UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[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
For the transition period from _________ to ___________.
Commission File Number 0-21863
EPIX Medical, Inc.
(Exact name of Registrant as Specified in its Charter)
Delaware 04-3030815
--------------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
71 Rogers Street
Cambridge, Massachusetts 02142
--------------------------------------- --------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 499-1400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share
--------------------------------------
(Title of Class)
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 for 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
As of October 1, 1997, 8,688,547 shares of the registrant's Common Stock,
$.01 par value per share, were issued and outstanding.
1
<PAGE>
EPIX MEDICAL, INC.
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Balance Sheets--September 30, 1997 and December 31, 1996 3
Statements of Operations--Three Months Ended September 30, 1997 and 1996 4
Statements of Operations--Nine Months Ended September 30, 1997 and 1996 5
Statements of Cash Flows--Nine Months Ended September 30, 1997 and 1996 6
Notes to Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
Signatures
</TABLE>
2
<PAGE>
EPIX Medical, Inc.
(A Company in the Development Stage)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------------ ------------------
(Unaudited)
<S> <C> <C>
Assets:
Current assets:
Cash and cash equivalents $826,428 $2,667,892
Marketable securities 19,738,450 7,996,186
Receivables 854,614
Prepaid expenses 315,187 57,135
Other current assets 10,887 12,221
------------------ ------------------
Total current assets 21,745,566 10,733,434
Property and equipment, net 1,157,094 994,179
Notes receivable from officer 310,371 295,344
Other assets 51,914 551,610
------------------ ------------------
Total assets $23,264,945 $12,574,567
================== ==================
Liabilities and Stockholders' Equity (Deficit):
Current liabilities:
Current portion of capital lease obligations $300,131 $208,571
Accounts payable and accrued expenses 2,226,025 2,225,713
------------------ ------------------
Total current liabilities 2,526,156 2,434,284
Capital lease obligations, less current portion 208,183 176,269
Redeemable convertible preferred stock:
Series B, $.01 par value, 2,655,138 shares authorized; 2,643,736 3,963,682
shares issued and outstanding at December 31, 1996 ($6,416,368
liquidation value)
Series C, $.01 par value, 1,445,536 shares authorized; 1,432,318 shares 3,251,444
issued and outstanding at December 31, 1996 ($3,565,063 liquidation
value)
Series D, $.01 par value, 1,740,002 shares authorized; 1,700,002 shares 5,072,575
issued and outstanding at December 31, 1996 ($5,641,777 liquidation
value)
Series E, $.01 par value, 868,329 shares authorized; 868,329 shares 4,916,106
issued and outstanding at December 31, 1996 ($4,916,106 liquidation
value)
Preferred stock, $.01 par value, 0,0 and 1,000,000 shares authorized at
December 31, 1995, December 31, 1996 and September 30, 1997.
None issued and outstanding
Stockholders' equity (deficit):
Series A convertible preferred stock, $.01 par value, 104,388 shares 1,037,664
authorized; 93,691 shares issued and outstanding at December 31, 1996
Preferred stock, $.01 par value, 0 and 1,000,000 shares
authorized at December 31, 1996 and September 30, 1997. None issued
and outstanding
Common stock, $.01 par value, 15,000,000 shares authorized; 8,688,547 86,885 15,644
and 1,564,451 shares issued and outstanding at September 30, 1997
and December 31, 1996, respectively
Additional paid-in capital 32,491,919 112,960
Accretion of redeemable convertible preferred stock to redemption value (101,059)
Deficit accumulated during the development stage (12,048,198) (8,305,002)
------------------ ------------------
Total stockholders' equity (deficit) 20,530,606 (7,239,793)
------------------ ------------------
Total liabilities and stockholders' equity (deficit) $23,264,945 $12,574,567
================== ==================
</TABLE>
See accompanying notes.
3
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months Three months
ended ended
September 30, September 30,
1997 1996
---------------- ----------------
<S> <C> <C>
Revenues $2,626,970 $6,665,088
Operating expenses:
Research and development 2,726,900 2,005,013
General and administrative 669,171 1,118,971
---------------- ----------------
Total operating expenses 3,396,071 3,123,984
---------------- ----------------
Operating income (loss) (769,101) 3,541,104
Interest expense (8,348) (23,926)
Interest income 314,948 89,004
---------------- ----------------
Net income (loss) $(462,501) $3,606,182
================ ================
Net income (loss) per share $(0.05) $0.47
Shares used in computation of net income (loss) per share 8,684,000 7,711,000
See accompanying notes.
</TABLE>
4
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Period from
inception
Nine months (November 29, 1988)
Nine months ended ended September to September 30,
September 30, 1997 30, 1996 1997
-------------------- ----------------- ---------------------
<S> <C> <C> <C>
Revenues $ 4,021,343 $ 9,635,088 $ 18,042,591
Operating expenses:
Research and development 6,286,198 4,951,652 21,588,121
General and administrative 2,267,923 2,212,086 9,197,932
-------------------- ----------------- ---------------------
Total operating expenses 8,554,121 7,163,738 30,786,053
-------------------- ----------------- ---------------------
Operating income (loss) (4,532,778) 2,471,350 (12,743,462)
Interest expense (26,807) (273,640) (612,288)
Interest income 816,390 140,122 1,323,020
-------------------- ----------------- ---------------------
Net income (loss) $(3,743,195) $2,337,832 $(12,032,730)
==================== ================= =====================
Net income (loss) per share $(0.45) $0.30
Shares used in computation of
net income (loss) per share 8,370,000 7,711,000
</TABLE>
See accompanying notes.
