<PAGE>
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, 1999
------------------
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 Identification No.)
incorporation or organization)
11010 Torreyana Road, San Diego, CA 92121
- ------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip code)
(858) 404-6600
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
(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.
Outstanding at
Class October 29, 1999
----- ----------------
Common Stock, $.001 par value 17,294,232
<PAGE>
AURORA BIOSCIENCES CORPORATION
FORM 10-Q
INDEX
<TABLE>
<S><C>
PAGE NO.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Balance Sheets - September 30, 1999 (Unaudited) and December 31, 1998............................3
Statements of Operations (Unaudited) - Nine months ended September 30, 1999 and 1998.............4
Statements of Cash Flows (Unaudited) - Nine months ended September 30, 1999 and 1998.............5
Notes to Financial Statements (Unaudited)........................................................6
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................................................7
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.......................................................11
SIGNATURE.............................................................................................12
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
AURORA BIOSCIENCES CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---------------------- -----------------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,524,279 $ 9,477,916
Investment securities, available-for-sale 17,704,321 18,547,991
Accounts receivable 6,834,409 3,750,291
Notes receivable from officers and employees -- 210,000
Prepaid expenses 1,119,525 475,927
Other current assets 2,642,689 1,104,249
---------------------- -----------------------
Total current assets 38,825,223 33,566,374
Equipment, furniture and leaseholds, net 11,440,114 10,863,357
Notes receivable from officers and employees 185,000 210,000
Restricted cash 740,467 1,096,034
Other assets 5,355,108 5,218,951
---------------------- -----------------------
Total assets $ 56,545,912 $ 50,954,716
---------------------- -----------------------
---------------------- -----------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,846,229 $ 3,216,696
Accrued compensation 751,746 550,770
Other current liabilities 621,628 391,694
Customer advances 875,000 --
Unearned revenue 7,934,264 2,440,833
Capital lease and loan obligations, current portion 2,511,944 2,024,786
---------------------- -----------------------
Total current liabilities 19,540,811 8,624,779
Capital lease and loan obligations, less current portion 4,690,989 4,787,667
Stockholders' equity:
Preferred stock, $.001 par value; 7,500,000 shares authorized and no
shares issued and outstanding -- --
Common stock, $.001 par value, 50,000,000 shares authorized,
17,167,808 and 17,024,919 shares issued and outstanding at
September 30, 1999 and December 31, 1998, respectively 17,168 17,025
Additional paid-in capital 61,567,421 61,496,842
Unrealized loss from investments (2,940) --
Deferred compensation (1,011,068) (2,240,606)
Accumulated deficit (28,256,469) (21,730,991)
---------------------- -----------------------
Total stockholders' equity 32,314,112 37,542,270
---------------------- -----------------------
Total liabilities and stockholders' equity $ 56,545,912 $ 50,954,716
---------------------- -----------------------
---------------------- -----------------------
</TABLE>
See accompanying notes.
3
<PAGE>
AURORA BIOSCIENCES CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
------------------ ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Revenue $ 10,880,151 $ 9,145,837 $ 30,440,929 $ 18,192,197
Operating expenses:
Cost of revenue 6,560,914 7,108,925 19,728,053 16,086,172
Research and development 3,234,796 4,053,497 9,299,210 13,005,576
Selling, general and administrative 2,978,022 1,871,001 8,543,400 4,307,355
------------------ ------------------ ----------------- -----------------
Total operating expenses 12,773,732 13,033,423 37,570,663 33,399,103
------------------ ------------------ ----------------- -----------------
Loss from operations (1,893,581) (3,887,586) (7,129,734) (15,206,906)
Interest income 401,287 554,552 1,123,805 1,970,581
Interest expense (175,940) (168,018) (519,549) (481,443)
------------------ ------------------ ----------------- -----------------
Net loss $ (1,668,234) $ (3,501,052) $ (6,525,478) $ (13,717,768)
------------------ ------------------ ----------------- -----------------
------------------ ------------------ ----------------- -----------------
Basic and diluted loss per share $ (0.10) $ (0.21) $ (0.39) $ (0.85)
------------------ ------------------ ----------------- -----------------
------------------ ------------------ ----------------- -----------------
Shares used in computing basic and diluted
loss per share - weighted average common
shares outstanding 17,010,179 16,417,747 16,881,342 16,219,425
------------------ ------------------ ----------------- -----------------
------------------ ------------------ ----------------- -----------------
</TABLE>
See accompanying notes.
4
<PAGE>
AURORA BIOSCIENCES CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1999 1998
-------------------- --------------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (6,525,478) $ (13,717,768)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 2,391,760 1,669,409
Amortization of deferred compensation 660,834 613,703
Revenue earned through barter agreement (300,000) --
Changes in operating assets and liabilities:
Accounts receivable (3,084,118) (1,351,452)
Prepaid expenses and other current assets (2,182,038) (720,191)
Other assets (1,120,061) (1,392,902)
Accounts payable and accrued compensation 3,830,509 3,165,878
Other current liabilities 229,934 (227,778)
Customer advances 875,000 --
Unearned revenue 5,493,431 599,332
Other noncurrent liabilities -- 1,182
-------------------- --------------------
Net cash provided by (used in) operating activities 269,773 (11,360,587)
INVESTING ACTIVITIES:
Purchases of short-term investments (6,922,439) (23,629,171)
Sales and maturities of short-term investments 7,763,169 26,205,000
Purchases of property and equipment (269,375) (3,310,599)
Notes receivable from officers and employees 235,000 30,000
Restricted cash 355,567 231,639
Other assets -- (2,467,868)
-------------------- --------------------
Net cash provided by (used in) investing activities 1,161,922 (2,940,999)
FINANCING ACTIVITIES:
Issuance of common stock, net 639,426 816,626
Issuance of capital loan obligations 619,225 --
Principal payments on capital lease and loan obligations (1,643,983) (1,023,319)
-------------------- --------------------
Net cash used in financing activities (385,332) (206,693)
-------------------- --------------------
Net increase (decrease) in cash and cash equivalents 1,046,363 (14,508,279)
Cash and cash equivalents at beginning of period 9,477,916 23,168,690
-------------------- --------------------
Cash and cash equivalents at end of period $ 10,524,279 $ 8,660,411
-------------------- --------------------
-------------------- --------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 519,549 $ 481,443
-------------------- --------------------
-------------------- --------------------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Property and equipment acquired under capital leases and loans $ 1,415,238 $ 2,600,598
-------------------- --------------------
-------------------- --------------------
Property and equipment acquired through barter agreement $ 300,000 $ --
-------------------- --------------------
-------------------- --------------------
</TABLE>
See accompanying notes.
