SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(MARK ONE)
|X| ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended June 30, 1999
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from______________to_______________
Commission File Number 0-24875
BIOENVISION INC.
(Name of small business issuer in its charter)
DELAWARE 11-3375915
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
ONE ROCKEFELLER PLAZA - SUITE 1600
NEW YORK, NEW YORK 10020
(Address of principal executive offices)
Issuer's telephone number: (212) 445-6581
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value per share
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 |_|.
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Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to the Form 10-KSB. [_]
The issuer's revenues for its most recent fiscal year were $-0-.
The aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of October 12, 1999, was $1,066,712.
ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PAST FIVE YEARS
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes |_| No |_|.
APPLICABLE ONLY TO CORPORATE REGISTRANTS
The number of shares outstanding of the issuer's common stock, $0.001 par value,
as of October 12, 1999 was 7,249,147.
Documents Incorporated by Reference: None.
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TABLE OF CONTENTS
PART I.......................................................................2
ITEM 1. DESCRIPTION OF BUSINESS.............................................2
General................................................................2
Technologies...........................................................2
Products...............................................................4
Contractual Arrangements with Partners and Licensors...................5
Manufacturing..........................................................6
Sales and Marketing....................................................6
Competition............................................................7
Raw Materials..........................................................7
Patents and Proprietary Rights.........................................7
Government Regulation..................................................8
Product Liability Insurance ...........................................8
Employees.............................................................11
Corporate History.....................................................11
ITEM 2. DESCRIPTION OF PROPERTY............................................11
Facilities............................................................11
Investment Policies...................................................12
ITEM 3. LEGAL PROCEEDINGS..................................................12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................12
PART II.....................................................................12
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS ............................................................12
Market Information....................................................12
Recent Sales of Unregistered Securities...............................13
Dividend Policy.......................................................14
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.........14
Overview..............................................................14
Plan of Operations....................................................14
Liquidity and Capital Resources.......................................15
Year 2000 Issue.......................................................15
ITEM 7. FINANCIAL STATEMENTS...............................................17
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE..................................................17
PART III....................................................................19
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a).........................................19
Directors and Executive Officers......................................19
Compensation of Directors.............................................20
Compliance with Section 16(a) of the Exchange Act.....................20
ITEM 10. EXECUTIVE COMPENSATION.............................................20
Summary Compensation..................................................20
Stock Options.........................................................21
Employment Agreements.................................................21
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.....22
PRINCIPAL STOCKHOLDERS................................................22
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................23
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.............................25
Exhibits..............................................................25
Reports on Form 8-K...................................................25
SIGNATURES............................................................26
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FORWARD LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). These forward-looking
statements are not historical facts, but rather are based on the Company's
current expectations, estimates, beliefs, assumptions and projections about the
biopharmaceutical industry and technologies for the treatment of cancer. Words
or phrases such as "the Company anticipates," "management anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates" and similar
expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties, assumptions and other factors, some of which are beyond
the Company's control and are difficult to predict. Should one or more of such
risks, uncertainties or other factors materialize, or should underlying
assumptions prove incorrect, actual results, performance or achievements of the
Company may vary materially from any future results, performance or achievements
expressed or implied by such forward-looking statements. The Company disclaims
any obligation to publicly announce the results of any revisions to any of the
forward-looking statements contained herein to reflect future events or
developments or the occurrence of unanticipated events.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
The Company is a development-stage, biopharmaceutical company primarily
focused in the research and development of products and technologies for the
treatment of cancer. The Company has acquired development and marketing rights
to a portfolio of four platform technologies that have been developed over the
past fifteen years, from which seven products and five product candidates have
been derived and additional products may be developed in the future. The
Company's primary objectives are to commence marketing its lead product,
Modrefen, and to continue developing its existing platform technologies and
commercializing products derived from those technologies.
The Company intends to begin marketing Modrefen (a selective steroid
receptor modulator) on a commercial scale in the United Kingdom before the end
of December 1999. Modrefen is currently licensed in the U.K. for the treatment
of post-menopausal breast cancer and is licensed in the U.S. for the treatment
of certain adrenal disorders. The Company intends to apply before the end of
December 1999 for regulatory approval of Modrefen in the U.S. for treatment of
hormone sensitive cancers. The Company's second lead product, clofarabine (a
purine nucleoside analog), has recently concluded Phase I clinical trials at The
University of Texas M.D. Anderson ("M.D. Anderson"), and the Company anticipates
that it will commence Phase II clinical trials within approximately three
months. Based on third-party studies conducted to date, the Company believes
that clofarabine may be effective in the treatment of leukemia and lymphoma. The
Company intends to request orphan drug designation for clofarabine for leukemia
and lymphoma indications, which will enable the Company to apply for approval of
clofarabine from the U.S. Food and Drug Administration ("FDA") for such
indications upon completion of Phase II clinical trials. In addition, two of the
other products to which the Company has rights are presently being tested in
clinical trials, and an additional eight are in the pre-clinical stage of
development.