5
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Period
Nine Months Ended Nine Months Ended from inception
September 30, September 30, (November 12, 1988)
1997 1996 to September 30, 1997
------------------- ------------------- ---------------------
<S> <C> <C> <C>
Operating activities:
Net income (loss) $ (3,743,195) $ 2,337,832 $ (12,032,730)
Adjustments to reconcile net loss to cash provided (used) by
operating activities:
Depreciation and amortization 408,173 406,169 2,060,818
Expenses paid with equity instruments 136,526 204,342
Change in operating assets and liabilities:
Accounts receivable (854,614) (665,088) (854,614)
Prepaid expenses, other current assets and other
assets 227,951 32 88,302
Accounts payable and accrued expenses 312 341,110 1,952,101
------------------- ------------------- ---------------------
Net cash provided (used) by operating activities (3,961,373) 2,556,581 (8,581,781)
Investing activities:
Purchase of fixed assets (571,089) (542,812) (2,954,141)
Proceeds from lease financing of fixed assets 302,365 17,173 1,425,218
Purchase of marketable securities (141,970,964) (152,323,660)
Proceeds from sale or redemption of marketable securities 130,228,700 132,585,210
Issuance of notes receivable from officer (230,000) (280,000)
------------------- ------------------- ---------------------
Net cash used by investing activities (12,010,988) (755,639) (21,547,373)
------------------- ------------------- ---------------------
Repayment of capital lease obligations (178,891) (217,173) (1,105,625)
Proceeds from issuance of promissory notes 300,000 3,000,000
Proceeds from issuance of bridge notes 600,000 600,000
Proceeds from sale of Series B redeemable convertible
preferred stock 3,941,236
Proceeds from sale of Series D redeemable convertible
preferred stock 4,468,963 4,468,963
Proceeds from sale of Series E redeemable convertible
preferred stock 4,882,372 4,882,372
Proceeds from sale of Series A convertible preferred stock 1,037,664
Repurchase of stock from officer (270,000) (270,000)
Proceeds from sale of common stock 14,268,564 14,268,564
Proceeds from issuance of stock options and warrants 41,224 19,768 132,408
------------------- ------------------- ---------------------
Net cash provided by financing activities 14,130,897 9,783,930 30,955,582
------------------- ------------------- ---------------------
Increase (decrease) in cash and cash equivalents (1,841,464) 11,584,872 826,428
Cash and cash equivalents at beginning of period 2,667,892 149,686
------------------- ------------------- ---------------------
Cash and cash equivalents at end of period $826,428 $11,734,558 $826,428
=================== =================== =====================
Supplemental cash flow information:
Cash paid for interest $26,807 $81,319 $320,351
=================== =================== =====================
</TABLE>
See accompanying notes.
6
<PAGE>
EPIX MEDICAL, INC.
(A Company in the Development Stage)
Notes to Condensed Financial Statements
September 30, 1997
(unaudited)
1. Basis of Presentation
The unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and the rules of the
Securities and Exchange Commission (the "Commission"). Accordingly, they do not
include all of the information and footnotes required to be presented for
complete financial statements. The accompanying condensed financial statements
reflect all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of the
results for the interim periods presented. The results of the interim periods
ended September 30, 1997 are not necessarily indicative of the results expected
for the full fiscal year.
The condensed financial statements and related disclosures have been
prepared with the assumption that users of the interim financial statements have
read or have access to the audited financial statements for the preceding fiscal
year. Accordingly, these condensed financial statements should be read in
conjunction with the audited financial statements and the related notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996.
2. Initial Public Offering
On February 4, 1997, the Company completed an initial public offering of
2,000,000 shares of its Common Stock at a price of $7.00 per share. On February
13, 1997, the Company issued an additional 300,000 shares of its Common Stock at
a price of $7.00 per share to cover an underwriters' over-allotment option. The
net proceeds to the Company, after deducting underwriters' discounts and
offering expenses, aggregated approximately $14.3 million.
3. Net Income (Loss) Per Share
Net loss per share for the three and nine month periods ended September 30,
1997 are computed using the weighted-average number of outstanding shares of
common stock assuming all convertible preferred stock were converted into common
stock at the beginning of the period. Common stock equivalents, consisting of
options and warrants, are excluded from the calculation because they are
anti-dilutive.
Net income per share for the three- and nine-month periods ended
September 30, 1996 are proforma and computed using the weighted-average number
of outstanding shares of common stock and common stock equivalents, assuming
conversion of convertible stock into common stock (as of their original date of
issuance). For these periods common stock equivalents are excluded from the net
income (loss) per share computation when their effect is anti-dilutive; however,
pursuant to the requirements of the Commission, common stock equivalent shares
relating to stock options and warrants (using the treasury stock method and an
assumed initial public offering price) and convertible preferred stock issued
during the twelve-month period prior to the initial public offering are included
for pro forma purposes, whether or not they are anti-dilutive.
In February 1997, the Financial Accounting Standard Board (FASB) issued
Financial Standards No. 128, "Earnings Per Share" (FAS 128), which simplifies
the calculation of earnings per share and creates a standard of comparability to
the recently issued International Accounting Standard No. 33, "Earnings Per
Share". Since early application is not permitted, the Company will adopt this
standard in the fourth quarter of 1997. The earnings per share calculations
required under FAS 128 are not materially different from the per share
calculations for the three- and nine-month periods ended September 30, 1997 as
presented herein.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Since commencing operations in 1992, the Company has been engaged
principally in the research and development of its contrast imaging agent
product candidates as well as seeking various regulatory clearances and patent
protection. The Company has had no revenues from product sales and has incurred
net losses since inception through September 30, 1997 aggregating approximately
$12.0 million. The Company has received revenues only in connection with various
licensing and collaboration agreements.
The Company's initial product candidate, MS-325, an injectable MRI contrast
agent, is currently the Company's only product candidate undergoing human
clinical trials. In 1996, the Company formed a strategic alliance with Daiichi
Radioisotope Laboratories, Ltd. ("Daiichi") related to the development and
commercialization of MS-325 in Japan. In 1996, the Company also formed a
strategic alliance with Mallinckrodt Inc. ("Mallinckrodt") related to the
development and commercialization of MS-325 worldwide, excluding Japan. The
Company completed a Phase I clinical trial of MS-325 in February 1997 and
commenced Phase II clinical trials of MS-325 in the second quarter of 1997.
During the second quarter of 1997, the Company also formed a strategic alliance
with Dyax Corp. ("Dyax") in which the parties will seek to identify and develop
novel diagnostic agents for imaging blood clots.
The Company anticipates fluctuation in its quarterly results of operations
due to several factors, including: the timing of fees and milestone payments
received from strategic partners; the formation of new strategic alliances by
the Company; the timing of expenditures in connection with research and
development activities; the timing of product introductions and associated
launch, marketing and sales activities; and the timing and extent of product
acceptance for different indications and geographical areas.
Results of Operations
Comparison of Three Months Ended September 30, 1997 and 1996
Revenues. Revenues for the three months ended September 30, 1997 were $2.6
million, as compared to $6.7 million for the three months ended September 30,
1996. The 1997 revenues included a $2.0 million milestone fee earned from
Mallinckrodt and $440,000 of MS-325 development contract revenue received from
Mallinckrodt. Revenues for the three months ended September 30, 1996 consisted
of $6.0 million in license fees earned from Mallinckrodt and $665,000 of
development contract revenue.
Research and development expenses. Research and development expenses for the
three months ended September 30, 1997 were $2.7 million, as compared to $2.0
million for the three months ended September 30, 1996. The increase largely
reflects the higher costs to support advancement of MS-325 through the
development program. Research and development expenses are expected to continue
to increase as MS-325 continues in clinical trials and as additional costs are
incurred to further develop the process for manufacturing MS-325. Additional
research and development expenses are also anticipated in connection with the
strategic alliance with DYAX which was formed during the second quarter of 1997.