5
<PAGE>
AURORA BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(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.
The balance sheet at December 31, 1998 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.
These financial statements should be read in conjunction with the
audited financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31,
1998, as filed with the Securities and Exchange Commission ("SEC").
2. COMPREHENSIVE LOSS
Total comprehensive loss was $1,659,371 and $3,501,052 for the three
months ended September 30, 1999 and 1998, respectively, and $6,528,418
and $13,717,768 for the nine months ended September 30, 1999 and 1998,
respectively. Total comprehensive loss for the three and nine months
ended September 30, 1999 includes unrealized gains from investments
totaling $8,863 and unrealized losses from investments totaling $2,940,
respectively.
6
<PAGE>
AURORA BIOSCIENCES CORPORATION
SEPTEMBER 30, 1999
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 ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998
AND FORM 10-Q FOR THE QUARTERS ENDED MARCH 31, 1999 AND JUNE 30, 1999, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION.
OVERVIEW
Aurora Biosciences Corporation ("Aurora" or the "Company") combines
innovative biotechnology with its novel, high technology automation and
software to provide solutions to challenges in drug discovery for the
pharmaceutical and biotechnology industries. Operating activities in 1996 and
1997 focused on the development of an integrated technology platform
comprised of a portfolio of proprietary fluorescent assay technologies for
drug discovery and its highly automated ultra-high throughput screening
system (the "UHTSS(-TM-)" Platform) applicable to Aurora's miniaturized
NanoWell-TM- Assay Plate format. Through 1998 and the first nine months of
1999, while continuing development and manufacture of other UHTSS components,
the Company delivered Module 1, the automated storage and retrieval system of
its UHTSS Platform, to four of its syndicate customers, began development of
its automated master compound storage ("AMCS-TM-") system, continued to
manufacture and deliver certain subsystems to customers, performed screen
development and screening services for customers, and initiated its
functional genomics GenomeScreen-TM- program.
The Company had an accumulated deficit of $28.3 million as of September 30,
1999. The Company's objective is to focus on increasing revenue, while
controlling the growth of expenses, to position the Company for profitability
in 2000. The Company's ability to achieve profitability will depend in part
on its ability to successfully complete development, manufacture and delivery
of the UHTSS Platform and other systems that meet contractual specifications,
continue to provide screen development and screening services to existing and
future pharmaceutical and biotechnology customers and achieve the required
further growth of sales of its systems, services and technologies.
The Company currently generates revenue by developing screens for discovering
new medicines, providing screening services, providing functional genomics
services, developing and providing the UHTSS Platform and other systems and
instruments, as well as licensing its proprietary assay technologies. In the
future, the Company may realize royalty and milestone payments from the
development and commercialization of drug candidates identified by its customers
using Aurora's technologies. The Company believes that its ability to achieve
profitability is not dependent on receipt of any such milestone payments or
royalties, which are not expected for several years, if at all.
The Company may encounter significant fluctuations in its quarterly financial
performance depending on factors such as the timing of the delivery of equipment
and acceptance by Aurora's collaborators, the completion of contracted service
commitments to Aurora's collaborators, the timing of expenditures to develop its
products and the timing of revenue recognized from future contracts.
Accordingly, the Company's results of operations for any historical period may
not be predictive of the results of operations for any future period. Aurora
will also continue to evaluate various strategic opportunities that expand or
enhance its range of services and products. These strategic opportunities could
take the form of joint ventures, acquisitions, business combinations,
collaborations or licensing agreements. Transactions
7
<PAGE>
of this nature have the potential for enhancing longer-term equity value, but
could also result in earnings fluctuations.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND
1998
Total revenue increased 19% from the three months ended September 30, 1998 to
the three months ended September 30, 1999 (the "three-month period") and
increased 67% from the nine months ended September 30, 1998 to the nine months
ended September 30, 1999 (the "nine-month period"). The increases in revenue
resulted primarily from new agreements entered into since September 30, 1998.
These new agreements include a services, systems and technology access agreement
with Pfizer Inc. ("Pfizer"), licensing agreements with Clontech Laboratories,
Inc., Genentech, Inc., Exelixis Pharmaceuticals, Inc. and AntiCancer, Inc., and
screen development and/or screening services agreements with Pharmacia & Upjohn,
Inc., Cytovia, Inc., F.Hoffmann-LaRoche Ltd., Becton Dickinson and Company and
the Cystic Fibrosis Foundation (collectively, the "New Agreements"). Also
contributing to the increases in revenue were acceptance by a customer of six of
the eight subsystems of Module 2 of the UHTSS Platform, acceptance by Merck &
Co. ("Merck") of Module 1 of the UHTSS Platform and screen development milestone
payments from Merck and Warner-Lambert in the first nine months of 1999.
