warranties and Aurora Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.3. Aurora Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
PD.AURORA COLLABORATION AGREEMENT I
<PAGE> 3
<TABLE>
<S> <C>
10.4. Warranties and PD Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.5. PD Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11. TERM, PARTIAL PERFORMANCE AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.1. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.2. Termination By Mutual Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.3. Termination Without Cause by PD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.4. Partial Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.5. Termination for Cause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.6. Effect of Bankruptcy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.7. Effect of Expiration or Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.1. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.2. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.3. Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.4. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.5. Governing Law and Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.6. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.7. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.8. Independent Contractors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.9. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.10. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.11. No Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.12. Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.13. Dispute Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
PD.AURORA COLLABORATION AGREEMENT II
<PAGE> 4
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
THIS AGREEMENT is entered into as of the Effective Date (as defined below) by
and between WARNER-LAMBERT COMPANY, a Delaware corporation, having offices at
2800 Plymouth Road Ann Arbor, Michigan, 48105 ("PD"), and AURORA BIOSCIENCES
CORPORATION, a Delaware corporation having offices at 11149 North Torrey Pines
Road, La Jolla, California 92037 ("Aurora").
RECITALS
WHEREAS, Aurora has expertise in the development of automated ultra-high
throughput screening systems and screening biologies/chemistries used therein;
and
WHEREAS, Aurora has the scientific expertise and capacity to undertake the
alliance activities described below; and
WHEREAS, PD has the capability to undertake screening and development of drug
products for the prevention, and treatment of human diseases and disorders.
NOW, THEREFORE, in consideration of the foregoing premises and of the
covenants, representations and agreements set forth below, the parties agree as
follows:
1. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"Affiliate" means any corporation, association or other entity which directly
or indirectly controls, is controlled by or is under common control with the
party in question. As used herein, the term control shall mean direct or
indirect beneficial ownership of more than *** of the voting or income interest
in such corporation or other business entity.
"Agreement" means this agreement, together with all appendices, exhibits and
schedules hereto, and as the same may be amended or supplemented from time to
time hereafter by a written agreement duly executed by authorized
representatives of each party hereto.
"Aurora Copyrights" means all copyrights throughout the world owned or
Controlled by Aurora that permit the operation of the System in accordance with
this Agreement.
"Aurora Patent Rights" means the Aurora Reporter System Patent Rights and the
Aurora System Patent Rights.
"Aurora Reporter" means any of the following: ***
"Aurora Reporter System" means the ***
PD.AURORA COLLABORATION AGREEMENT 1
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 5
"Aurora Reporter System Technology" means ***
"Aurora Reporter System Patent Rights" means ***
"Aurora Screening Program" shall have the meaning ***
"Aurora Technology" means ***
"Aurora System Patent Rights" means ***
"Aurora System Technology" means ***
"Collaborative Screen" means ***
"Collaborative Screen Program" shall have the meanings ***
"Compound" means ***
"Compound Supply" has the meaning ***
"Confidential Information" means ***
"Control" or "Controlled" means ***
"CPI" shall have the meaning ***
"CSP Steering Committee" shall have the meaning ***
"CSP Work Plan" shall have the meaning ***
"Deliverables" has the meaning ***
"Derivative" means ***
PD.AURORA COLLABORATION AGREEMENT 2
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 6
***
"Development Compound" means ***
"Effective Date" means the date that this Agreement is executed by the last
party to so execute.
"FDA" shall mean the United States Food and Drug Administration, or any
successor agency having regulatory jurisdiction over the manufacture,
distribution and sale of drugs in the United States or equivalent in any other
jurisdiction.
"FTE" shall have the meaning ***
"Hit" means ***
"IND" means ***
"Internal Research" means ***
"Invention" means ***
"Know-How" means ***
"Licensee" means ***
"Licensor" means ***
"Manufacturing Cost" means ***
PD.AURORA COLLABORATION AGREEMENT 3
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 7
***
"Materials" means ***
"Module One" has the meaning ***
"Module Two" has the meaning ***
"Module Three" has the meaning ***
"NDA" means ***
"Net Sales" shall mean ***:
"Patent Rights" means ***
PD.AURORA COLLABORATION AGREEMENT 4
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 8
"PD Copyrights" means ***
"PD Patent Rights" means ***
"PD Technology" means ***
"Person" shall mean ***
"Phase III Clinical Trial" means ***
"Product" means ***
"Royalty Term" means ***
"Selection Procedure" ***
"Specifications" ***
"System" means ***
"System Steering Committee" shall have the meaning ***
"System Target Delivery Date" has the meaning ***
"Technology" ***
PD.AURORA COLLABORATION AGREEMENT 5
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 9
"Term" means ***
"Territory" means ***
"Third Party" means ***
"Tracking Record" shall have the meaning ***
"Valid Claim" means: ***
"Validation" has the meaning ***
2. SYSTEM DEVELOPMENT AND DELIVERY
2.1. System Development.
***
2.1.1. Project Management.
The parties shall establish a committee to coordinate the
development *** The System Steering Committee will meet at
least three times per year at mutually agreed upon times and
locations using mutually agreed upon meeting formats,
including tele- and video-conferencing. On an alternating
basis, one party shall promptly prepare and deliver to the
members of the System Steering Committee minutes in respect
thereof, for review and approval by both parties. ***
PD.AURORA COLLABORATION AGREEMENT 6
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 10
***
Aurora will also submit progress reports to the System
Steering Committee at such time(s) as the System Steering
Committee may reasonably request and no less than twice per
year.
2.1.2. Development; Delivery.
From time to time during the term of this Agreement, PD
representatives shall have the right, upon reasonable advance
written notice to Aurora, to visit the facilities where the
System is being developed to verify the information in the
progress reports submitted to the System Steering Committee
and to confirm Aurora's compliance with the terms hereof.
2.1.2.1. Development. ***
i) Module One - ***
ii) Module Two - ***
iii) Module Three - ***
2.1.2.2. Shipment, and Installation. Aurora
will be responsible for the appropriate
packaging of all Deliverables to be delivered
to PD and instructions for special handling
thereof. PD will be responsible ***
PD.AURORA COLLABORATION AGREEMENT 7
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 11
***
2.1.3. Validation Testing.
All Deliverables shall be subject to testing by or for Aurora.
***
2.1.4. Payments Relating to Development of the System.
PD will make the following payments to Aurora in consideration
of the *** System and its modules:
2.1.4.1. A payment of ***
2.1.4.2. Module One: A payment of ***
2.1.4.3. Module Two: A payment of ***
2.1.4.4. Module Three: A payment of ***
PD.AURORA COLLABORATION AGREEMENT 8
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 12
***
In the event that the PD facility necessary
for the installation of the Deliverables
required by Sections 2.1.2.1 (i), 2.1.2.1
(ii), or 2.1.2.1 (iii), is unavailable
after thirty (30) days of the receipt by PD
of any such Deliverables, PD will make any
remaining payment regarding such Deliverables
under Sections 2.1.4.2, 2.1.4.3, or 2.1.4.4
to Aurora.
2.1.4.5. ***
2.1.5. After Payment of all Deliverables for the System.
***
2.1.6. Syndicate Formation and Limitations.
It is understood that Aurora is seeking to collaborate with,
and grant certain license rights to, Third Parties with
respect to the use and installation of a system similar to the
System. ***
PD.AURORA COLLABORATION AGREEMENT 9
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 13
***
***
3. COLLABORATIVE SCREEN PROGRAM
3.1. Collaborative Screen Program.
For a period of *** years following the Effective Date, the parties
will collaborate in developing and validating Collaborative Screens as
part of a development program (a "Collaborative Screen Program" or a
"CSP"), as follows:
3.1.1. Screen Development Program.
PD and Aurora will collaborate to develop no less
than *** high throughput and/or ultra high throughput
screens per each consecutive twelve (12) month period
beginning on the Effective Date in accordance with
this Agreement.