General and administrative expenses. General and administrative expenses for
the three months ended September 30, 1997 were $669,000, as compared to $1.1
million for the three months ended September 30, 1996. The decrease was due to
reduced consulting expenses and lower costs associated with the timing of patent
activities. In addition, 1996 expenses included $250,000 of nonrecurring expense
incurred in connection with the restructuring of a liver agent development
program which was terminated by the Company in 1995. A moderate increase to
general and administrative expenses is expected to be incurred in future
quarters to support research and development programs and ongoing patent
protection activities.
8
<PAGE>
Interest income and expense. Interest income for the quarter ended September
30, 1997 was $315,000, as compared to $89,000 for the quarter ended September
30, 1996. This increase was due to higher average cash available for investment
during 1997. Interest expense for the three months ended September 30, 1997 was
$8,300, as compared to $24,000 for the three months ended September 30, 1996.
Comparison of Nine Months Ended September 30, 1997 and 1996
Revenues. Revenues for the nine-month period ended September 30, 1997 were
$4.0 million as compared to $9.6 million for the corresponding period of 1996.
Revenues for the nine-month period ended September 30, 1997 consisted of
milestone payments of $2.0 million received from Mallinckrodt and $900,000
received from Daiichi. Revenues for the 1997 period also included $1.1 million
received from Mallinckrodt and Daiichi in connection with MS-325 development
contracts. Revenues for the nine-month period ended September 30, 1996 included
a $6.0 million license fee received from Mallinckrodt and a $3.0 million license
fee (net of 10% foreign withholding tax) received from Daiichi, each related to
the formation of strategic collaborations to commercialize MS-325 in the
respective territories covered by the collaboration agreements. The 1996
revenues also included $665,000 of development contract revenue received from
Mallinckrodt.
Research and development expenses. Research and development expenses for the
nine-months ended September 30, 1997 were $6.3 million, as compared to $5.0
million for the nine-months ended September 30, 1996. The increase primarily
reflected the added costs to support advancement of MS-325 through the
development program. The increased expense was also due to additional personnel
and resources to support research in the area of thrombus imaging and the
advancement of the Company's core technology. Research and development expenses
are expected to increase in future quarters as MS-325 continues in Phase II
clinical trials.
General and administrative expenses. General and administrative expenses for
the nine-month period ended September 30, 1997 were $2.3 million, as compared to
$2.2 million for the corresponding period of 1996. The increase was primarily
due to higher personnel costs associated with additions to senior management as
well as the increased cost to build the infrastructure needed to support
development of MS-325 and new discovery programs. The additional expenses of
ongoing patent protection activities as well as those of transitioning to and
operating as a publicly-held company also contributed to the increase in general
and administrative expenses in 1997 as compared to 1996. Partially offsetting
these increases were $250,000 of nonrecurring expense incurred in 1996 in
connection with the restructuring of a liver agent development program which was
terminated by the Company in 1995.The Company had terminated the program after
reassessing the anticipated future product development costs under the program
measured against the size of the potential market for products. As a part of a
negotiated termination of the agreement covering the development program, the
Company paid the contracting party $250,000 and gave a nonexclusive license to
the technology developed to date under the program in exchange for royalty
payments on future sales of products by the contracting party.
Interest income and expense. Interest income for the nine-month period ended
September 30, 1997 was $816,000, as compared to $140,000 for the corresponding
period of 1996. This increase was due to higher average cash available for
investment which was due largely to the Company's initial public offering in
February 1997. Interest expense for the nine-month period ended September 30,
1997 was $27,000, as compared to $274,000 for the corresponding period of 1996.
The 1996 period included interest on promissory notes and bridge loans which
were outstanding during the first five months of 1996.
Liquidity and Capital Resources
The Company financed its operations from inception through September 30,
1997 primarily with $14.3 million in net proceeds from the Company's initial
public offering completed in February 1997, $18.4 million from private sales of
equity securities, $18.0 million received from third parties in connection with
collaboration and license arrangements, $1.4 million of lease financing and $1.3
million in interest income. From inception through September 30, 1997, the
Company has incurred $30.8 million of costs attributable to operating
activities, including $21.6 million related to the research and development of
technology and new product candidates, including MS-325.
The Company's principal source of liquidity consists of cash, cash
equivalents and marketable securities which totaled $20.6 million at September
30, 1997, as compared to $10.7 million at December 31, 1996.
The Company is eligible to receive additional payments of $2.4 million from
Daiichi upon the attainment of certain future MS-325 development milestones.
Under the Company's agreement with Mallinckrodt, Mallinckrodt and the Company
will generally share equally in future development costs of MS-325 up to a
specified maximum amount.
9
<PAGE>
During the nine months ended September 30, 1997, the Company used
approximately $8.0 million of cash for operating activities, exclusive of
license fee revenues. The Company expects that its cash needs for operations
will increase in future quarters due to planned clinical trials and other
expenses associated with the development of MS-325 and new research and
development programs.
The Company estimates that its existing cash and cash equivalents available
at September 30, 1997 will be sufficient to fund its operations through June
1998. The Company believes that it will need to raise additional funds for
research, development and other expenses, through equity or debt financings,
strategic allowances or otherwise, prior to commercialization of any of its
product candidates. There can be no assurance that additional financing will be
available on terms acceptable to the Company, or at all. The Company's future
liquidity and capital requirements will depend on numerous factors, including
the following: the progress and scope of clinical trials; the timing and costs
of filing future regulatory submissions; the timing and costs required to
receive both United States and foreign governmental approvals; the cost of
filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights; the extent to which the Company's products gain
market acceptance; the timing and costs of product introductions; the extent of
the Company's ongoing research and development programs; the costs of training
physicians to become proficient with the use of the Company's products; and, if
necessary, once regulatory approvals are received, the cost of developing
marketing and distribution capabilities.
Because of anticipated spending to support development of MS-325 and new
research programs, the Company does not expect positive cash flow from operating
activities for any future quarterly or annual period prior to commercialization
of MS-325. The Company anticipates continued investments in fixed assets,
including equipment and facilities expansion to support new and continuing
research and development programs. In July 1997, the Company reached an
agreement to which will enable it to lease its current facilities through
December 31, 2002.
The Company has reported only tax losses to date and therefore has not paid
significant federal or state income taxes since inception. At December 31, 1996,
the Company had loss carryforwards of approximately $7.3 million available to
offset future taxable income. These amounts expire at various times through
2010. As a result of ownership changes resulting from sales of equity
securities, the Company's ability to use the loss carryforwards is subject to
limitations as defined in Sections 382 and 383 of the Internal Revenue Code of
1986, as amended (the "Code"). The Company currently estimates that the annual
limitation on its use of net operating losses through May 31, 1996 will be
approximately $900,000. Pursuant to Section 382 of the Code, the change in
ownership resulting from the initial public offering and any other future sale
of stock may limit utilization of future losses in any one year. The Company is
also eligible for research and development tax credits which can be carried
forward to offset federal taxable income. The annual limitation and the timing
of attaining profitability may result in the expiration of net operating loss
and tax credit carryforwards before utilization.