Total operating expenses decreased slightly for the three-month period and
increased 12% for the nine-month period. The increase in operating expenses for
the nine-month period resulted primarily from the growth of the Company,
reflected by the increase from 144 employees at September 30, 1998 to 180 at
September 30, 1999. Cost of revenue decreased 8% for the three-month period and
increased 23% for the nine-month period, related to the development of the UHTSS
Platform, the AMCS system and screening subsystems for the Company's customers,
as well as screen development and screening services performed under the New
Agreements. Research and development expenses decreased 20% and 29% for the
three-month and nine-month periods, respectively, with a shift of resources and
expenditures to revenue-generating projects as reflected by the New Agreements.
Selling, general and administrative expenses increased 59% and 98% for the
three-month and nine-month periods, respectively, due to the growth of the
sales, marketing and business development functions and headcount increases in
other administrative areas to support the overall growth of the Company. Such
increases included the appointment of Stuart J.M. Collinson, Ph.D., as president
in May 1999. In November 1999, Dr. Collinson was named Chief Executive Officer,
replacing Timothy J. Rink, M.D., Sc.D., who remains Chairman of the Board. The
Company anticipates that selling, general and administrative expenses may
continue to increase over prior-year periods as it continues to expand its sales
and marketing program.
Net interest income decreased due to decreased cash and investment balances and
an increase in interest expense incurred on capital lease and loan obligations.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, Aurora held cash, cash equivalents and investment
securities available-for-sale of $28.2 million and working capital of $19.3
million. The Company has funded its operations since inception primarily through
the issuance of equity securities with aggregate net proceeds of $57.7 million,
receipts from corporate collaborations and strategic technology alliances of
$75.7 million, capital equipment lease and loan financing of $11.1 million and
interest income of $5.9 million.
The Company has received an advance payment of $0.9 million from a customer. The
payment relates to potential future sales agreements, however no formal
agreement with the customer has been signed. In
8
<PAGE>
September 1999, the Company delivered a product it believes will be covered by
the future sales agreements. The related revenue will be recorded upon
completion of a formal contract with the customer, which the Company expects
will occur in the fourth quarter of 1999.
The Company has entered into an agreement with a customer whereby Aurora will
receive a series of milestone payments upon the achievement of certain specified
performance criteria. The milestone achieved in the third quarter of 1999
entitles the Company to a $300,000 credit against the purchase of equipment from
the customer.
The Company expects to complete the purchase in late 1999.
The Company's facility lease agreements are secured by letters of credit, which
are secured by certificates of deposit recorded as restricted cash. At September
30, 1999, such restricted cash totaled $0.7 million. The letters of credit will
be reduced over the next two years on a predetermined schedule.
The Company has entered into certain technology and license agreements with
commitments totaling approximately $6.7 million payable over the next five
years.
The Company's strategy for the development of the UHTSS Platform includes the
establishment of a syndicate of collaborators to provide the Company with
funding for development, technology and personnel resources and payments for
system validation at collaborator sites. The Company's UHTSS Platform
co-development syndicate currently includes Bristol-Myers Squibb Pharmaceutical
Research Institute ("BMS"), Eli Lilly and Company, Warner-Lambert, Merck and
Pfizer. The Company has also entered into agreements with Warner-Lambert and
Pfizer to develop an AMCS system for long-term company-wide sample inventory
storage. In addition, the Company has entered into collaborations with Cytovia,
Inc., Pharmacia & Upjohn, Inc. and F.Hoffmann-LaRoche Ltd. to provide screen
development and/or screening services and with Warner-Lambert and Becton
Dickinson and Company for functional genomics programs. Other collaborations
include a combinatorial chemistry agreement with SIDDCO, Inc. to synthesize
large libraries of chemical compounds for Aurora.
The Company's ability to achieve profitability will be dependent upon its
ability to deliver and obtain acceptance of equipment by collaborators, perform
contracted screening services, sell or license new products and services, and to
increase market share of existing discovery services and technologies by
agreements with new collaborators and expansion of agreements with existing
collaborators. Although the Company is actively seeking to enter into additional
collaborations, there can be no assurance that the Company will be able to
negotiate additional collaborative agreements on acceptable terms, if at all,
that the Company's revenue goals will be met, or that the Company will be able
to achieve or sustain profitability. Some of the Company's current collaborative
agreements provide that they may be terminated by the collaborator without cause
upon short notice, which would result in loss of anticipated revenue. Although
certain of the Company's collaborators would be required to pay certain
penalties in the event they terminate their agreements without cause, there can
be no assurance that any one or more of the Company's collaborators will not
elect to terminate their agreements with the Company. In addition, collaborators
may terminate their agreements for cause if the Company cannot deliver the
technology in accordance with such agreements. There can be no assurance that
the Company will derive any additional revenue from such agreements or that such
current or future collaborative agreements will be successful and provide the
Company with expected benefits. Termination of the Company's existing or future
collaborative agreements, or the failure to enter into a sufficient number of
additional collaborative agreements on favorable terms, or to generate
sufficient revenues from the Company's services and technologies, could have a
material adverse effect on the Company's business, financial condition and
results of operations.
In the third quarter of 1999, the Company and BMS amended their syndicate
agreement to extend the screen development portion of the collaboration for
an additional two years and provide a team of Aurora scientists to develop
assays for use by BMS in its screen development operations. As a result of
the amendment, the Company will receive contracted payments from BMS over two
years.
The Company has been notified by one of its ultra-high throughput screening
system syndicate members that such syndicate member desires to amend its
syndicate agreement with the Company to discontinue further work on the UHTSS
Platform to be provided by the Company. The Company is in the process of
discussing potential amendments to the agreement with such syndicate member.
Based on the Company's current understanding of such syndicate member's
intentions, the Company believes such amendment, should it be entered into,
will provide for continuation of the screen development and license fees and
is not expected to have a material adverse impact on the Company's business,
financial condition or results of operations.