3.1.1.1. Screen Selection. Within *** of the
Effective Date PD will begin to propose in
writing to Aurora molecular targets. For
each proposed molecular target, PD shall
provide Aurora with a written proposal
describing such target. Within thirty (30)
days of receiving such information, and
further information as Aurora may
PD.AURORA COLLABORATION AGREEMENT 10
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 14
reasonably request regarding a proposed
molecular target, Aurora shall notify PD in
writing whether Aurora reasonably believes
that the development of a Collaborative
Screen based on the proposed molecular target
is reasonably feasible and if it is
consistent with Aurora's Third Party
obligations (the "Selection Procedure").
Each year, for the period *** following the
Effective Date, PD and Aurora will repeat the
Selection Procedure until Aurora, using
reasonable efforts, has selected *** for such
year, for which screen development shall be
initiated.
The molecular targets proposed by PD shall be
targets that PD reasonably believes to be
amenable for the development of a high
throughput screen using Aurora Technology.
3.1.1.2. CSP Steering Committee. No later
that *** after the Effective Date, the
parties shall establish a CSP Steering
Committee (the "CSP Steering Committee").
The CSP Steering Committee shall consist of
*** representatives designated by PD and ***
representatives designated by Aurora. Each
representative will have one vote resulting
in each party having exactly ***. Decisions
by the CSP Steering Committee will be made by
unanimous vote, at a meeting where a quorum
of *** are present. The CSP Steering
Committee will meet at least three times per
year at mutually agreed upon times and
locations using mutually agreed upon meeting
formats, including tele- and
video-conferencing.
On an alternating basis, one party shall
promptly prepare and deliver to the members
of the CSP Steering Committee minutes in
respect thereof, for review and approval by
both parties. ***
The CSP Steering Committee will ***
Promptly following mutual agreement on the
selection of each target, the CSP Steering
Committee will coordinate the preparation of
a work plan (a "CSP Work Plan"), which
PD.AURORA COLLABORATION AGREEMENT 11
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 15
shall set forth the respective
responsibilities of the parties in the
development of each Collaborative Screen, and
which must be *** Each such CSP Work Plan
will also contain a description of the
specific deliverables and documentation to be
produced, the dates by which such activities
shall be accomplished by the parties, and
validation criteria for each Collaborative
Screen.
Promptly following the approval of each CSP
Work Plan, the parties will commence their
respective duties under the CSP Work Plan for
the development of the applicable
Collaborative Screen. All work under a CSP
Work Plan shall be performed in accordance
with the provisions of this Agreement, and
each party will use its reasonable efforts to
complete its obligations under the CSP Work
Plan as expeditiously as practicable.
3.1.1.3. Payments for Screen Development. As
partial consideration for Collaborative
Screens to be developed, the development of
Aurora Reporter System Technology, and Aurora
Screening Programs to be performed under
Section 3.1.1.5 by Aurora, PD shall commit to
fund *** Such funding shall be payable in
quarterly payments beginning with a first
payment *** Such payments shall be
non-refundable and non-creditable.
***
PD.AURORA COLLABORATION AGREEMENT 12
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 16
***
If Aurora determines that the expenses that
would be incurred by Aurora with respect to
the development of Collaborative Screens
during any year of such *** would exceed such
funding, Aurora shall notify PD, and in such
event the CSP Steering Committee shall in
good faith determine the amount of additional
funding to be provided to Aurora by PD for
the applicable Collaborative Screen Programs.
Such additional funding shall be calculated
based ***
3.1.1.4. Screen Validation. When Aurora
completes the development of a Collaborative
Screen, ***
PD.AURORA COLLABORATION AGREEMENT 13
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 17
*** Upon approval of the report for the first
Collaborative Screen to be developed by
Aurora, Aurora will submit to PD an invoice
for *** Upon the approval of the report for
the second Collaborative Screen to be
developed by Aurora, Aurora will submit an
invoice for *** Upon the approval of *** to
be developed by Aurora, Aurora will submit to
PD an invoice for *** All such invoices in
this Section 3.1.1.4 are to be paid to Aurora
within thirty days of the date of such
invoice.
3.1.1.5. Screening by Aurora. For the first
*** Collaborative Screens validated, pursuant
to Section 3.1.1.4, and thereafter up to ***
collaborative screens per calendar year,
Aurora will testthe activity of at least ***
provided by PD or chemicals agreed to by the
parties pursuant to Section 3.1.1.6. Aurora
shall with regard to each such Collaborative
Screen, screen Compounds in a manner
determined by the CSP Steering Committee and
provide retests of Compounds for putative
Hits, and determination of crude IC50's as
determined by the CSP Steering Committee (such
screening by Aurora in each Collaborative
Screen is referred to as an "Aurora Screening
Program").
3.1.1.6. Compound Supply. PD shall ***
supply Aurora Compounds selected by PD for an
Aurora Screening Program. In the event that
PD desires to have Aurora test in an Aurora
Screening Program a chemical (including a
library of compounds) owned, accessed or
Controlled by Aurora, the parties agree to
negotiate in good faith the terms and
conditions under which such compound may be
screened. Any chemical supplied by PD for
use in an Aurora Screening Program will be
provided in 96-well microtiter plates, in
quantities, form and format as agreed by the
CSP Steering Committee ("Compound Supply").
Aurora agrees not to transfer the Compound
Supply to any Third Party, attempt to analyze
the Compound Supply for purposes of
determining structure, or to use the Compound
Supply for purposes not contemplated herein
without PD's written consent. Aurora will
return or destroy such Compound Supply upon
written notice by PD.
3.1.1.7. Screening Payments. The CSP Steering
Committee will *** Aurora Screening Program
in accordance with Sections
PD.AURORA COLLABORATION AGREEMENT 14
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 18
3.1.1.5 and 3.1.2. Such allocation shall be
inclusive of all cost incurred by Aurora
relating to labor, screening equipment, and
supplies (other than compounds or reagents
unique to a Collaborative Screen). If Aurora
determines that the expenses which would be
incurred by Aurora with respect to any ***
Aurora shall notify the CSP Steering
Committee, and the CSP Steering Committee
shall in good faith determine the amount of
any additional funding to be allocated to
Aurora by PD for the applicable Aurora
Screening Program.
3.1.2. Deployment of Collaborative Screen by PD.
For each Collaborative Screen not subject to an Aurora
Screening Program at Aurora, upon receipt of the payment made
by PD to Aurora pursuant to Section 3.1.1.4, Aurora will ship
the Collaborative Screen to PD. For each such transferred
Collaborative Screen, PD will use reasonable efforts for ***
to employ such Collaborative Screen to screen Compounds, using
PD's then current screening practices. If after ***, PD is
unable to successfully employ such Collaborative Screen ***
3.1.3. Additional Screens.
Subject to the *** and Aurora's approval, such approval shall
not be unreasonably withheld, PD may elect to increase the
number of Collaborative Screens to *** following the Effective
Date.