The Company has adopted an aggressive product development program and,
assuming the successful completion of clinical trials, anticipates that by the
end of 2002, five of such products will have received regulatory approval for
certain disease indications in the U.S. or Europe, and seven will be emerging
through the clinical trial process. There can be no assurance, however, that any
of such products will be developed and/or receive applicable regulatory approval
within such time frame.
The following is a description of the Company's current portfolio of
platform technologies and products.
TECHNOLOGIES
SELECTIVE STEROID RECEPTOR MODULATION TECHNOLOGY
The Company has acquired development and marketing rights to a selective
steroid receptor modulation technology. The lead compound of this technology is
Modrefen, which is currently licensed in the U.K. for the treatment of
post-menopausal breast cancer and in several other countries, including the U.S.
and Canada, for the treatment of certain adrenal disorders, such as Cushing's
disease. The Company intends to begin marketing Modrefen on a commercial scale
in the U.K. in the last quarter of 1999 for the treatment of post-menopausal
breast cancer, and at the same time to apply for regulatory approval of Modrefen
in the U.S. for treatment of hormone sensitive cancers. The Company anticipates
that Modrefen will be able to compete with its principal competitor, tamoxifen,
upon receipt of such approval. The Company also intends to pursue opportunities
for Modrefen adrenal disorder products on a smaller scale, principally in the
veterinary market. The Company will also devote its research efforts to discover
new applications for Modrefen and related compounds and to build upon the
selective steroid receptor modulation technology. The Company believes that
Modrefen's dual mode of action not only
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makes it a versatile treatment for breast cancer, but may enable it to be
developed for additional disease indications in the future, such as endometrial
and prostate cancers.
PURINE-BASED NUCLEOSIDE TECHNOLOGY
The Company has an agreement with the Southern Research Institute ("SRI")
in Birmingham, Alabama to co-develop purine-based nucleoside analogs which,
based on third-party studies conducted to date, may be effective in the
treatment of leukemia and lymphoma. The lead compound of such purine-based
nucleosides is known as clofarabine. Clofarabine has recently successfully
concluded Phase I clinical trials at M.D. Anderson, and the Company anticipates
that it will enter Phase II clinical trials within approximately three months.
Unlike many competing drugs which are administered intravenously, clofarabine
and related products are anticipated to be developed for oral administration,
making it easier for patients to receive them as treatment. The Company intends
to request orphan drug designation for clofarabine for leukemia and lymphoma
indications, which will enable the Company to apply for approval from the FDA
upon completion of Phase II clinical trials. In addition to clofarabine's
effects against leukemia cells, scientists at SRI have shown that it has
anti-tumor activity in vitro against several solid tumors, including cancers of
the colon, kidney and prostate, which distinguishes clofarabine from other drugs
in its class that have shown relatively little activity against solid tumors.
Moreover, other drugs in the purine nucleoside class have been shown to be
effective in the treatment of certain autoimmune diseases. The Company intends
to develop purine nucleoside products for the treatment of solid tumors and
autoimmune diseases simultaneously with the development of clofarabine for the
treatment of hematological cancers. The regulatory approval cycles of those
products, however, are expected to be longer than those for the Company's
hematological cancer products.
CELL DIFFERENTIATION TECHNOLOGY
The Company has acquired a right to develop and market three distinct
groups of compounds the Company believes could play an important role in
controlling the rate of growth of cancer cells. The first group of compounds are
synthetic analogs of a drug derived from cottenseed oil. The drug has been
widely tested by clinicians in several countries for a variety of clinical
indications, and data has been published in medical literature. The drug has
shown efficacy against certain cancers by, it is believed, preventing cell
division and promoting cell differentiation. The first compound derived from
this technology, the cancer cytostatic drug, is currently approved for a Phase I
clinical trial at a leading cancer center in the U.K.
The second group of compounds block enzymes that metabolize RA, a
derivative of vitamin A. RA helps to regulate cell differentiation, a crucial
factor in preventing normal cells from transforming into cancer cells. When the
enzyme that breaks down RA is blocked, there is a buildup of natural RA within
the cell which can prevent or decrease the malignant transformation of cells.
The compounds have been extensively tested in the U.K. at Cardiff University,
and the Company expects to have the lead compounds in Phase I clinical trials
within 18 months.
The Company has also acquired a license to develop a third group of
compounds that control cell growth and differentiation by effectively blocking
hormone synthesis. A key feature of these compounds is they are non-steroidal
inhibitors of an important enzyme, 17(beta), involved in the production of
androgens and estrogen. Prostate cancer growth is controlled, at least in the
early stages, by androgens and the blockade of these hormones is an essential
part of treating this particular cancer. As with the second group of compounds,
this third group has been extensively tested in the U.K. at Cardiff University,
and the Company also expects to have the lead compounds of this group in Phase I
clinical trials within 18 months.