9
<PAGE>
The Company may be required to raise additional capital over the next several
years in order to conduct or expand its operations or acquire new technology.
Such additional capital may be raised through additional public or private
equity financings, borrowings and other available sources. No assurance can be
given that the Company's business or operations will not change in a manner that
would consume available resources more rapidly than anticipated, or that
substantial additional funding will not be required before the Company can
achieve or sustain profitable operations. There can be no assurance that the
Company will continue to generate sales from and receive payments under its
existing collaborative agreements or that the Company's existing or potential
revenue will be adequate to fund the Company's operations. If additional funding
becomes necessary, there can be no assurance that additional funds will be
available on favorable terms, if at all. If adequate funds are not available,
the Company may be required to curtail operations significantly or to obtain
funds by entering into arrangements with others that may have a material adverse
effect on the Company's business, financial condition and results of operations.
IMPACT OF YEAR 2000
The Company recognizes the need to ensure its operations will not be adversely
impacted by the inability of computer systems to process data having dates on or
after January 1, 2000 (the "Year 2000" issue). The Company has modified or
replaced portions of its software and certain hardware so that its systems
should function properly, based on third party representations, with respect to
dates in the year 2000 and thereafter. Required modifications and conversions of
existing software and certain hardware are essentially complete. The Company
believes that the Year 2000 issue will not pose significant operational problems
for its systems.
The Company has gathered information about its significant suppliers, financial
institutions and others with whom the Company does business to determine the
extent to which the Company's systems are vulnerable to those third parties'
failure to remediate their own Year 2000 issues. The Company continues to
monitor the Year 2000 compliance status of such third parties, and no
significant issues with third parties' systems have been identified to date.
While the Company has no material systems that interface directly with those of
third parties, there can be no assurance that any failure within systems of
third parties will not have a material adverse impact on the operations of the
Company.
The Company has not incurred significant costs for modifications and conversions
of existing software and certain hardware and has not utilized significant
external resources to assess, test, modify or replace existing software and
hardware for Year 2000 issues. Accordingly, the total Year 2000 issue cost to
the Company is expected to be less than $50,000, substantially all of which has
already been paid and expensed. The Company continues to evaluate the status of
the Year 2000 issue and has developed contingency plans which primarily involve
the use of back-up systems and procedures which do not rely on computers.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.49* Collaborative Research and License Agreement (Second
Amendment) effective as of July 29, 1999 between the
Registrant and Bristol-Myers Squibb Pharmaceuticals Research
Institute.
10.50 Agreement dated November 2, 1999 between the Registrant and
Timothy J. Rink, M.D., Sc.D.
27.1 Financial Data Schedule related to the Financial Statements
for the period ended September 30, 1999.
- -------------
* The Company has requested confidential treatment 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:
No reports on Form 8-K were filed during the quarter ended
September 30, 1999.
11
<PAGE>
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 15, 1999 By: /s/ John Pashkowsky
---------------------
John Pashkowsky
Senior Director, Finance and Treasurer
(on behalf of the Registrant and as Registrant's
Principal Financial and Accounting Officer)
12
<PAGE>
Confidential
EXHIBIT 10.49
SECOND AMENDMENT
TO
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
This Second Amendment ("Second Amendment") is entered into by and
between Bristol-Myers Squibb Pharmaceuticals Research Institute, a division of
E.R. Squibb & Sons, Inc., a Delaware corporation, having offices at Route 206 at
Province Line Road, P.O. Box 4000, Princeton, New Jersey 08543-4000 ("BMS"), and
between Aurora Biosciences Corporation, a Delaware corporation having offices at
11010 Torreyana Road, San Diego, California 92121 ("Aurora").
WHEREAS, effective November 26, 1996, BMS and Aurora entered into a
Collaborative Research and License Agreement and a First Amendment entered into
on June 18, 1997 (which collectively are referred to as the "Research and
License Agreement");
WHEREAS, BMS and Aurora are obligated to develop in collaboration with
one another certain ESP screens under Section 3.1 of the Research and License
Agreement and desire to amend such obligations and expand the development of
Nonexclusive Screens under Section 3.1 of the Research and License Agreement;
and
WHEREAS, BMS and Aurora are, the licensee and licensor, respectively,
of certain Reporters under Section 5.1 of the Research and License Agreement and
desire to clarify and amend certain provisions relating to licensing certain
Patent Rights and technology for the benefit of both parties under the Research
and License Agreement.
NOW THEREFORE, in consideration of the above premises and of the
faithful performance of the covenants herein contained, the parties hereto agree
as follows:
1. All capitalized terms used in this Second Amendment shall have the
meaning ascribed to such term in the Research and License Agreement,
unless otherwise specifically defined herein.
The definition of "PLP" shall be amended to read as follows:
"PLP" means a ***.
Page 1
*** Confidential Treatment Requested
<PAGE>
Newly defined terms, include:
"Second Amendment" as defined in the first paragraph of page one
herein.
"Second Amendment Effective Date" is defined as the date of the last
party to sign this Second Amendment below.
"Research and License Agreement" as defined in the recitals herein.
""Collaborative NSP Screen", "Successful Collaborative NSP Screen" and
"NSP Activities" shall have the meanings set forth in Section 3.2 of
Exhibit B hereof."
"Burdened Reporter System Technology", "Burdened Reporter System",
"Burdened Reporter" and "Burdened Patent Rights" as defined in Section
3.7.
"Stanford Patents" is defined as ***.
2. Section 3.1.1 of the Research and License Agreement shall be amended to
replace the first paragraph thereof with the new paragraph attached as
EXHIBIT A to this Second Amendment. In the last subparagraph (ii) of
Section 3.1.1 of the Research and License Agreement, ***. Exhibit 3.1.1
of the Research and License Agreement shall be amended throughout to
replace "ESP" with "ESP or NSP."