3.1.4. Payments to Aurora.
In addition to such payments as are made by PD to Aurora
pursuant to Section 3.1.1 and Section 3.1.2 hereof, the
following payments shall be made to Aurora:
3.1.4.1. Milestones. PD will pay to Aurora:
3.1.4.1.1. ***
PD.AURORA COLLABORATION AGREEMENT 15
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 19
3.1.4.1.2. ***, that reaches the
following milestones, PD will
promptly notify Aurora of same and
will pay the following amounts, to
a bank account specified by
Aurora, within thirty (30) days
following such notification from
PD.
Milestone
Event Payment (US$)
i) *** ***
ii) *** ***
iii) *** ***
***
3.1.4.2. Royalties. With respect to *** a
Collaborative Screen PD shall pay a royalty
on *** as follows, the sum of the ***
3.2. Access to the Aurora Reporter System Technology and Aurora Reporter
System Patent Rights.
PD's right to use ***, as set forth in the license in Section 5.1.3,
requires that PD pay to Aurora an ***
***
PD.AURORA COLLABORATION AGREEMENT 16
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 20
***
3.3. Supply of Reporters.
So long as PD has made payments in accordance with Section 3.2 hereof,
then, at PD's written request, *** Materials pertaining to *** PD will
be charged for all supplies *** PD will pay for all Materials so
ordered within thirty (30) days after delivery to PD.
3.4. Ownership of Data.
All results and data concerning any Hits or Development Compounds
generated by or for PD, or its Affiliates arising out of the use of
the System, any Collaborative Screen, the use of any of the rights
licensed under Section 5 hereof, or otherwise arising out of this
Agreement shall be ***
3.5. Development of Products.
PD will in its sole discretion determine which, if any, such Hit(s),
or Derivative(s), will be approved as a Development Compound. PD will
be responsible for all pre-clinical and clinical development,
including all regulatory filings, of Hits and Development Compounds
arising out of this Agreement at no expense to Aurora. PD shall have
discretion and control over the conduct of all activities associated
with the development or abandonment of any Development Compound, all
regulatory activities relating to the manufacture, use or sale of any
Development Compound or Product, and the commercialization and
marketing of any Product in any country and *** All regulatory
filings made or filed by PD for any Development Compound or Product
shall be owned solely by PD. At PD's expense, Aurora shall cooperate
to the extent reasonably necessary to permit PD to perform the
foregoing activities.
3.6. Laboratory Facilities and Personnel.
Aurora and PD shall each, at their respective cost and expense,
provide suitable and sufficient laboratory facilities and equipment,
and will devote sufficient, experienced personnel, as is needed to
carry out their respective obligations under this Agreement.
PD.AURORA COLLABORATION AGREEMENT 17
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 21
4. SERVICE AND SUPPORT
4.1. Service and Support.
For a period of *** Aurora will provide service and support for the
System and all system components, *** Service and support is more
fully described on Exhibit 4.1 attached hereto ("Service and
Support"). Aurora will be responsible for *** Aurora will designate
an appropriate Aurora employee to coordinate such Service and Support.
Following ***, PD may elect to purchase Service and Support *** This
purchased annual Service and Support will be available to PD *** PD
and Aurora will negotiate in good faith for further Service and
Support.
5. INTELLECTUAL PROPERTY RIGHTS
5.1. Grant of Rights from Aurora to PD.
5.1.1. Intellectual Property Rights Related to the System.
Aurora grants to PD a *** The grant of rights from
Aurora to PD does not include the right to sublicense
or the right to provide screening services *** The
rights granted hereunder shall be subject to any and
all payments required under Article 2 hereof, and
shall continue until terminated in accordance with
this Agreement. The rights granted hereunder in
Section 5.1.1 shall be subject to any Third Party
obligations of Aurora, provided however, that (i) PD
is not obligated to pay further payments for Third
Party Patent Rights, copyrights and Technology coming
under the Control of Aurora after the Effective Date
from Third Parties unless PD desires to obtain rights
to such Patent Rights, Copyrights and Technology of
Third Parties ***
5.1.2. Intellectual Property Rights Related to Collaborative
Screens.
Aurora, upon payment under Section 3.1.1.4,
*** Collaborative Screen, ***
PD.AURORA COLLABORATION AGREEMENT 18
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 22
*** The grant of rights from Aurora to PD does not
include the right to sublicense or the right to
provide screening services to *** The rights granted
hereunder shall be subject to any and all payments
and royalties required under Article 3 hereof, and
shall continue until terminated in accordance with
this Agreement. The rights granted hereunder in
Section 5.1.2 shall be subject to any Third Party
obligations of Aurora, provided however, that (i) PD
is not obligated to pay further payments for Patent
Rights, Copyrights and Technology coming under the
Control of Aurora after the Effective Date from Third
Parties unless PD desires to obtain rights to such
Patent Rights, Copyrights and Technology of Third
Parties ***
5.1.3. Intellectual Property Rights Related to Aurora
Reporters.
Aurora grants to PD *** The grant of rights from
Aurora to PD does not include the right to sublicense
or to provide screening services *** The rights
granted hereunder shall be subject to any and all
payments required under Article 3 hereof, and shall
continue until terminated in accordance with this
Agreement. The rights granted hereunder in Section
5.1.3 shall be subject to any Third Party obligations
of Aurora, provided however, that (i) PD is not
obligated to pay further payments for Patent Rights,
Copyrights and Technology coming under the Control of
Aurora after the Effective Date from Third Parties
unless PD desires to obtain rights to such Patent
Rights, Copyrights and Technology of Third Parties
***
5.2. Grant of Rights from PD to Aurora.
PD grants to Aurora a non-exclusive, world-wide license,
without the right to sublicense, under PD Copyrights, PD
Patent Rights and PD Technology to the extent necessary for
Aurora to perform its obligations relating to a Collaborative
Screen. The rights granted hereunder shall continue until the
***
5.3. Ownership of Intellectual Property and Property
5.3.1. Except as otherwise expressly provided in this
Agreement, nothing in this Agreement is intended to
convey or transfer ownership by one party to the
other of any rights, title or interest in any
Confidential Information, Technology, copyrights or
Patent Rights owned or Controlled by a party. Except
as expressly provided for
PD.AURORA COLLABORATION AGREEMENT 19
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 23
in this Agreement, nothing in this Agreement shall be
construed as a license or sublicense by one party to
the other of any rights in any Technology,
copyrights, or Patent Rights owned or Controlled by a
party.
5.3.2. PD shall own all Inventions and other Technology made
solely by its employees and agents, and all patent
applications and patents claiming such Inventions and
other Technology; provided, however, that if PD has a
license for Aurora Reporter Systems pursuant to
Sections 5.1.2 or 5.1.3, Aurora shall own such
Inventions and other Technology that consists of
improvements relating to an Aurora Reporter and PD
will assign the same to Aurora. Aurora shall own
such Inventions and other Technology made solely by
its employees and agents, and all patent applications
and patents claiming such Inventions and other
Technology, provided, however, that PD will own all
Inventions and other Technology relating to PD's
Compounds and uses thereof conceived by Aurora in
performance of this Agreement and Aurora will assign
the same to PD. PD and Aurora agree to execute all
documentation necessary to perfect such assignment.
5.3.3. During the period from the Effective Date to ***
Inventions and other Technology conceived or made
jointly by employees or agents of PD and employees or
agents of Aurora shall be owned jointly by PD and
Aurora, provided however: 1) PD will own all such
Inventions and other Technology relating to PD's
therapeutic compounds and uses thereof conceived by
PD and Aurora in performance of this Agreement and
Aurora will assign the same to PD; and 2) Aurora
shall own such Inventions and other Technology
relating to Aurora Reporter or the System and PD will
assign the same to Aurora. PD and Aurora agree to
execute all documentation necessary to perfect such
assignment.