The Company does not believe that inflation has had a material impact on its
operations.
10
<PAGE>
Forward-Looking Statements
The discussion included in this section as well as elsewhere in the
Quarterly Report on Form 10-Q contains forward-looking statements based on the
current expectations of the Company's management. Such statements are subject to
risks and uncertainties which could cause actual results to differ materially
from those projected. See "Important Factors Regarding Forward-Looking
Statements" attached as Exhibit 99.1 and incorporated herein by reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 as
previously filed with the Commission. Readers are cautioned not to place undue
reliance on the forward-looking statements which speak only as of the date
thereof. The Company undertakes no obligation to release publicly the result of
any revisions to these forward-looking statements which may be made to reflect
events or circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events.
11
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(A) EXHIBITS
10.1 Collaboration Agreement effective as of June 20, 1997
between Dyax Corp. and the Company. Filed herewith.
11.1 Computation of net income (loss) per share
27.2 Financial Data Schedule for the interim year-to date period
ended September 30, 1997 (for electronic filing only).
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended September 30, 1997.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
EPIX MEDICAL, INC.
Date: October 21, 1997 By: /s/ Jeffrey R. Lentz
--------------------
Jeffrey R. Lentz,
Chief Financial Officer and
Vice President, Finance and
Administration
(Principal Financial Officer and
Accounting Officer)
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
10.1 Collaboration Agreement between the Registrant and DYAX Corp. effective as of June 20, 1997. Filed
herewith.
11.1 Computation of net income (loss) per share
27.2 Financial data schedule for the interim year-to-date period ended September 30, 1997 (for electronic
filing only).
99.1 Important Factors Regarding Forward-Looking Statements filed as Exhibit 99.1 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference.
</TABLE>
14
COLLABORATION AGREEMENT
THIS LICENSE AGREEMENT (this "Agreement"), effective as of June 20,
1997 (the "Effective Date"), is between DYAX CORP., a Delaware corporation,
having a principal place of business at One Kendall Square, Bldg. 600, 5th Fl.,
Cambridge, Massachusetts 02139 ( "DYAX"); and EPIX MEDICAL INC. , a Delaware
corporation, having its principal place of business at 71 Rogers St., Cambridge
MA 02142 ("EPIX").
RECITALS
WHEREAS, DYAX has technology and expertise relating to the discovery
and development of ligands useful in diagnostic imaging;
WHEREAS, EPIX has technology and expertise relating to magnetic
resonance diagnostic imaging; and
WHEREAS, DYAX and EPIX wish to collaborate in the research, development
and commercialization of new ligands useful in the imaging of thrombi.
NOW, THEREFORE, in consideration of the mutual covenants set forth in
this Agreement, the parties hereby agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, the terms defined in this Article shall
have the meanings specified below:
1.1. "Affiliate" shall mean a corporation or other legal entity that
controls, is controlled by, or is under common control with such party. For
purposes of this definition, "control" means the ownership, directly or
indirectly, of more than fifty percent (50%) of the outstanding equity
securities of a corporation which are entitled to vote in the election of
directors or a more than fifty percent (50%) interest in the net assets or
profits of an entity which is not a corporation.
1.2. "DYAX Revenues" shall mean all payments received by DYAX from
third parties, including customers, sublicensees, partners and distributors,
directly from the sale of RadioPharma Products.
1.3. "EPIX Net Sales" shall mean the invoiced sales price for any MRI
Product billed to independent customers by EPIX or any of its Affiliates,
sublicensees, partners or distributors, less (a) actual credited allowances to
such independent customers for such MRI
<PAGE>
Product which was spoiled, damaged, out-dated or returned; (b) freight and
insurance costs incurred in transporting such MRI Product to such customers; (c)
quantity and other trade discounts actually allowed and taken; and (d) customs
duties and surcharges and other governmental charges incurred in connection with
the exportation or importation of such MRI Product. The transfer of any Product
by EPIX or one of its Affiliates to another Affiliate of EPIX shall not be
considered a sale; in such cases, EPIX Net Sales shall be determined based on
the invoiced sales price by the Affiliate to its customer, less the deductions
allowed under this Section.
1.4. "Imaging Field" shall mean the diagnostic imaging of diseases or
medical conditions in humans or animals, including, but not limited to,
detection of analytes, and not any therapeutic, in vitro diagnostic,
purifications or separations or other purposes.
1.5. "MRI-Based Chelate Compound" shall mean metal chelate complexes
that enhance a magnetic resonance signal and which are proprietary to EPIX.
1.6. "MRI Products" shall mean magnetic resonance imaging products
incorporating one or more Thrombus Ligands and one or more MRI-Based Chelate
Compounds and which are marketed and sold for the Imaging Field.
1.7. "Nonpeptidic Thrombus Ligands" shall mean any non-peptidic ligand
compound based on structure and activity relationships derived from Peptidic
Thrombus Ligands which bind to fibrin and have potential utility for identifying
and localizing thrombi in vivo.
1.8. "Peptidic Thrombus Ligands" shall mean any peptidic compounds
discovered during the Research Program, and any analogs or derivatives thereof,
which bind to fibrin and have potential utility for identifying and localizing
thrombi in vivo.
1.9. "RadioPharma Products" shall mean radiopharmaceutical imaging
products incorporating one or more Thrombus Ligands and which are marketed and
sold for the Imaging Field.
1.10. "Research Program" shall mean the program for the discovery and
development of Thrombus Ligands which is conducted pursuant to Article 2 and is
described in Attachment A, which may be amended from time to time by mutual
agreement of the parties.
1.11. "Thrombus Ligands" shall mean any Peptidic Thrombus Ligands or
any Nonpeptidic Thrombus Ligands, but excluding MRI-Based Chelate Compounds.
The above definitions are intended to encompass the defined terms in
both the singular and plural forms.
ARTICLE 2. RESEARCH & DEVELOPMENT PROGRAMS
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2.1. Conduct of Research Program. DYAX undertakes to diligently conduct
the Research Program described in detail in Attachment A hereto. EPIX will fund
DYAX=s reasonable costs and expenses of the Research Program in accordance with
Section 4.1. The specific tasks of the Research Program may be reduced, modified
or supplemented from time to time by mutual consent of the Steering Committee.
During the Research Program, DYAX shall provide the Steering Committee on a
quarterly basis with written reports of the status of the program and a summary
of the data and results as of that date in sufficient detail to allow the
Steering Committee to reasonably assess the progress of the Research Program.
Within 30 days of completion of the Research Program, DYAX shall provide the
Steering Committee with a final written report with all data and results, and
shall provide EPIX with an appropriate amount of all lead Thrombus Ligands
discovered during the Research Program sufficient for EPIX to further evaluate
such Thrombus Ligands, and shall provide EPIX with the confirmed chemical
composition, sequence and purity information for all such lead Thrombus Ligands.