3. Section 3.2 of the Research and License Agreement shall be amended and
replaced in its entirety with a new Section 3.2 attached as EXHIBIT B
to this Second Amendment.
Page 2
*** Confidential Treatment Requested
<PAGE>
4. Section 3.6 of the Research and License Agreement is amended in its
entirety and replaced with new Sections 3.6 and 3.7 attached as EXHIBIT
C to this Second Amendment.
5. Aurora, to the best of its knowledge, hereby represents and warrants to
BMS that:
a. As of the Second Amendment Effective Date, the ***.
b. As of the Second Amendment Effective Date, ***.
6. Section 5.1.2.4 is added to the Research and License Agreement, as
follows: "The right to use a Burdened Reporter System Technology,
Burdened Reporter System, Burdened Reporter or Burdened Patent Rights
(as such terms are defined in Section 3.7), where BMS and Aurora ***set
forth in Section 3.7 hereof."
7. Section 2.1.7.4 of the Research and License Agreement is amended to add
after the words "Nonexclusive Screens" the following: "(other than
Exclusive and Collaborative NSP Screens that were developed by Aurora
for BMS under this Agreement***, subject to such milestone and royalty
obligations as BMS may have under Section 3.2 hereof)" and delete ***.
8. Section 2.1.7.4.1 of the Research and License Agreement is amended by
replacing the words "milestone payments" with the words "milestone and
royalty payments".
9. Section 2.1.8.4 of the Research and License Agreement is amended to add
after the words "Nonexclusive Screens" the following: "(other than
Nonexclusive Screens that were developed by Aurora for BMS under this
Agreement, ***, subject to such milestone and royalty obligations as
BMS may have under Section 3.2 hereof)".
10. Section 2.1.8.4.1 of the Research and License Agreement is amended by
replacing the words "milestone payments" with the words "milestone and
royalty payments".
11. Sections 5.2.2, 10.1, 10.2 and 12.5.1 of the Research and License
Agreement are each amended by replacing the references to "3.2.5"
therein with "3.2.6".
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12. Section 12.5.1 of the Research and License Agreement is amended by
adding ", 3.6, 3.7," between "3.4" and "5.2".
13. Aurora provides ***attached as *** to the Second Amendment.
14. Exhibit 1.2 of the Research and License Agreement shall be amended and
replaced in its entirety as of the Second Amendment Effective Date with
a new Exhibit attached as EXHIBIT E to this Second Amendment. ***
Patent Rights covering compositions or uses of the Reporters and
Reporters Systems listed on Exhibit E *** and that are licensed,
sublicensed or ***.
15. Exhibit 11.2.1 of the Research and License Agreement shall be amended
and replaced in its entirety as of the Second Amendment Effective Date
with a new Exhibit attached as EXHIBIT F to this Second Amendment, but
only to the extent that the same relates to Aurora Reporter System
Patent Rights, ***. Aurora acknowledges that the use by BMS of the
Aurora Reporter System Patent Rights listed on Exhibit F or otherwise
existing as of the Second Amendment Effective Date in accordance with
the terms of the Research and License Agreement shall ***Patent Rights
covering compositions or uses of the Reporters and Reporters Systems
*** and that are licensed, sublicensed or ***.
16. The parties make the following representations and warranties to each
other:
(i) 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 Second Amendment 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 Research
and License Agreement, as amended by this Second Amendment.
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(ii) Each party hereby represents and warrants that such party (a) has
the requisite power and authority and the legal right to enter into the
Second Amendment and to perform its obligations and grant the rights
extended by it hereunder; and (b) has taken all necessary action on its
part to authorize the execution and delivery of the Second Amendment
and to authorize the performance of its obligations hereunder and the
grant of rights extended by it hereunder.
(iii) Each party hereby represents and warrants to the other that: (a)
this Second Amendment 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 Second Amendment and the Research and License
Agreement, as modified by this Second Amendment, 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 execution, delivery and performance of the Second
Amendment and the Research and License Agreement, as modified by this
Second Amendment, have been obtained.
17. Except as herein amended and extended, the parties confirm and ratify
that the terms and conditions of the Research and License Agreement
remain in full force and effect. Except as may be specifically
referenced herein, all changes to the Research and License Agreement
made in this Second Amendment shall be effective as of the date that
this Second Amendment is signed by the last party to sign below.
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IN WITNESS WHEREOF, the parties have caused this Second Amendment to be executed
in multiple counterparts by their duly authorized representatives.
Bristol-Myers Squibb Aurora Biosciences Corporation
Pharmaceutical Research Institute
By: By:
------------------------------ --------------------------------
Title: Title:
--------------------------- -----------------------------
Date: Date:
---------------------------- ------------------------------
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EXHIBIT A OF THE SECOND AMENDMENT
(TO REPLACE ORIGINAL SECTION 3.1.1
AS OF THE SECOND AMENDMENT EFFECTIVE DATE)
3.1.1 SCOPE. Under ***, BMS and Aurora will collaborate, using the
Screening Technology, to develop high throughput and/or ultra high
throughput screens for BMS' use in accordance with this Agreement and
which will be manufactured by Aurora and delivered to BMS *** selected
by BMS ***. The parties will collaborate on the specifications for, and
development of, the particular screens (each screen, together with all
of the reagents and any other materials to be delivered by Aurora in
connection therewith, ***, which shall be manufactured by Aurora and
delivered to BMS (the ***). BMS will *** parties will use all
reasonable efforts to select *** months following the Effective Date.