5.3.4. Inventorship of patentable Inventions shall be in
accordance with U.S. patent law.
6. PAYMENTS OF ROYALTIES, ACCOUNTING FOR ROYALTIES AND RECORDS.
6.1. Payment and Reporting.
The royalties due under Article 3 and as follows in this Article 6,
shall be paid within sixty (60) days after the end of each calendar
quarter period in which such royalties are earned during the Royalty
Term for each Product. With each such quarterly payment, PD shall
furnish Aurora a royalty statement setting forth on a
country-by-country basis the relevant sales information, including the
total number of units of each such Product and other information
employed to calculate Net Sales for such Product.
PD.AURORA COLLABORATION AGREEMENT 20
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 24
6.2. Currency of Payment.
All payments to be made under this Agreement, including the royalties
payable to Aurora by PD, shall be paid in U.S. dollars by wire
transfer or other mutually acceptable means to a bank account
designated by the recipient. Royalties earned shall be determined
from the Net Sales in the currency of the country in which they are
earned and then converted into dollars at the prevailing commercial
rate of exchange for purchasing dollars with such foreign currency as
quoted by the eastern edition of the Wall Street Journal at the close
of business on the last business day of the calendar quarter for which
the relevant royalty payment was earned.
6.3. Taxes Withheld.
Any income or other tax that PD or any of its Affiliates, Licensees or
Licensors is required by a government agency to withhold and pay on
behalf of Aurora with respect to the royalties payable under this
Agreement shall be deducted from and offset against said royalties
prior to remittance to the recipient; provided, however, that in
regard to any tax so deducted, PD shall give or cause to be given to
Aurora such assistance as may reasonably be necessary to enable Aurora
to claim exemption therefrom or credit therefor, and in each case
shall furnish the recipient proper evidence of the taxes paid on
Aurora's behalf.
6.4. Records.
6.4.1. Net Sales and Royalty Calculations.
During the Royalty Term and for two (2) years from the date of
each payment of royalties, PD shall keep complete and accurate
records of sales and all other information necessary to
calculate Net Sales of each Product in sufficient detail to
allow the accrued royalties to be determined accurately in
accordance with GAAP. Aurora, with reasonable written notice
to PD, shall have the right to cause Aurora's nationally
recognized independent, certified public accountant to audit
such records at the place or places of business where such
records are customarily kept in order to verify the accuracy
of the reports of Net Sales and royalty payments. Such
accountant shall execute a confidentiality agreement prior to
entering PD's premises, obligating such accountant to keep all
information disclosed to it confidential and shall only be
permitted to disclose to Aurora the extent of any discrepancy
between royalty payments made by PD hereunder and the actual
royalty required to be so paid. Aurora shall bear the full
cost of such audit unless such audit discloses a variance of
more than *** from the amount of the royalties due under this
Agreement, in which event, PD shall bear the full cost of such
audit. Aurora agrees not to disclose Confidential Information
concerning royalty payments and reports, and all information
learned in the course of any audit or inspection, except to
the extent necessary for Aurora to reveal such information in
order to enforce its rights under this Agreement or if
disclosure is required by law.
PD.AURORA COLLABORATION AGREEMENT 21
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 25
6.4.2. Tracking Records for Collaborative Screens and the
System.
6.4.2.1. The compounds, screens and targets
tested using a Collaborative Screen or the
fully integrated screening capabilities of
the System will be recorded and stored by PD
using its customary means and in a computer
searchable database on a storage device. The
information stored will include the target,
screen type, the concentration, structure and
activity of the compound tested, and date of
testing. Records of any Hits or any compound
subject to additional screening will be
stored by PD in a separate computer
searchable data base. Upon written request
by Aurora, PD will create an annual written
report of Hits or Derivatives subjected to
additional screening, in vivo testing,
computer modeling, medicinal chemistry or an
Investigational New Drug application or
foreign equivalent to date. All the records
described in this Section 6.4.2.1 are
collectively referred to as tracking records
(the "Tracking Records"). PD will permit a
Third Party appointed by Aurora and subject
to a confidential relationship with PD, to
inspect the Tracking Records once per year or
upon reasonable request for the sole purpose
of determining the attainment of a milestone
or royalty under Article 2 or 3. The
Tracking Records shall be securely retained
for no less than *** from the last use of a
Collaborative Screen or the System.
6.4.2.2. Upon reasonable request by Aurora
and at a minimum once per year, PD will
provide Aurora with a summary of the status
of Development Compounds and Products that
may be used to calculate royalties or
milestones.
6.5. Trade Secret Royalty.
*** PD agrees to pay those royalties and other
amounts during the Royalty Term at the applicable
rate specified under the Agreement, ***
PD.AURORA COLLABORATION AGREEMENT 22
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 26
***
7. INTELLECTUAL PROPERTY ENFORCEMENT AND DEFENSE OF INFRINGEMENT CLAIMS
7.1. Intellectual Property Enforcement.
PD and Aurora shall have the right, but not the obligation, to
bring proceedings against any Third Party for the
inappropriate use, including patent infringement, of
Technology or Patent Rights solely owned or Controlled by it,
and at its own risk and expense. Such party shall be entitled
to retain any and all awards or damages obtained in any such
proceeding. At the request and expense of either party, the
other party shall give the requesting party all reasonable
assistance required to file and conduct any such proceeding.
For jointly owned Technology or Patent Rights, PD and Aurora
shall use their best efforts to coordinate pursuing a
commercially reasonable action to address inappropriate use,
including patent infringement, by Third Parties of such
Technology and Patent Rights and to determine how expenses and
any recovery from such action shall be allocated between the
parties.
PD will make reasonable efforts to provide Aurora with any
information known to PD relating to the suspected or actual
inappropriate use, including patent infringement, of Aurora
Technology and Aurora Patent Rights.
7.2. Defense of Infringement Claims Pertaining to PD Hits,
Development Compounds and Products.
Aurora will cooperate with PD, at PD's expense, in the defense
of any suit, action or proceeding against Aurora or PD and
PD's Affiliates alleging the infringement of the intellectual
property rights of a Third Party by reason of the manufacture,
use or sale of a Product by PD. Each party shall give the
other party prompt written notice of the commencement of any
such suit, action, proceeding or claim of infringement. Aurora
shall give to PD all authority, information and assistance
necessary to defend or settle any such suit, action or
proceeding; provided, however, that if Aurora should join in
any such suit, action or proceeding pursuant to this Section
7.2 and at the request of PD, PD shall hold Aurora harmless
from any and all costs and expenses of such litigation,
including reasonable attorneys' fees, and Aurora shall execute
all documents, provide pertinent records, and take all other
actions, including requiring persons within its control to
give testimony, which may be reasonably required in connection
with the defense or settlement of such litigation.
7.3. Defense of Infringement Claims Pertaining to Aurora Technology
and Aurora Patent Rights.