2.2. Training of EPIX Staff. Upon EPIX's request, DYAX will provide
onsite training during the conduct of the Research Program to one member of
EPIX's research staff in the field of phage display technology chosen by EPIX
and reasonably acceptable to DYAX. Any materials (including vectors, libraries
and peptides) and inventions conceived or made during the onsite training shall
be the sole property of DYAX. EPIX shall fund the reasonable costs and expenses
of the training as part of the Research Program funding as shown on Attachment
A.
2.3. Development Programs. Within 90 days of the completion of the
Research Program, DYAX and EPIX shall discuss and agree upon the following
development programs for the Imaging Field: For the optimization of the lead
Thrombus Ligands suitable for magnetic resonance imaging and preclinical and
clinical development of MRI Products exclusively by EPIX ("MRI Development
Program"); and for the optimization of lead Thrombus Ligands suitable for
radiopharmaceutical imaging and preclinical and clinical development of
RadioPharma Products exclusively by DYAX ("RadioPharma Development Program").
EPIX will have responsibility for the costs and decisions of the MRI Development
Program, and DYAX will have responsibility for the costs and decisions of the
RadioPharma Development Program. Each party agrees to use all commercially
reasonable efforts to diligently develop MRI Products and RadioPharma Products,
as applicable, and to provide the Steering Committee with semi-annual reports on
the status and results of their respective development programs, which each
party shall be entitled to use in the development and commercialization of
products pursuant to this Agreement.
2.4. Composition of Steering Committee. EPIX and DYAX hereby establish
a Steering Committee comprised of four (4) members, with two (2) representatives
appointed by each party. The initial members of the Steering Committee shall be
as follows:
EPIX Representatives DYAX Representatives
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Stephen C. Knight, M.D. Edward Cannon, Ph.D.
V.P. of Strategic Planning President, Research Division
and Corporate Development
James E. Smith, Ph.D. Arthur Ley, Ph.D.
Executive V.P. of Research Associate Director of Research
and Development
A party may change one or more of its representatives to the Steering
Committee at any time upon notice to the other party. Each party will designate
one of its representatives as its team leader.
2.5. Duties of the Steering Committee. The Steering Committee shall
direct and administer the Research Program, and shall have the following
responsibilities:.
(i) administration of the Research Program, as described in
Attachment A hereto, to include recommending to the management
of the respective parties decisions on approving, reducing,
modifying or supplementing the steps of the Research Program
and the resulting budget, allocating personnel resources to be
utilized by the parties under the Agreement, and revising
and/or extending the Research Program based on prior
developments;
(ii) making recommendations on: the Thrombus Ligands for
advancement to optimization and development, the criteria of
significant functional activity necessary to identify a lead
Thrombus Ligand, the identity of lead Thrombus Ligands, the
appropriate quantity of lead Thrombus Ligands to be delivered
to EPIX, and the resolution of all matters involving
scientific questions;
(iii) providing advice and guidance on the MRI Development Program
and RadioPharma Development Program, and reviewing each
party=s diligence towards commercialization in such programs;
(iv) reviewing and approving all reports provided by both parties
to the Steering Committee under Sections 2.1 and 2.3 above;
(v) discussing and reaching agreement on the development and
commercialization of opportunities in the Imaging Field other
than MRI Products and RadioPharma Products; and;
(vi) monitoring the expenditures of each party relevant to the
payments due either party pursuant to Article 4.
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<PAGE>
2.6. Meetings of the Steering Committee. The Steering Committee shall
conduct monthly telephone conferences during the Research Program, and quarterly
telephone conferences during the MRI Development Program and RadioPharma
Development Program, and shall prepare and deliver a brief written report
describing the significant issues and discussions that take place during such
conferences. A representative of the Steering Committee jointly appointed by its
members shall provide each member with five (5) business days notice of the time
of any such meetings and the proposed agenda with respect thereto, unless waived
by all members. The Steering Committee shall meet at least once each quarter
alternately at the parties' locations, or at such other times and locations as
the Steering Committee determines. A representative of the Steering Committee
jointly appointed by its members shall provide each member with five (5)
business days notice of the time and location of meetings, unless such notice is
waived by all members. If a designated representative of a party cannot attend
any meeting of the Steering Committee, such party may designate a different
representative for that meeting without notice to the other party, and the
substitute member will have full power to vote on behalf of the permanent
member. Except as otherwise provided in this Section 2, all actions and
decisions of the Steering Committee will require the unanimous consent of all of
its members. If the Steering Committee fails to reach agreement upon any matter,
the dispute will be resolved in accordance with the procedures set forth in
Section 8.3 below. Within ten (10) days following each quarterly meeting of the
Steering Committee, the Steering Committee shall prepare and deliver, to both
parties, a written report describing the decisions made, conclusions and actions
agreed upon.
2.7. Cooperation. Each party agrees to provide the Steering Committee
with information and documentation as reasonably required for the Steering
Committee to fulfill its duties under this Agreement. In addition, each party
agrees to make available its employees and consultants as reasonably requested
by the Steering Committee. The parties anticipate that members of the Steering
Committee will communicate informally with each other and with employees and
consultants of the parties on matters relating to the Research Program.
2.8. Visits to Facilities. Members of the Steering Committee shall have
reasonable access to the facilities of each party where activities under this
Agreement are in progress, but only during normal business hours and with
reasonable prior notice. Each party shall bear its own expenses in connection
with such site visits.
2.9. Ownership of Results and Inventions.
(a) DYAX shall own all Thrombus Ligands and associated libraries
(whether or not patentable) developed from the Research Program, subject to
EPIX's rights as set forth herein, and shall own all RadioPharma Products and
results (whether or not patentable) from the RadioPharma Development Program.
EPIX shall own all MRI Products and results (whether or not patentable)
developed from the Research Program and/or from the MRI Development Program.
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<PAGE>
(b) Subject to subsection(a) above and DYAX's ownership of inventions
made by EPIX staff trained at DYAX pursuant to Section 2.2, all patentable
inventions (the "Inventions") made during the Research Program and development
of products hereunder shall be owned in accordance with the employment
relationship of the inventors, as follows: DYAX shall own the inventions of DYAX
employees; EPIX shall own the inventions of EPIX employees; and DYAX and EPIX
shall jointly own the inventions jointly made by their employees. Inventorship
shall be determined in accordance with federal law governing patent inventors.
Each party shall have responsibility for the cost and decisions in filing for,
maintaining and defending patent applications and patents for their solely owned
inventions, and the parties shall jointly agree upon such responsibility for
joint inventions.
ARTICLE 3. COMMERCIAL RIGHTS & OBLIGATIONS
3.1. Rights to Imaging Field. The parties agree that the rights to
develop and commercialize Thrombus Ligands in the Imaging Field shall be as
follows:
(a) EPIX shall have the exclusive worldwide rights, with the right to
grant sublicenses, to the Thrombus Ligands and the Inventions to develop, make,
have made, use, sell, have sold and import MRI Products, subject to the payment
obligations to DYAX pursuant to Article 4.