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EXHIBIT B OF THE SECOND AMENDMENT
(TO REPLACE ORIGINAL SECTION 3.2
AS OF THE SECOND AMENDMENT EFFECTIVE DATE)
***
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***
Promptly following mutual agreement ***, the parties will jointly
prepare the *** Work Plan, which shall set forth in detail the
respective responsibilities of the parties in the development of each
Collaborative *** Screen, and which must be executed by both parties to
be effective. Each such *** Work Plan will contain, where applicable, a
description of the tasks to be performed by each party, location, the
specific deliverables (including number of reagents and any other
materials to be provided for each ***Screen) and documentation to be
produced by Aurora, acceptance criteria for each Collaborative NSP
Screen, *** any other relevant terms, conditions, and work
specifications.
Promptly following the execution of each *** Work Plan, the parties
will commence their respective duties under the *** Work Plan for the
development, manufacture, and delivery of the applicable ***Screen. All
work under a ***Work Plan shall be performed in accordance with the
provisions of this Agreement, and each party will use its reasonable
best efforts to complete its
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obligations under the *** Work Plan as expeditiously as practicable. If
any provisions of any such *** Work Plan should conflict with any
provisions set forth in this Agreement, the provisions of this
Agreement shall take precedence, unless such *** Work Plan expressly
refers to the specific provision(s) of this Agreement that it is
intended to replace or modify (and which shall be limited in force and
effect to such *** Work Plan ***). During the development of a ***
Screen, ***.
*** reagents and other materials to be delivered for use with ***
Screen shall be based on the specifications and validation criteria for
such *** Screen, reagents and other materials as established by such
*** Work Plan. ***, after which the *** Screen shall be delivered to
BMS. Promptly following receipt of each such *** Screen, *** days after
receipt by BMS and *** BMS so that Aurora may develop ***. Aurora will
use its commercially reasonable best efforts to promptly ***, if
possible, provide *** Screen within a reasonable time ***. If Aurora is
*** Screen for ***, or BMS is *** Screen transferred to BMS by Aurora
and Aurora is ***Screen to *** as the parties may agree, Aurora will
prepare an *** Work Plan for *** and BMS will *** Screen; provided,
however, that (i) the foregoing shall not *** BMS in *** Screen, and,
except as set forth in (ii) that follows, BMS shall *** as a result of
BMS' use of such ***, and (ii) BMS may, ***, elect to incorporate the
cells provided by Aurora from such *** Screen into an *** Screen ***
BMS for ***, in which *** using such ***Screen that incorporates such
cells provided by Aurora as BMS would have ***.
If at any time within *** delivery of a *** Screen for whatever reason
such ***, Aurora *** promptly as *** are required to *** Screen), in
which event BMS will reimburse Aurora for *** incurred to manufacture
and supply same ***.
***.
*** BMS under Section *** will not *** of the number of such *** to be
delivered to BMS as part of such *** Plan; provided, however BMS shall
pay for Materials unique to such *** Screens (e.g. cell lines not
available to Aurora or readily commercially available, specific ligands
not available to Aurora or readily commercially available, ***).
***
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All Materials provided by BMS in furtherance of an *** Work Plan shall
be used in accordance with *** attached to the Research and License
Agreement.
3.2.2 *** RESOURCE. In each year for a period of *** years following
the Second Amendment Effective Date, Aurora will use reasonable effort
and a screen development resource of *** Aurora FTEs each of which
shall spend up *** hours per year to develop the *** Screens at Aurora
provided for in Section 3.2.
3.2.3 TRAINING OF BMS PERSONNEL IN AURORA TECHNOLOGIES. In each year
for a period of *** years following the Second Amendment Effective
Date, Aurora will dedicate *** Aurora FTE who will devote up to ***
hours per year to train BMS personnel in aspects of Aurora Reporter
System Technology. This will include, with BMS's approval and at the
expense of BMS, the training of BMS scientist in BMS's facilities ***
times per year and the training of up to *** BMS scientists per year in
Aurora Technology at Aurora's facilities in San Diego. BMS and Aurora
will determine the nature of the training and coordination of such
training sessions, and ***.
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3.2.4 PAYMENTS FOR SUPPORT AND SCREEN DEVELOPMENT RESOURCE. As partial
consideration for the development of *** Screens at Aurora under
Section 3.2 and the training and support of BMS personnel in Aurora
Reporter System Technology under Section 3.2.3, BMS shall commit to pay
Aurora *** per year for *** years following the Second Amendment
Effective Date. The payments with respect to the *** Second Amendment
Effective Date shall be paid as follows: *** shall be paid *** Second
Amendment, and the *** shall become payable ***. The *** to be paid
with respect to the *** Second Amendment Effective Date shall be paid
in *** installments of *** which shall be paid upon the *** of the
Second Amendment Effective Date, and the *** shall become payable ***.
3.2.5 DEPLOYMENT OF *** SCREENS BY BMS. BMS and its Affiliates will
employ each *** Screen developed in collaboration with Aurora to screen
such BMS Test Materials as BMS deems appropriate for such purpose in
the exercise of its sole and absolute discretion. *** Affiliates shall
have the right to continue to use the *** Screens developed by Aurora
and provided to BMS hereunder (and to use the Reporters and Reporter
System provided by Aurora for use ***.
3.2.6 ***.
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3.2.7 PAYMENTS TO AURORA. In addition to such payments as are made by
BMS to Aurora pursuant to section 3.2.4 hereof, the following payments
shall be made to Aurora with respect to the delivery and use of ***
Screens by BMS:
3.2.7.1 MILESTONES. BMS will pay to Aurora the following
milestone payments on each Product containing an Approved PLP
*** Screen developed under this Section 3.2 ***:
3.2.7.1.1 BMS will promptly notify Aurora in writing of
each Approved PLP Compound *** Screen ***. BMS will pay
Aurora *** for each such Approved PLP Compound so approved
for further development by the ***. Payments shall be
wired to a bank account specified by Aurora within ***
days following such notification from BMS.