PD will cooperate with Aurora, at Aurora's expense, in the
defense of any suit, action or proceeding against Aurora
alleging the infringement of the
PD.AURORA COLLABORATION AGREEMENT 23
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 27
intellectual property rights of a Third Party by reason of
Aurora's use of any Aurora Patent Rights and Aurora Technology
licensed to PD under this Agreement. Aurora shall give PD
prompt written notice of the commencement of any such suit,
action, proceeding or claim of infringement. PD shall give to
Aurora all authority, information and assistance necessary to
defend or settle any such suit, action or proceeding;
provided, however, that if PD should join in any such suit,
action or proceeding pursuant to this Section 7.3 and at the
request of Aurora, Aurora shall hold PD harmless from any and
all costs and expenses of such litigation, including
reasonable attorneys' fees, and PD shall execute all
documents, provide pertinent records, and take all other
actions, including requiring persons within its control to
give testimony, which may be reasonably required in connection
with the defense or settlement of such litigation.
8. TREATMENT OF CONFIDENTIAL INFORMATION; PUBLICITY
8.1. Confidentiality.
8.1.1. Subject to the terms and conditions of this
Agreement, PD and Aurora ***, it will keep
confidential, and will cause its Affiliates to keep
confidential, all Confidential Information that is
disclosed to it or to any of its Affiliates by the
other party in connection with the performance of
this Agreement. Neither PD nor Aurora nor any of
their respective Affiliates shall use the other
party's Confidential Information except as expressly
permitted in this Agreement.
8.1.2. PD and Aurora each agree that any disclosure of the
other's Confidential Information to any officer,
employee, contractor, consultant, sublicensee or
agent of the other party or of any of its Affiliates
shall be made only if and to the extent necessary to
carry out its responsibilities under this Agreement
and to exercise the rights granted to it hereunder,
shall be limited to the extent consistent with such
responsibilities and rights, and shall be provided
only to such persons or entities who are bound to
maintain same in confidence in a like manner as the
party receiving same hereunder is so required. Each
party shall use reasonable efforts to take such
action, and to cause its Affiliates to take such
action, to preserve the confidentiality of each
other's Confidential Information, which shall be the
same efforts as it would customarily take to preserve
the confidentiality of its own Confidential
Information. PD's Confidential Information shall not
be disclosed, without PD's written consent, in a
patent application filed by Aurora or any Aurora
Affiliate. Aurora's Confidential Information shall
not be disclosed, without Aurora's written consent,
in a patent application filed by PD or any PD
Affiliate. Each party, upon the other's request,
will return all the Confidential Information received
from the other party pursuant to this
PD.AURORA COLLABORATION AGREEMENT 24
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 28
Agreement, including all copies and extracts of
documents, within sixty (60) days of the request of
the other party following any termination of this
Agreement, except for one (1) copy which may be kept
for the purpose of ascertaining and complying with
continuing confidentiality obligations under this
Agreement.
8.1.3. Confidential Information shall not include any
information which the receiving party can prove by
competent evidence:
i) is now, or hereafter becomes, through no act
or failure to act on the part of the receiving party,
generally known or available;
ii) is known by the receiving party at the time
of receiving such information, as evidenced by its
records;
iii) is hereafter furnished to the receiving party
without restriction as to disclosure or use by a
Third Party lawfully entitled to so furnish same;
iv) is independently developed by the employees,
agents or contractors of the receiving party without
the aid, application or use of the disclosing party's
Confidential Information; or
v) is the subject of a written permission to
disclose provided by the disclosing party; or
vi) is provided by the disclosing party to a
Third Party without restriction as to
confidentiality.
A party may also disclose Confidential Information of
the other where required to do so by law or legal
process, provided that, in such event, the party
required to so disclose shall give maximum practical
advance written notice of same to the other party and
will cooperate with the other party's efforts to
seek, at the request and expense of the other party,
all confidential treatment and protection for such
disclosure as is permitted by applicable law.
The parties agree that the material financial terms
of this Agreement will be considered Confidential
Information of both parties. Notwithstanding the
foregoing, either party may disclose such terms in
legal proceedings or as are required to be disclosed
in its financial statements, by law, or under
strictures of confidentiality to bona fide potential
sublicensees. Either party shall have the further
right to disclose the material financial terms of
this Agreement under strictures of confidentiality to
any potential acquirer, merger partner, bank, venture
capital firm, or other financial institution to
obtain financing.
The parties agree that information developed pursuant
to the development and use of a Collaborative Screen
will be considered Confidential Information of both
parties and shall be subject to the confidentiality
requirements of this Section 8.1. Notwithstanding
PD.AURORA COLLABORATION AGREEMENT 25
<PAGE> 29
the foregoing, either party may disclose and use
information developed pursuant to the development and
use of a Collaborative Screen that is not specific to
a target selected by PDfor screen development and
screening under strictures of confidentiality to bona
fide sublicensees.
8.2. Publication of Results.
Subject to Section 8.1 hereof, results and data obtained by either
party in the course of a Collaborative Screen Program through use of
an Aurora Reporter may be submitted for publication by PD in
accordance with PD's customary practices, provided, however, that PD
shall credit Aurora in such publication as the provider of the
technology that produced, in part, the published results or data. PD
shall send a copy of the proposed publication and shall allow Aurora
thirty (30) days from the date of receipt in which to determine
whether such publication contains subject matter for which patent
protection should be sought prior to disclosure, or otherwise contains
Aurora Confidential Information.
8.3. Publicity.
Except as required by law and as provided in this Article 8, neither
party may make any public announcement or otherwise disclose the terms
of this Agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld.
9. PATENT PROSECUTION AND COPYRIGHTS
9.1. Patents.
The control and expense of the filing, prosecution (including an
opposition or interference) and maintenance of patents and patent
applications claiming jointly owned Inventions will be equally shared
by PD and Aurora. Both Aurora and PD will use reasonable efforts to
coordinate the filing prosecution and maintenance of patents and
patent applications claiming jointly owned Inventions. Should one
party elect not to share in the control, filing, prosecution or
maintenance of such patents or patent applications, the other party,
upon thirty (30) days written notice, may elect to gain sole control
of the filing, prosecution and maintenance of such patents or patent
applications and have sole responsibility for filing, prosecution or
maintenance expenses.
The control and expense of the filing, prosecution ***
PD.AURORA COLLABORATION AGREEMENT 26
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 30
9.2. Copyrights.
The parties agree to treat and handle, to the maximum practical
extent, any copyrights owned or Controlled by a party in the same
manner as Patent Rights owned or Controlled by such party.
10. WARRANTIES AND INDEMNIFICATION
10.1. Mutual Representations and Warranties.
The parties make the following representations and warranties to each
other:
10.1.1. Corporate Power. Each party hereby represents and
warrants that such party (a) is duly organized and
validly existing under the laws of the state of its
incorporation and has full corporate power and
authority to enter into this Agreement and to carry
out the provisions hereof; (b) has the requisite
power and authority and the legal right to own and
operate its property and assets, to lease the
property and assets it operates under lease, and to
carry on its business as it is now being conducted;
and (c) is in compliance with all requirements of
applicable law, except to the extent that any
noncompliance would not have a material adverse
effect on the properties, business, financial or
other condition of it and would not materially
adversely affect its ability to perform its
obligations under the Agreement.
10.1.2. Due Authorization. Each party hereby represents and
warrants that such party (a) has the requisite power
and authority and the legal right to enter into the
Agreement and to perform its obligations hereunder;
and (b) has taken all necessary action on its part to
authorize the execution and delivery of the Agreement
and to authorize the performance of its obligations
hereunder and the grant of rights extended by it
hereunder.