(b) DYAX shall have the exclusive worldwide rights, with the right to
grant sublicenses, to the Thrombus Ligands and the Inventions to develop, make,
have made, use, sell, have sold and import RadioPharma Products, subject to the
payment obligations to EPIX pursuant to Article 4.
(c) EPIX and DYAX shall jointly have the right to the Thrombus Ligands
and Inventions to develop, make, have made, use, sell, have sold and import
products in the Imaging Field other than MRI Product and RadioPharma Products,
subject to mutual agreement by the Steering Committee on the joint development,
commercialization and revenue sharing for such products.
3.2. Rights outside Imaging Field. DYAX shall have the exclusive
worldwide rights, with the right to grant sublicense, to the Thrombus Ligands
and DYAX Inventions, but excluding EPIX Inventions not related to Thrombus
Ligands, to develop, make, have made, use, sell, have sold and import products
outside of the Imaging Field, with no payment or financial obligation to EPIX.
3.3. No other rights or licenses. Except as set forth herein, neither
party grants any rights or licenses to the other party to any patents, patent
applications, inventions, trademarks, trade secrets or other intellectual
property.
3.4. Commercial Diligence. EPIX agrees to use all commercially
reasonable efforts on its own or with third parties to diligently market and
sell MRI Products in all major markets
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<PAGE>
for such products in the world, and upon request, but in no event more than
twice per calendar year, to provide DYAX with a written report of summarizing
its marketing and sales efforts. DYAX agrees to use all commercially reasonable
efforts on its own or with third parties to diligently market and sell
RadioPharma Products in all major markets for such products in the world, and
upon request, but in no event more than twice per calendar year, to provide EPIX
with a written report of summarizing its marketing and sales efforts.
3.5. Most Favored Licensee. In the event that DYAX offers broad,
non-exclusive licenses to one or more third parties under its phage display
patent rights in the Imaging Field, DYAX agrees to notify EPIX and offer EPIX
such license on the same terms as being offered to others.
ARTICLE 4. FUNDING AND REVENUE SHARING
4.1. Research Funding. Subject to a budget for the Research Program
approved by the parties as recommended by the Steering Committee, EPIX shall
fund the Research Program at DYAX at a rate equal to DYAX=s full time equivalent
rate (FTE) per technical staff at the time the work is performed, but not to
exceed $225,000 per FTE without approval of the Steering Committee, plus
reimbursement for all commercially reasonable external costs. The estimated
budget for the Research Program as of the Effective Date is set forth in
Attachment A. EPIX shall make payment to DYAX quarterly in advance based on the
estimated budget, with payment of the first quarterly estimate due within 10
days of the Effective Date and the remaining quarterly payments due within 10
days of invoice. The parties shall review the budget against actual FTE costs
and external costs on a monthly basis at the Steering Committee, with the
applicable adjustment made to the next invoice to EPIX.
4.2. Revenue Sharing of MRI Products. In consideration for the rights
and licenses granted to EPIX hereunder, upon the first commercial sale of MRI
Products, EPIX shall pay DYAX a royalty of 8% on EPIX Net Sales of MRI Products
based on Peptidic Thrombus Ligands, 4% on EPIX Net Sales of MRI Products based
on Nonpeptidic Thrombus Ligands discovered solely by EPIX, 8% on EPIX Net Sales
of MRI Products based on Nonpeptidic Thrombus Ligands discovered jointly by EPIX
and DYAX, or 12% on EPIX Net Sales of MRI Products based on Nonpeptidic Thrombus
Ligands discovered solely by DYAX, for the remainder of the term of the royalty
obligation. Such royalty obligation shall commence with the first commercial
sale of MRI Products and shall end on a country-by-country basis 15 years after
the first commercial sale of MRI Products in each country. The payments shall be
made to DYAX on a quarterly basis, within 45 days after the end of each quarter.
If EPIX is required to pay royalties to a third party in order to make, use,
sell or import an MRI Product for which EPIX is then paying royalties to DYAX,
to avoid infringing such third party's patent rights, and where such
infringement arises solely and directly from the use or sale of an MRI Product,
EPIX may deduct up to fifty percent (50%) of such third party royalty payments
from royalties thereafter payable to DYAX; provided, however, under no
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<PAGE>
circumstances shall the royalties due DYAX be reduced to less than (i) four
percent (4.0%) for MRI Products based on Peptidic Thrombus Ligands, or
Nonpeptidic Thrombus Ligands discovered jointly by EPIX and DYAX, (ii) six
percent (6.0%) for MRI Products based on Nonpeptidic Thrombus Ligands discovered
solely by DYAX, or (iii) two percent (2.0%) for MRI Products based on
Nonpeptidic Thrombus Ligands discovered solely by EPIX.
4.3. Revenue Sharing of RadioPharma Products. In consideration for the
funding and rights and licenses granted to DYAX hereunder, DYAX shall pay to
EPIX upon the first commercial sale of RadioPharma Products a percentage of DYAX
Revenues, excluding license fees and milestone payments, based on the following
formula: Y% x A/(A+B), where A is the total amount of funding made by EPIX for
the Research Program, B is the total amount expenses incurred by DYAX for the
RadioPharma Development Program (excluding research and/or development funding
received by DYAX from a third party), and Y% equals 40% for RadioPharma Products
based on Peptidic Thrombus Ligands, 20% for RadioPharma Products based on
Nonpeptidic Thrombus Ligands discovered solely by DYAX, 40% for RadioPharma
Products based on Nonpeptidic Thrombus Ligands discovered jointly by DYAX and
EPIX, or 60% for RadioPharma Products based on Nonpeptidic Thrombus Ligands
discovered solely by EPIX. (For example, if EPIX funds $500,000 and DYAX expends
$1,500,000, the percentage would be 40% X .25 = 10% for RadioPharma Products
based on Peptidic Thrombus Ligands). Such payment obligation shall commence with
the first DYAX Revenues and shall end on a country-by-country basis 15 years
after the first commercial sale of RadioPharma Products in each country. The
payments shall be made to EPIX on a quarterly basis, within 45 days after the
end of each quarter.
If DYAX is required to pay a percentage of DYAX Revenues to a third party in
order to make, use, sell or import a RadioPharma Product for which DYAX is then
paying a percentage of DYAX Revenues to EPIX, to avoid infringing such third
party's patent rights, and where such infringement arises solely and directly
from the use or sale of a RadioPharma Product, DYAX may deduct up to fifty
percent (50%) of such third party DYAX Revenue payments from the portion of DYAX
Revenue thereafter payable to EPIX; provided, however, under no circumstances
shall the percentage of DYAX Revenues due EPIX be reduced to less than (i)
twenty percent (20%) for RadioPharma Products based on Peptidic Thrombus
Ligands, or Nonpeptidic Thrombus Ligands discovered jointly by EPIX and DYAX,
(ii) thirty percent (30%) for RadioPharma Products based on Nonpeptidic Thrombus
Ligands discovered solely by EPIX, or (iii) ten percent (10%) for RadioPharma
Products based on Nonpeptidic Thrombus Ligands discovered solely by DYAX.