3.2.7.1.2 ***:
Event Payment (US$)
----- -------------
***
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3.2.7.2 ROYALTIES. With respect to each Covered Product
containing an Approved PLP Compound *** Screen developed in
collaboration between Aurora and BMS under this Section 3.2
***, BMS shall pay a royalty on *** of such Covered Product
during the Royalty Term for such Covered Product, as follows
(the worldwide annual *** are multiplied by the applicable
royalty rate ***:
Worldwide *** (in US$ millions) *** Percentage of Net Sales
----------------------------------- -----------------------
***
***.
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<PAGE>
Royalties for Net Sales of any such Covered Product in any
given country shall be due and payable only during the Royalty
Term for such Covered Product in such country; thereafter, BMS
shall be entitled to continue to sell such Covered Product in
such country without further compensation to Aurora.
3.2.8 ***:
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(i) ***.
3.2.9 ***.
3.2.10 ***.
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EXHIBIT C TO SECOND AMENDMENT
3.6 ***.
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<PAGE>
***
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***
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<PAGE>
***
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EXHIBIT D TO THE SECOND AMENDMENT
***
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<PAGE>
***
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<PAGE>
***
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<PAGE>
***
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EXHIBIT E TO THE SECOND AMMENDMENT
***
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<PAGE>
EXHIBIT F OF THE SECOND AMENDMENT
***
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<PAGE>
***
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<PAGE>
***
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EXHIBIT G TO THE SECOND AMENDMENT
***
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<PAGE>
EXHIBIT H TO THE SECOND AMENDMENT
***
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<PAGE>
***
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<PAGE>
***
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EXHIBIT I TO THE SECOND AMENDMENT
***
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EXHIBIT 10.50
November 2, 1999
Timothy J. Rink, M.D., Sc.D.
Chairman & Chief Executive Officer
Aurora Biosciences Corporation
11010 Torreyana Road
San Diego, CA 92121
Dear Tim:
This letter agreement ("Agreement") sets out the terms for your part-time
employment with Aurora Biosciences Corporation (the "Company") as well as the
terms under which you will act as Chairman of the Company's Board of Directors
(the "Board"). This Agreement will become effective November 8, 1999, consequent
to Stuart Collinson's appointment as Chief Executive Officer of the Company.
- - COMPENSATION AND HOURS FOR 1999. Your work schedule, compensation,executive
bonus plan for 1999, and fringe benefits will remain at their current
levels through December 31, 1999. It is understood that you will take Paid
Personal Leave ("PPL") from December 13 through December 23 and that you
will be paid holiday pay for December 24 through December 31, 1999.
- - CHAIRMANSHIP OF BOARD OF DIRECTORS. Beginning January 1, 2000 and as long
as you serve as Chairman of the Board, you will receive fees for meetings
comparable to the fees received by other non-executive directors, namely
$2,500.00 per Board meeting attended by you in person, $500.00 per
telephone or committee meeting in which you participate.
You will also receive a quarterly Chairman's fee of $2,500.00, payable in
advance on the first day of each quarter for as long as you remain Chairman
of the Board.
- - PART-TIME EMPLOYMENT.
- Areas of service include: recruitment; customer relations;
business development; strategic alliances; investor relations;
organization development; scientific and technical review and any
other areas in which the Board requests your service.
- Reporting to: Chief Executive Officer
- Hours: You agree to provide 28 days of service per quarter, up to
15 of which may, at the Company's request be performed at the
Company's San Diego headquarters or elsewhere in the USA, and the
remainder will be in Europe, where it is understood you will be
residing.
- You will not be required to make more than four visits to the USA
in any quarter.
<PAGE>
- Compensation: You will be paid $70,000 per quarter in advance,
subject to applicable deductions and withholdings.
- Expenses: The Company will pay reasonable and documented travel
and incidental business expenses including: business-class air
travel for inter-continental flights for business performed in the
USA at the Company's request, car rental and hotel-suite
accommodations for work periods in San Diego.
- Secretarial assistance and other facilities: You will receive
reasonable secretarial assistance and office facilities at the
Company's San Diego headquarters.
- COBRA: The Company will reimburse you for the costs of your COBRA
coverage or the premiums for medical coverage similar to your
current Company sponsored medical coverage (excluding family
members) during your service as a part-time employee.
- The Company's Business is a Priority: You agree that so far as
reasonably practicable the Company's business will take precedence
over any other professional work obligations in which you are or
become involved.
- Other professional activities: You agree that you will not provide
more than eighteen (18) days' paid work to third parties per
quarter. You agree that such third party work shall not conflict
with the Company's business interests. You further agree to notify
the CEO of the Company of the identity and nature of work involved
in any third party affiliations during the term of this agreement.
- Term: Beginning April 30, 2000, other than termination for "cause"
as defined in Attachment A, your employment with the Company may
be terminated by either the Company or you for any reason or no
reason with a minimum of 60 days' written notice to the other
party. The Company retains the right to pay you severance in lieu
of notice in exchange for your signature of a release of claims,
in the form attached hereto as Attachment B.
- Stock Options: All of the stock options to purchase Company Common
Stock which have been granted to you and dated February 18, 1997
and July 23, 1998 will continue to vest pursuant to the current
vesting schedules as provided in the Company's 1996 Stock Plan, as
long as you are serving as Chairman of the Board or a part-time
employee to the Company pursuant to this Agreement.
- Employee Proprietary Information & Inventions Agreement: The
conditions of the Employee Proprietary Information & Inventions
Agreement you executed on February 20, 1996, and attached hereto
as Attachment C, will remain in effect during and beyond the term
of your employment with the Company as provided therein.