GENE THERAPY TECHNOLOGY
The Company's product portfolio also includes a variety of gene therapy
products which, the Company believes, may offer advancements in the field of
cancer treatment and may have additional applications in certain non-cancer
diseases such as diabetes, cystic fibrosis and other auto-immune disorders.
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The company has co-development agreements with the Royal Free and University
College Medical School, London (the "Royal Free Medical School"), one of the
leading medical and scientific institutions in the U.K., pursuant to which the
Company is developing Deoxyribonucleic Acid ("DNA") vector technologies. Based
on pre-clinical research and early Phase I/II clinical trials conducted by a
member of the Company's Scientific Advisory Board, the Company believes these
DNA vector technologies are capable of elevating albumin levels in cancer and
cirrhosis patients with hypo-albuminemia, a serious physiological disorder. The
Company further believes that these technologies have considerable market
potential since low albumin levels are considered to be very dangerous
consequences of many diseases, including cirrhosis and liver cancer. The Company
is also currently working on a gene marker which, based on research work
performed to date by scientists at a London teaching hospital, the Company
believes will enable clinicians to identify the location of DNA transferred
during gene therapy. Although the Company's gene marker product is currently in
the pre-clinical development stage, it is expected to have a relatively short
development cycle and the Company anticipates that, subject to applicable
regulatory approval, the product will be suitable for market distribution by
2002. In addition, the Company is conducting pre-clinical research on a product
that may have the ability to cause tumor regression by enhancing and stimulating
the human body's natural immune cells.
PRODUCTS
The following table summarizes the current status of the Company's
research, development and marketing program:
PRODUCT/TECHNOLOGY DISEASE INDICATION DEVELOPMENT PHASE (1)
------------------ ------------------ ---------------------
CANCER TREATMENT
- -----------------
Modrefen(2) Breast Cancer Market
Clofarabine Leukemia and Lymphoma Phase I/Phase II
Purine Nucleoside Solid Tumor Colon and Breast Cancer Phase I
Anti-Estrogen Prostate Prostate Cancer Pre-clinical
Cancer Cytostatic Drug Bladder Cancer Phase I
RA Inhibitor Hormone-Dependent Cancers Research
17(beta) Inhibitor Hormone-Dependent Cancers Research
GENE THERAPY
- -----------------
Gene Marker Gene Therapy Research
Albumin Gene Product Metastatic Cancer Phase I/Phase II
Non-Viral Vector Gene Therapy Research
Immunomodulator Cancer Research
OTHER PRODUCTS AND TECHNOLOGIES
- -------------------------------
Purine Nucleoside Autoimmune Autoimmune Disorders Pre-clinical
- ----------
(1) "Development Phase" refers to the current stage of development of the most
advanced indication.
"Research" is a pre-clinical Phase and includes research related to
specific targets and the identification of lead compounds.
"Lead compounds" are chemicals that have been identified that meet
pre-selected criteria in cell culture models for activity and potency
against specific targets. More extensive evaluation is then undertaken to
determine if the compound should be selected to enter into pre-clinical
development. Once a lead compound is selected, chemical modification of
the compound is then undertaken to create the best drug candidate.
"Pre-clinical" includes pharmacology and toxicology testing in
pre-clinical models (in vitro and in vivo), formulation work and
manufacturing scale-up to gather necessary data to comply with applicable
regulations prior to commencement of human clinical trials.
Clinical trials are typically conducted in three sequential phases that
may overlap. In "Phase I," the initial introduction of the pharmaceutical
into healthy human volunteers, the emphasis is on testing for safety
(adverse effects), dosage tolerance, metabolism, distribution, excretion
and clinical pharmacology. "Phase II" involves studies in a limited
patient population to determine the efficacy of the pharmaceutical for
specific targeted indications, to determine dosage tolerance and optimal
dosage and to identify possible adverse side effects and safety risks.
Once a compound is found
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to be effective and to have an acceptable safety profile in Phase I and II
evaluations, "Phase III" trials are undertaken to evaluate clinical
efficacy further, to further test for safety within an expanded patient
population at multiple clinical study sites, and to compare the results of
the trials with those of currently available treatments. Sometimes Phase I
and II trials or Phase II and III trials are combined. The FDA reviews
both the clinical plans and the results of the trials and may discontinue
the trials at any time if there are significant safety issues.
(2) Modrefen is currently licensed in the U.K. for the treatment of
post-menopausal breast cancer. It is also presently licensed in several
other countries, including the U.S. and Canada, for the treatment of
certain adrenal disorders, such as Cushing's disease. The Company intends
to file for FDA approval of Modrefen for the treatment of breast cancer in
the United States in the last quarter of 1999.