4.4. Reports. Concurrent with each payment due under this Article 4,
each party shall deliver to the other party a report containing the following
information: (a) Total DYAX Revenues and EPIX Net Sales (including gross
receipts), as applicable, during the reporting period, and (b) calculation of
the actual payment due the other party for the reporting period. All such
reports shall be maintained in confidence by the parties.
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<PAGE>
4.5. Records. Each party shall maintain complete and accurate records
relating to the DYAX Revenues and EPIX Net Sales, as applicable, including of
all payments received from third parties, product sales and product development
costs which are necessary for the accurate calculation of the amounts due the
other party in this Article 4. Such records shall be maintained according to
Good Accounting Practices and shall be retained for at least three (3) years
after the conclusion of each payment period. Each party shall have the right, at
its expense, to cause an independent certified public accountant reasonably
acceptable to the other party to inspect such records of the other party during
normal business hours for the sole purpose of verifying any reports and payments
delivered under this Agreement. The parties shall reconcile any underpayment or
overpayment within 30 days after the accountant delivers the results of the
audit. In the event that any audit performed under this Section reveals an
underpayment in excess of 5% for any royalty period, the reporting party shall
bear the full cost of such audit.
4.6. Payments in U.S. Dollars. All payments due under this Agreement
shall be payable in United States dollars. Conversion of foreign currency to
U.S. dollars shall be made at the conversion rate existing in the United States
as reported in the Wall Street Journal on the last working day of the calendar
quarter preceding the applicable calendar quarter. Such payments shall be
without deduction of exchange, collection, or other charges. The method of
payment shall be by check or wire transfer as directed from time to time by the
receiving party.
4.7. Late Payments. Any payments due any party hereunder that are not
paid on or before the date such payments are due under this Agreement shall bear
interest, to the extent permitted by law, at two percentage points above the
base rate of interest most recently reported by The Wall Street Journal,
calculated based on the number of days that payment is delinquent.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES & INDEMNIFICATION
5.1. Representations and Warranties. Each party represents and warrants
to the other that it has the legal right and power to enter into this Agreement,
to extend the rights and licenses granted to the other in this Agreement, and to
fully perform its obligations hereunder, and that the performance of such
obligations will not conflict with its charter documents or any agreements,
contracts, or other arrangements to which it is a party.
5.2. Disclaimers. Nothing in this Agreement shall be construed as a
warranty or representation by either party of the success of the Research
Program, MRI Development Program or RadioPharma Development Program.
5.3. Indemnification by DYAX. DYAX agrees to indemnify, defend, and
hold harmless EPIX and its Affiliates and their directors, officers, employees,
and agents (the "EPIX Indemnitees") against any liability, damage, loss, or
expense (including reasonable attorneys fees and expenses of litigation)
incurred by or imposed upon any of the EPIX
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<PAGE>
Indemnitees as a result of any claims, suits, actions, demands, or judgments
concerning (i) the negligent or willful acts of DYAX or its Affiliates and their
directors, officers, employees, and agents or (ii) any Thrombus Ligand products
or RadioPharma Products marketed and sold by or on behalf of DYAX hereunder.
5.4. Indemnification by EPIX. EPIX agrees to indemnify, defend, and
hold harmless DYAX and its Affiliates and their directors, officers, employees,
and agents (the "DYAX Indemnitees") against any liability, damage, loss, or
expense (including reasonable attorneys fees and expenses of litigation)
incurred by or imposed upon any of the DYAX Indemnitees as a result of any
claims, suits, actions, demands, or judgments concerning (i) any negligent or
willful acts of EPIX or its Affiliates and their directors, officers, employees,
and agents or (ii) any Thrombus Ligand products or MRI Products marketed and
sold by or on behalf of EPIX hereunder.
ARTICLE 6. CONFIDENTIALITY & PUBLICITY
6.1. Confidential Information. In connection with the performance of
their respective obligations under this Agreement, each party intends to
disclose certain confidential information and materials to the other party ,
including such information and materials as are developed hereunder ( the
AConfidential Information@). During the term of this Agreement and for a period
of (5) years thereafter, each party shall maintain all Confidential Information
in strict confidence, except that the receiving party may disclose or permit the
disclosure of any Confidential Information to its directors, officers,
employees, consultants, advisors and commercial partner candidates who are
obligated to maintain the confidential nature of such Confidential Information
and who need to know such Confidential Information for the purposes set forth in
this Agreement; and each party shall use all Confidential Information solely for
the purposes set forth in this Agreement. The obligations of confidentiality and
non-use set forth above shall not apply to the extent that the receiving party
can demonstrate that Confidential Information: was in the public domain or
became party of the public domain prior through no fault of the receiving party;
was independently developed or discovered by the receiving party prior to the
time of its disclosure under this Agreement; is or was disclosed to the
receiving party at any time by a third party having no obligation of
confidentiality with respect to such Confidential Information; or is required to
be disclosed to comply with applicable laws or regulations, or with a court or
administrative order.
6.2. Publication of Results & Publicity. DYAX and EPIX shall mutually
agree upon any publication, whether oral or in writing, of the results of the
Research Program, MRI Development Program and RadioPharma Development Program.
In any such publication, each party shall recognize the contribution of the
other party. Additionally, DYAX and EPIX shall mutually agree upon any press
release or similar public disclosure concerning this Agreement.
ARTICLE 7. TERM AND TERMINATION.
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7.1. Term. Unless sooner terminated as provided herein, this Agreement
shall commence on the Effective Date and shall remain in effect on a
country-by-country basis until no further payments are due under Article 4.
7.2. Voluntary Termination during the Research Program. EPIX shall have
the right terminate this agreement for any reason upon 3 months notice during
the Research Program. In the event of such termination by EPIX, DYAX shall have
the right to continue the research and development of Thrombus Ligands, with no
payment obligations to EPIX.
7.3. Voluntary Termination after the Research Program. After completion
of the Research Program, either party may terminate this Agreement for any
reason upon 3 months notice. In the event of such termination by EPIX, all
rights and obligations of EPIX hereunder, including rights to any Thrombus
Ligands, shall cease, except for the right to receive payments and reports under
Article 4 hereunder with respect to RadioPharma Products. In the event of such
termination by DYAX, all rights and obligations of DYAX hereunder in the Imaging
Field shall cease, except for the right to receive payments and reports under
Article 4 with respect to MRI Products.