- This Agreement is subject to satisfactory proof of your right to
work in the USA.
<PAGE>
This Agreement is made in San Diego, California. This Agreement shall be
construed and interpreted in accordance with the laws of the State of
California. Once signed by you this Agreement will constitute the complete,
final and exclusive agreement between you and the Company relating to the terms
and conditions of your employment, and supersedes all prior and contemporaneous
oral and written employment agreements or arrangements between the Company and
you.
Yours sincerely,
/s/ James Blair /s/ Hugh Rienhoff, Jr.
- -------------------- ------------------------
James Blair, Ph.D. Hugh Rienhoff, Jr., M.D.
Compensation Committee of the Board of Directors
Cc: S. Collinson, President
P. Fritz, Senior Director, Human Resources
I accept the terms and conditions outlined in this Agreement.
/s/ Timothy J. Rink
- ---------------------------
Timothy J. Rink, M.D., Sc.D.
<PAGE>
ATTACHMENT A
Termination by the
Company for Cause: The Company may immediately terminate your
- ------------------ employment "for cause" at any time without
any prior written notice to you. Termination
shall constitute a termination "for cause" if
such termination is for one or more of the
following causes, as found by the Board of
Directors of the Company by a resolution duly
adopted by a majority of its members,
excluding you if you are then a member of the
Board (a copy of which resolution shall be
delivered to you):
(i) your substantial and continuing willful or
grossly negligent failure to perform your
duties substantially in accordance with your
responsibilities, which materially and
adversely affects the business, prospects,
financial condition, operations, property or
affairs of the Company, after 30 days notice
from the Board of Directors of the Company
(so long as such failure is continuing), such
notice setting forth in reasonable detail the
nature of such failure;
(ii) the commission by you of an act of willful
misconduct, fraud or embezzlement, which
results in material loss, damage or injury to
the Company, whether directly or indirectly,
or the commission by you of any other action
with the intent to injure materially the
Company which could, in the reasonable
opinion of the Board of Directors, result in
material harm to the Company;
(iii) if you are convicted of a felony, either in
connection with the performance of your
responsibilities for the Company or which
shall materially adversely affect your
ability to perform your responsibilities for
the Company; or
(iv) the commission of an act which constitutes
unfair competition with the Company or with
the intent of inducing any third party to
breach a material contract with the Company
or the willful and materially injurious
unauthorized disclosure of any trade secret
or confidential information of the Company.
In the event of a termination "for cause"
pursuant to the provisions of clauses (i)
through (iv) above, inclusive, you shall be
entitled to no severance or other termination
benefits except as required by law.
<PAGE>
ATTACHMENT B
RELEASE AND WAIVER OF CLAIMS
In consideration of the payments and other benefits set forth in the
Employment Agreement dated November 2, 1999, to which this form is attached, I,
TIMOTHY J. RINK, M.D., SC.D., hereby furnish AURORA BIOSCIENCES CORPORATION (the
"Company"), with the following release and waiver ("Release and Waiver").
I hereby release, and forever discharge the Company, its officers,
directors, agents, employees, stockholders, successors, assigns affiliates and
Benefit Plans, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys' fees, damages, indemnities and obligations
of every kind and nature, in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed, arising at any time prior
to and including my employment Termination Date with respect to any claims
relating to my employment and the termination of my employment, including but
not limited to, claims pursuant to any federal, state or local law relating to
employment, including, but not limited to, discrimination claims, claims under
the California Fair Employment and Housing Act, and the Federal Age
Discrimination in Employment Act of 1967, as amended ("ADEA"), or claims for
wrongful termination, breach of the covenant of good faith, contract claims,
tort claims, and wage or benefit claims, including but not limited to, claims
for salary, bonuses, commissions, stock, stock options, vacation pay, fringe
benefits, severance pay or any form of compensation.
I also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Company.
I acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this Release and Waiver is knowing and
voluntary, and that the consideration given for this Release and Waiver is in
addition to anything of value to which I was already entitled as an executive of
the Company. I further acknowledge that I have been advised, as required by the
Older Workers Benefit Protection Act, that: (a) the Release and Waiver granted
herein does not relate to claims which may arise after this Release and Waiver
is executed; (b) I have the right to consult with an attorney prior to executing
this Release and Waiver (although I may choose voluntarily not to do so); and if
I am over 40 years of age upon execution of this Release and Waiver: (c) I have
twenty-one (21) days from the date of termination of my employment with the
Company in which to consider this Release and Waiver (although I may choose
voluntarily to execute this Release and Waiver earlier); (d) I have seven (7)
days following the execution of this Release and Waiver to revoke my consent to
this Release and Waiver; and (e) this Release and Waiver shall not be effective
until the seven (7) day revocation period has expired.
Date: November 2, 1999 By: /s/ Timothy J. Rink
---------------------------
TIMOTHY J. RINK, M.D., SC.D.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT SEPTEMBER 30, 1999 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 10,524,279
<SECURITIES> 17,704,321
<RECEIVABLES> 6,834,409
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 38,825,223
<PP&E> 17,113,144
<DEPRECIATION> 5,673,030
<TOTAL-ASSETS> 56,545,912
<CURRENT-LIABILITIES> 19,540,811
<BONDS> 0
0
0
<COMMON> 17,168
<OTHER-SE> 32,296,944
<TOTAL-LIABILITY-AND-EQUITY> 56,545,912
<SALES> 0
<TOTAL-REVENUES> 30,440,929
<CGS> 0
<TOTAL-COSTS> 19,728,053
<OTHER-EXPENSES> 17,842,610
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 519,549
<INCOME-PRETAX> (6,525,478)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,525,478)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,525,478)
<EPS-BASIC> (0.39)
<EPS-DILUTED> (0.39)
</TABLE>