10.1.3. Binding Agreement. Each party hereby represents and
warrants to the other that: (a) this Agreement has
been duly executed and delivered on its behalf and is
a legal and valid obligation binding upon it and is
enforceable in accordance with its terms; (b) the
execution, delivery and performance of this Agreement
by such party does not conflict with any agreement,
instrument or understanding, oral or written, to
which it is a party or by which it may be bound, nor
violate any law or regulation of any court,
governmental body or administrative or other agency
having authority over it; and (c) all necessary
consents, approvals and authorizations of all
governmental authorities and other persons required
to be obtained by it in connection with the Agreement
have been obtained.
PD.AURORA COLLABORATION AGREEMENT 27
<PAGE> 31
10.2. Warranties and Aurora Technology.
Aurora represents and warrants to PD as of the Effective Date the
following:
10.2.1. To the best knowledge of Aurora Aurora has the lawful
right to license (or sublicense as the case maybe) to
PD in accordance with this Agreement Aurora Patent
Rights and Aurora Copyrights, including those Aurora
Patent Rights and Aurora Copyrights set forth in
Exhibit 5.1. To the best knowledge of Aurora Aurora
Patent Rights and Aurora Copyrights were properly
filed and prosecuted and no Third Party suit exists
relating to Aurora Patent Rights and Aurora
Copyrights.
10.2.2. EXCEPT AS SET FORTH IN SECTION 10.2.1 ABOVE, AURORA
(INCLUDING ITS OFFICERS, EMPLOYEES AND AGENTS)
EXPRESSLY DISCLAIMS ANY REPRESENTATIONS AND
WARRANTIES, WHETHER EXPRESS OR IMPLIED, RELATING TO
AURORA PATENT RIGHTS, AURORA COPYRIGHTS AND AURORA
TECHNOLOGY. AURORA FURTHER DISCLAIMS I) ANY EXPRESS
OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE OF ***
10.3. Aurora Indemnification.
Aurora hereby agrees to indemnify, defend and hold PD, and its
officers, directors, employees, and agents (collectively, the "PD
Indemnitees") harmless from and against all damages or other amounts
payable to a Third Party, including reasonable attorneys' fees and
costs of litigation, resulting from a suit brought or threatened by a
Third Party against a PD Indemnitee for *** misconduct relating to
Aurora's performance under this Agreement, (b) Aurora's performance
under this Agreement in the course of the Collaborative Screen Program
at Aurora, (c) Aurora's intentional violation of any law, rule, or
regulation (not including a law, rule or regulation relating to
intellectual property) and (d) *** except to the extent such damages
or other amounts payable are attributable to: (i) a violation of law,
regulation or court order by any PD Indemnitee, (ii) a violation of
any contractual or fiduciary duty owed by any PD Indemnitee to a Third
Party, (iii) the misappropriation by any such PD Indemnitee of the
trade secrets of any Third Party, (iv) any negligent or wrongful act
or omission of any PD Indemnitee, (v) PD's use of the System, (vi) any
breach of this Agreement by a PD Indemnitee or misrepresentation
contained herein, or (vii inappropriate use (including patent
infringement) by Aurora of a target selected, or Compounds provided
under this Agreement by PD that is owned or otherwise controlled by a
Third Party or a Third Party's patent rights. IN NO EVENT SHALL
AURORA BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES SUFFERED
BY PD RESULTING FROM
PD.AURORA COLLABORATION AGREEMENT 28
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 32
THE EXERCISE OF ANY RIGHTS GRANTED IN ACCORDANCE WITH THIS AGREEMENT.
10.4. Warranties and PD Technology.
PD warrants to Aurora as of the Effective Date the following:
10.4.1. To the best knowledge of PD as of the Effective Date,
PD has the lawful right to license to Aurora in
accordance with this Agreement PD Patent Rights and
PD Copyrights. To the best knowledge of PD as of the
Effective Date, PD Patent Rights and PD Copyrights
were properly filed and prosecuted and no Third Party
suit exists relating to PD Patent Rights, and PD
Copyrights.
10.4.2. EXCEPT AS SET FORTH IN SECTION 10.4.1 ABOVE, PD
(INCLUDING ITS OFFICERS, EMPLOYEES AND AGENTS)
EXPRESSLY DISCLAIM ANY REPRESENTATIONS AND
WARRANTIES, WHETHER EXPRESS OR IMPLIED, RELATING TO
PD PATENT RIGHTS, PD COPYRIGHTS AND PD TECHNOLOGY.
PD FURTHER DISCLAIMS: I) ANY EXPRESS OR IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSEOF PD TECHNOLOGY OR PD PATENT
RIGHTS; II) PRACTICE OF PD COPYRIGHTS, PD TECHNOLOGY
OR PD PATENT RIGHTS WILL NOT INFRINGE A PATENT,
COPYRIGHT, TRADEMARK OR OTHER RIGHT OF A THIRD PARTY;
AND III) THE PATENTABILITY OF ANY PD TECHNOLOGY,
INCLUDING PD TECHNOLOGY CLAIMED IN PATENT
APPLICATIONS AS PART OF PD PATENT RIGHTS.
10.5. PD Indemnification.
PD hereby agrees to indemnify, defend and hold Aurora, and its
respective officers, directors, employees, and agents
(collectively, the "Aurora Indemnitees") harmless from and
against all damages or other amounts payable to a Third Party,
including reasonable attorneys' fees and costs of litigation,
resulting from a suit or other threat brought or threatened by
a Third Party against a Aurora Indemnitee for i) any
development, manufacture, use or sale of a Development
Compound or Product by or through PD or its Affiliates or its
Licensees or Licensors, ii) infringement of a Third Party
patent claim by PD or its Affiliates or its Licensees or
Licensors, and iii) infringement by Aurora of Patent Rights
owned or controlled by a Third Party for a target proposed by
PD for a Collaborative Screen, or Compounds provided under
this Agreement by PD; except to the extent such damages or
other amounts payable are attributable to: (i) a violation of
law, regulation or court order by any Aurora Indemnitee, (ii)
a violation of any contractual or fiduciary duty owed by any
Aurora Indemnitee to a Third Party, (iii) *** IN NO EVENT
SHALL PD BE LIABLE FOR ANY INCIDENTAL OR
PD.AURORA COLLABORATION AGREEMENT 29
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 33
CONSEQUENTIAL DAMAGES SUFFERED BY AURORA RESULTING FROM THE
EXERCISE OF ANY RIGHTS GRANTED IN ACCORDANCE WITH THIS
AGREEMENT.
11. TERM, PARTIAL PERFORMANCE AND TERMINATION
11.1. Term.
The term of this Agreement will begin on the Effective Date and shall
continue until there is no longer a royalty obligation owed by PD to
Aurora unless terminated earlier in accordance with the provisions of
Sections 11.2-11.4 hereof.
11.2. Termination By Mutual Agreement.
The parties may at any time terminate this Agreement, in whole or in
part, by written agreement executed by both Aurora and PD. In such
event, the document effecting such termination shall specify the
continuation or termination of any license rights granted hereunder,
as well as any other terms agreed to by both parties.
11.3. Termination Without Cause by PD.
PD may elect to terminate this Agreement for any reason without cause,
provided, however, that PD provide Aurora with written notice *** In
the event of such termination without cause by PD, the following shall
occur:
11.3.1. PD shall pay to Aurora *** payments as are necessary
so that PD *** under Section 2.1.4.5.