7.4. Termination for Material Breach. In the event that either party
commits a material breach of any of its obligations under this Agreement,
including failure to make timely payment of any amounts due, the non-breaching
party may terminate this Agreement upon 60 days written notice to the other
party, unless the party in breach cures such breach within the 60 days notice
period.
7.5. Effect of Termination. Notwithstanding anything to the contrary in
this Article 7, upon the expiration or termination of this Agreement, the
following provisions shall survive the expiration or termination of this
Agreement: Article 5 and 6, and the obligations under Article 4 to make payments
and reports for any amounts and reports which have accrued or are owing prior to
the effective date of termination.
ARTICLE 8. MISCELLANEOUS
8.1. Notices. All notices required or permitted to be given pursuant to
this Agreement shall be in writing and shall be deemed to have been duly given
upon the date of receipt if delivered by hand, international overnight courier,
confirmed facsimile transmission, or registered or certified mail, return
receipt requested, postage prepaid to the following addresses or facsimile
numbers:
If to DYAX: If to EPIX:
Dyax Corp. Epix Medical Inc.
One Kendall Square, Bldg. 600, 5th Fl. 71 Rodgers St.
Cambridge, MA 02139 Cambridge , MA 02142
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Attention: Chief Executive Officer Attention: Chief Executive Officer
Facsimile: (617) 225-2501 Facsimile: (617) 499-1414
Either party may change its designated address and facsimile number by
notice to the other party in the manner provided in this Section.
8.2. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
8.3. Arbitration. In the event either party has a dispute regarding any
of the terms of this Agreement, that party shall notify the other party in
writing. The parties shall use their best efforts to resolve the dispute
amicably at the Steering Committee, or if the Steering Committee is unsuccessful
in reaching resolution, the parties shall refer the matter for resolution by
their Chief Executive Officers. If such attempts are not successful in resolving
the dispute within a period of 90 days following the notice of dispute, either
party may refer the dispute to the American Arbitration Association for hearing
and resolution, using a mutually agreed upon arbitrator at a forum in the Boston
area. Upon reference of the dispute for arbitration, neither party shall contest
such dispute in a court of law until the completion of the arbitration process.
8.4. Consent to Jurisdiction. The parties hereby irrevocably consent
and submit to the exclusive jurisdiction of any Commonwealth of Massachusetts or
Federal court sitting in Boston in any action or proceeding of any type
whatsoever arising out of or relating to this Agreement.
8.5. Headings & Counterparts. All headings in this Agreement are for
convenience only and shall not affect the meaning of any provision hereof. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, and all of which together shall be deemed to be one and the
same instrument.
8.6. Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the parties and their respective lawful successors and assigns.
8.7. Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party, except that either party
may assign this Agreement to any of its Affiliates or to a successor in
connection with the merger, consolidation, or sale of all or substantially all
of its assets or that portion of its business pertaining to the subject matter
of this Agreement, with prompt written notice to the other party of any such
assignment.
8.8. Compliance With Law. Nothing in this Agreement shall be construed
so as to require the commission of any act contrary to law, and wherever there
is any conflict between any provision of this Agreement and any statute, law,
ordinance or treaty, the latter shall prevail, but in such event the affected
provisions of the Agreement shall be conformed and limited only to the extent
necessary to bring it within the applicable legal requirements.
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<PAGE>
8.9. Amendment and Waiver. This Agreement may be amended, supplemented,
or otherwise modified only by means of a written instrument signed by both
parties. Any waiver of any rights or failure to act in a specific instance shall
relate only to such instance and shall not be construed as an agreement to waive
any rights or fail to act in any other instance, whether or not similar.
8.10. Severability. In the event that any provision of this Agreement
shall, for any reason, be held to be invalid or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other provision hereof,
and the parties shall negotiate in good faith to modify the Agreement to
preserve their original intent.
8.11. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements or understandings between the parties relating to the subject
matter hereof.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as a sealed instrument effective as of the date first above
written.
DYAX CORP. EPIX MEDICAL INC.
By: /s/ Henry E. Blair By: /s/ Michael D. Webb
Name: Henry E. Blair Name: Michael D. Webb
Title: Chairman and CEO Title:President & CEO
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ATTACHMENT A
RESEARCH PROGRAM
[summary of research program and time line to be added]
DYAX and EPIX will have joint responsibility for preparing fibrin in a
form suitable for use a thrombus diagnostic marker
DYAX will design, construct and screen phage display libraries to identify
peptidic compounds which bind the fibrin.
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EXHIBIT 11.1
Computation of Net Income (Loss) Per Share
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended September
September 30, 30, 1996
1997 Pro Forma
---- ---------
<S> <C> <C>
Weighted average shares of common stock and equivalents:
Common stock (1) 8,684,000 6,290,000
Options and warrants, based on treasury stock method (2) -- 1,421,000
------------------ ------------------
Total 8,684,000 7,711,000
Net income (loss) $(462,501) $3,606,182
Net income (loss) per share $(0.05) $0.47
================== ==================
</TABLE>
<TABLE>
<CAPTION>
Nine Months
Ended September
Nine Months Ended 30, 1996
September 30, 1997 Pro Forma
------------------ ---------
<S> <C> <C>
Weighted average shares of common stock and equivalents:
Common stock (1) 8,370,000 6,290,000
Options and warrants, based on treasury stock method (2) -- 1,421,000
------------------- -----------------
Total 8,370,000 7,711,000
Net income (loss) $(3,743,195) $2,337,832
Net income (loss) per share $(0.45) $0.30
=================== =================
</TABLE>
(1) All convertible preferred stock converted to common stock upon completion of
the Company's initial public offering in February 1997. All convertible
preferred stock (including, for pro forma purposes, convertible preferred stock
issued during the twelve-month period prior to the initial public offering) is
treated as if converted to common stock at the beginning of earliest period
presented.
(2) Weighted average shares for the three and nine month periods ended September
30, 1997 exclude all options and warrants because they are anti-dilutive.
Weighted average shares for the three and nine month periods ended September 30,
1996 include common stock equivalents issued during the twelve month period
prior to the initial public offering.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF EPIX MEDICAL, INC. AS OF SEPTEMBER 30, 1997 AND FOR THE THREE MONTH
PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001027702
<NAME> EPIX MEDICAL, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 826,428
<SECURITIES> 19,738,450
<RECEIVABLES> 854,614
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,745,566
<PP&E> 3,077,588
<DEPRECIATION> 1,920,493
<TOTAL-ASSETS> 23,264,945
<CURRENT-LIABILITIES> 2,526,156
<BONDS> 0
0
0
<COMMON> 86,885
<OTHER-SE> 20,443,721
<TOTAL-LIABILITY-AND-EQUITY> 23,264,945
<SALES> 0
<TOTAL-REVENUES> 2,626,970
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,396,071
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,348
<INCOME-PRETAX> (462,501)
<INCOME-TAX> 0
<INCOME-CONTINUING> (462,501)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (462,501)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