11.3.2. PD shall either: ***
11.3.3. All licenses and sublicenses granted in accordance
with this Agreement shall be terminated and all
Materials transferred in accordance with this
Agreement shall be returned to Aurora or destroyed at
the discretion of Aurora by PD ***
PD.AURORA COLLABORATION AGREEMENT 30
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 34
*** PD will remain obligated to pay ***
11.3.4. All payments by PD required in accordance with this
Agreement from the date of receipt by Aurora of
written notice of such termination by PD shall be
paid by PD within thirty (30) days of such notice to
Aurora; provided, however, that the quarterly
payments under Section 11.3.1 may be made quarterly.
***, if such delivery is requested by PD within
fifteen (15) days of such termination. Further, upon
such termination all of Aurora's obligations under
the Agreement will be satisfied.
11.4. Partial Performance.
PD and Aurora agree that Aurora may, under certain circumstances,
partially perform under this Agreement, without PD terminating the
Agreement, as set forth below:
11.4.1. ***
11.5. Termination for Cause.
Either party shall have the right to terminate this Agreement at any
time for a material breach of this Agreement by the other party,
provided that the non-breaching party shall have given the breaching
party (90) days written notice of the breach and intention to
terminate this Agreement in the absence of a cure within ninety (90)
days of receipt of such notice by the beaching party. Upon
termination of this Agreement for cause, all licenses and sublicenses
granted in accordance with this Agreement shall be terminated and all
Materials transferred
PD.AURORA COLLABORATION AGREEMENT 31
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 35
in accordance with this Agreement shall be returned to the supplying
party or destroyed at the discretion of such party *** The non-
breaching party, upon termination of this Agreement may seek actual or
general damages and remedies available to it at law or in equity.
11.6. Effect of Bankruptcy.
If a party becomes insolvent or admits in writing its inability to pay
its debts as they mature or applies for or consents to the appointment
of a receiver or trustee for any of its properties; or a receiver or
trustee is appointed for such party or a substantial portion of its
properties and is not discharged within ninety (90) days; or any
bankruptcy, reorganization, debt arrangement, dissolution, liquidation
or other proceeding under any bankruptcy or insolvency law is
instituted by or against such party and, if instituted against such
party, it is consented to by such party or remains undismissed for
ninety (90) days, then
11.6.1. Notwithstanding any such event, such party shall
remain obligated to fulfill its obligations and
covenants hereunder, and any failure to do so or
other breach hereunder shall entitle the other party
to terminate this Agreement in accordance with
Section 11.2 hereof; and
11.6.2. It is the parties desire that, if any such receiver,
trustee, judge, arbitrator or other adjudicator
conducting or controlling such proceedings on behalf
of a party should hold that any obligations,
covenants or duties of such party hereunder should be
suspended or declared unenforceable, in whole or in
part, then the rights and benefits granted to the
other party hereunder shall remain in full force and
effect, and that any such obligations, covenants or
duties shall be reformed by such receiver, trustee,
judge, arbitrator or other adjudicator so as to be
enforceable to the maximum extent permitted by
applicable law and to permit any suspension to be
lifted at the earliest practicable time.
11.7. Effect of Expiration or Termination.
The obligations and rights of the parties under Sections 2.1.5, 3.1.4
through 3.2, 5.3, 10.2, 10.3, 10.4, 10.5, 11.3.2 (if applicable),
11.7, Articles 6, 8, 9, and 13, thereof, as well as any provisions,
which, by their intent or meaning are intended to so survive, shall
survive termination or expiration of this Agreement. Except as
otherwise expressly provided in this Agreement, the rights and
obligations of the parties under Sections 5.1, and 5.2 hereof shall
terminate and be of no further force or effect whatsoever upon any
termination of this Agreement.
PD.AURORA COLLABORATION AGREEMENT 32
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 36
12. MISCELLANEOUS
12.1. Assignment.
Notwithstanding any provision of this Agreement to the contrary ***
Either party may also assign its rights or obligations under this
Agreement in connection with the sale of all or substantially all of
its assets, or may otherwise assign its rights or obligations under
this Agreement with the prior written consent of the other party.
This Agreement shall survive any merger or consolidation of either
party with or into another party and no consent for any such merger,
consolidation or similar reorganization shall be required hereunder;
provided, that in the event of such merger, consolidation or similar
reorganization or in the event of a sale of all assets, the party
participating in such merger, consolidation or similar reorganization
is obligated to provide consideration to the non-participating party
for the transfer of the intellectual property rights, Technology and
Deliverables licensed and accessed under this Agreement for twice the
total consideration under this Agreement for such intellectual
property rights, Technology and Deliverables licensed and accessed;
further provided, that in the event of such merger, consolidation or
similar reorganization or in the event of a sale of all assets, no
intellectual property rights of the acquiring or acquired company
shall be included in the technology licensed hereunder.
12.2. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the parties. Any assignment not
in accordance with this Agreement shall be void.
12.3. Force Majeure.
Neither party shall lose any rights hereunder or be liable to the
other party for damages or losses on account of failure of performance
by the defaulting party if the failure is occasioned by war, fire,
explosion, flood, earthquake, strike, lockout, embargo, act of God, or
any other similar cause beyond the control of the defaulting party,
provided that the party claiming force majeure has exerted all
reasonable efforts to avoid or remedy such force majeure and
thereafter takes all reasonable steps to mitigate any such delay in
performance hereunder and any damages that may be incurred by the
other party thereby.
12.4. Notices.
Any notices or communications provided for in this Agreement to be
made by either of the parties to the other shall be in writing, in
English, and shall be made
PD.AURORA COLLABORATION AGREEMENT 33
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 37
by prepaid air mail or overnight carrier with return receipt addressed
to the other at its address set forth below. Any such notice or
communication may also be given by hand, or facsimile to the
appropriate designation. Notices shall be sent:
If to PD, to: Warner-Lambert Company
2800 Plymouth Road
Ann Arbor, Michigan, 48105
Facsimile number: (313) 996-1553
Attention: Dr. Ronald Cresswell
Vice President and Chairman
Parke-Davis Research Division
Copy: General Counsel
Warner-Lambert Company
If to Aurora, to: Aurora Biosciences Corporation
11149 N. Torrey Pines Road
La Jolla, CA 92037
Facsimile number: (619) 452-5723
Attention: Timothy J. Rink, M.D., Sc.D.
Chairman, CEO, and President
Copy: Paul Grayson
Vice President, Corporate Development
provided that if such notice or communication relates to an amendment
to this Agreement or to any notice pursuant to Article 11 hereof, a
copy shall also be sent to:
If to PD, to: Susan C. Moniot
Director of Corporate Development and
Licensing
Warner-Lambert Company
201 Tabor Road
Moris Plains, New Jersey
If to Aurora, to: Dr. John Mendlein
Senior Legal Counsel
Aurora Biosciences Corporation
11149 Torrey Pines Road
La Jolla, California, 92037
Either party may by like notice specify or change an address to which
notices and communications shall thereafter be sent. Notices sent by
mail, facsimile or cable shall be effective upon receipt and notices
given by hand shall be effective when delivered.
12.5. Governing Law and Jurisdiction.
This Agreement shall be governed by the laws of the State of
California, as such laws are applied to contracts entered into and to
be performed within such state.
PD.AURORA COLLABORATION AGREEMENT 34
<PAGE> 38
Any dispute arising from this Agreement, including litigation and
non-binding arbitration, shall be resolved in San Diego, California.
12.6. Waiver.
Except as specifically provided for herein, the waiver from time to
time by either of the parties of any of their rights or their failure
to exercise any remedy shall not operate or be construed as a
continuing waiver of same or any of the other of such party's rights
or remedies provided in this Agreement.
12.7. Severability.
If any term, covenant or condition of this Agreement or the
application thereof to any party or circumstance shall, to any extent,
be held to be invalid or unenforceable, then the remainder of this
Agreement, or the application of such term, covenant or condition to
parties or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each term,
covenant or condition of this Agreement shall be valid and be enforced
to the fullest extent permitted by law; and the parties hereto
covenant and agree to renegotiate any such term, covenant or
application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this
Agreement or the application thereof that is invalid or unenforceable,
it being the intent of the parties that the basic purposes of this
Agreement are to effectuated.
12.8. Independent Contractors.
It is expressly agreed that Aurora and PD shall be independent
contractors and that the relationship between the two parties shall
not constitute a partnership or agency of any kind. Neither Aurora
nor PD shall have the authority to make any statements,
representations or commitments of any kind, or to take any action,
which shall be binding on the other, without the prior written
authorization of the other party to do so.
12.9. Counterparts.
This Agreement may be executed in two (2) or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12.10. Entire Agreement.
This Agreement between the parties of even date herewith set forth all
of the covenants, promises, agreements, warranties, representations,
conditions and understandings between the parties hereto, and
supersedes and terminates all prior agreements and understanding
between the parties, with respect to the subject matter hereof. There
are no covenants, promises, agreements, warranties, representations
conditions or understandings, either oral or written, between the
parties other than as set forth herein and therein. No subsequent
alteration, amendment, change or addition to this Agreement shall be
binding upon the parties hereto unless reduced to writing and signed
by the respective authorized
PD.AURORA COLLABORATION AGREEMENT 35
<PAGE> 39
officers of the parties. This Agreement shall not be strictly
construed against either party hereto. Any conflict between the terms
set forth in the text of this Agreement and the terms of any Exhibit
hereto shall be resolved in favor of the text of this Agreement.
12.11. No Third Party Beneficiaries.
No third party, including any employee of any party this Agreement,
shall have or acquire any rights by reason of this Agreement. Nothing
contained in this Agreement shall be deemed to constitute the parties
partners with each other or any third party.
12.12. Construction.
The term "Section" can refer to any single paragraph level found
herein or any collection of multiple paragraphs thereunder.
12.13. Dispute Resolution.
The parties recognize that disputes as to certain matters may from
time to time arise during the term of this Agreement which relate to
either party's rights and/or obligations hereunder. It is the
objective of the parties to establish procedures to
facilitate the resolution of disputes arising under this Agreement in
an expedient manner by mutual cooperation and without resort to
litigation or arbitration. The parties agree that prior to any
litigation or arbitration concerning this Agreement, PD's president
and Aurora's president will meet in person or by video-conferencing in
a good faith effort to resolve any disputes concerning this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
WARNER-LAMBERT COMPANY AURORA BIOSCIENCES CORPORATION
By: /s/ Anthony Wild By: /s/ Timothy J. Rink
--------------------------- -----------------------------
Name: Anthony Wild Ph.D. Name: Dr. Timothy J. Rink
--------------------------- -----------------------------
Title: President, Pharma Sector Title: President, CEO and Chairman
--------------------------- -----------------------------
Date: September 22, 1997 Date: 8/19/1997
--------------------------- -----------------------------
PD.AURORA COLLABORATION AGREEMENT 36
<PAGE> 40
LIST OF EXHIBITS
EXHIBIT 1.1: PERFORMANCE SPECIFICATIONS
EXHIBIT 1.2: EXHIBIT OF REPORTERS
EXHIBIT 4.1: SERVICE AND SUPPORT
EXHIBIT 5.1: LIST OF AURORA REPORTER SYSTEM PATENT RIGHTS
PD.AURORA COLLABORATION AGREEMENT 37
<PAGE> 41
EXHIBIT 1.1 - PAGE 1
PERFORMANCE SPECIFICATIONS
***
PD.AURORA COLLABORATION AGREEMENT 38
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 42
EXHIBIT 1.1 - PAGE 2
PERFORMANCE SPECIFICATIONS
MODULE 2
***
PD.AURORA COLLABORATION AGREEMENT 39
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 43
EXHIBIT 1.1 - PAGE 3
PERFORMANCE SPECIFICATIONS
MODULE 2
***
PD.AURORA COLLABORATION AGREEMENT 40
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 44
EXHIBIT 1.1 - PAGE 4
PERFORMANCE SPECIFICATIONS
***
PD.AURORA COLLABORATION AGREEMENT 41
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 45
EXHIBIT 1.2
DESCRIPTION OF REPORTERS
***
PD.AURORA COLLABORATION AGREEMENT 42
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 46
EXHIBIT 4.1
SERVICE AND SUPPORT
The following terms and conditions shall apply to the Service and
Support provided by Aurora to PD pursuant to Section 4.1 of the Collaborative
Research and License Agreement. ***
PD.AURORA COLLABORATION AGREEMENT 43
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 47
EXHIBIT 5.1
LIST OF AURORA REPORTER SYSTEM PATENT RIGHTS
TITLE SERIAL NUMBER
***
PD.AURORA COLLABORATION AGREEMENT 44
*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 1
EXHIBIT 11.1
AURORA BIOSCIENCES CORPORATION
EXHIBIT 11.1
STATEMENT RE COMPUTATION OF NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------------------ -------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income (loss) $ 896,759 $ (1,673,193) $ (1,547,415) $ (2,841,052)
Computation of common and common
equivalent shares outstanding:
Weighted average common shares
outstanding 17,002,007 2,288,190 4,472,501 1,754,031
Net effect of dilutive stock options
based on the treasury stock
method using average market price 574,494 -- -- --
Convertible preferred stock assuming
conversion from date of issuance -- 9,457,947 9,915,973 6,924,588
----------- ----------- ------------ ------------
17,576,501 11,746,137 14,388,474 8,678,619
----------- ----------- ------------ ------------
Shares related to SAB 83 based on the
treasury stock method:
Common stock -- 630,319 6,168 845,823
Convertible preferred stock -- 251,914 -- 634,700
Warrants (1) -- 45,290 45,290 45,290
Common stock options granted (1) -- 507,159 311,256 507,159
------------ ------------ ------------ ------------
-- 1,434,682 362,714 2,032,972
------------ ------------ ------------ ------------
Shares used in computing
net income (loss) per share 17,576,501 13,180,819 14,751,188 10,711,591
============ ============ ============ ============
Net income (loss) per share $ 0.05 $ (0.13) $ (0.10) $ (0.27)
============ ============ ============ ============
</TABLE>
(1) All warrants and common stock options granted between March 14, 1996 and
March 31, 1997 are included in this calculation as SAB 83 shares for the
applicable periods.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT SEPTEMBER 30, 1997 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER
30, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 29,346,325
<SECURITIES> 16,255,344
<RECEIVABLES> 2,615,694
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 51,744,737
<PP&E> 4,569,448
<DEPRECIATION> 775,660
<TOTAL-ASSETS> 56,857,139
<CURRENT-LIABILITIES> 2,322,112
<BONDS> 0
0
0
<COMMON> 17,018
<OTHER-SE> 52,224,320
<TOTAL-LIABILITY-AND-EQUITY> 56,857,139
<SALES> 0
<TOTAL-REVENUES> 7,584,963
<CGS> 0
<TOTAL-COSTS> 4,637,452
<OTHER-EXPENSES> 5,356,732
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 236,374
<INCOME-PRETAX> (1,547,415)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,547,415)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,547,415)
<EPS-PRIMARY> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