CONTRACTUAL ARRANGEMENTS WITH PARTNERS AND LICENSORS
STEROID RECEPTOR MODULATION TECHNOLOGY SELECTIVE
In July 1998, the Company entered into an agreement with Stegram
Pharmaceuticals, a U.K. pharmaceutical company ("Stegram"), to co-develop the
selective steroid synthesis-inhibiting and receptor-blocking technology. Under
the terms of the agreement, the Company was granted the exclusive worldwide
license, excluding Japan and South Africa, to make, use and sell products
derived from the technology for a term expiring on the date of expiration of all
current and future patents covered by the agreement (approximately in
2005--subject to earlier termination under certain circumstances), and to
utilize information related to the technology to obtain patent and other
proprietary rights to products developed by the Company and its collaborator
from the technology. In consideration of the licenses granted to the Company,
the Company agreed to pay to its collaborator, among other things, a royalty of
10% of the gross sales revenues of all products, less any discounts or
deductions for value-added taxes incurred and not recovered by the Company.
Beginning July 2001, the Company will be required to pay Stegram a minimum
royalty of $50,000 per year. In addition, the Company has agreed to pay, among
other things, certain costs associated with pre-clinical development and
clinical trials of such products. Under the terms of the agreement, the clinical
trial costs are not to exceed $4,000,000 unless agreed to by both parties.
PURINE-BASED NUCLEOSIDE TECHNOLOGY
In August 1998, the Company entered into an agreement with SRI in
Birmingham, Alabama to co-develop the purine-based nucleoside technology. Under
the terms of the agreement, the Company was granted the exclusive worldwide
license, excluding Japan and Southeast Asia, to make, use and sell products
derived from the technology, and to utilize technical information related to the
technology to obtain patent and other proprietary rights to products developed
by the Company and SRI from the technology for a term expiring on the date of
expiration of all current and future patents covered by the agreement. Based on
the patents currently covered by the agreement, the license will expire in the
year 2008, subject to earlier termination under certain circumstances. In
consideration of the liceses granted to the Company, the Company agreed to pay
to SRI, among other things, a royalty of 7% of the gross sales revenues of all
products derived from the technology, less any discounts or deductions for
value-added taxes incurred and not recovered by the Company, plus certain
additional royalty payments in the event the Company achieves certain gross
profit margins. In addition, the Company has agreed to pay, among other things,
certain costs associated with pre-clinical development and clinical trials of
the products developed for hematologic malignancies, including the cost
associated with Phase I clinical trails at M.D. Anderson, which are not to
exceed $1,250,000, unless agreed by both parties.
Certain patents and other intellectual property rights granted by SRI to
the Company for use in developing clofarabine products are held by the
Sloan-Kettering Institute for Cancer Research ("Sloan-Kettering") in New York
City. In August 1998, SRI entered into an agreement with Sloan-Kettering,
pursuant to which the parties agreed to cooperate in the commercialization of
their respective purine nucleoside technologies. Under the terms of the
agreement, Sloan-Kettering granted to SRI an exclusive, worldwide license to
utilize its technology and agreed to permit SRI to sublicense such technology to
the Company. The parties also agreed that all proceeds received by SRI from the
licensing or other commercial utilization of any portion of Sloan-Kettering's
technology, excluding fees for research and development, will be apportioned 75%
to SRI and 25% to Sloan-Kettering until the termination of SRI's agreement with
the Company.
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The Company has also reached an agreement in principle with M.D. Anderson
pursuant to which M.D. Anderson would be the principal clinical research center
in the United States for all of the Company's products currently in development.
The agreement contemplates the establishment of a trust fund at M.D. Anderson to
receive royalty payments from the direct sale by the Company of its products and
to finance future research at M.D. Anderson. This agreement will become
effective upon the completion of the Company's pending private financing.
CELL DIFFERENTIATION TECHNOLOGY
In June 1999, the Company entered into an agreement with the University
College Cardiff Consultants Limited, a company incorporated under the laws of
England and Wales ("Cardiff Consultants"), to develop and commercialize a group
of compounds that are believed to inhibit cancer cell division, and a group of
compounds that inhibit steriodgenesis. Under the agreement the Company acquired
the commercial rights worldwide to develop, manufacture, use, sell or otherwise
deal in these products in connection with cancer therapy in humans and animals
for a term expiring on the date of expiration of all current and future patents
covered by the agreement. In consideration of the licenses granted to the
Company, the Company agreed to pay to Cardiff Consultants, among other things,
an annual royalty of 5% of the gross sales revenues of all products derived from
the technology, less any reasonable discounts and rebates actually given by the
Company for returned products, and a royalty of 35% of the total amounts
received by the Company from any sub-licenses or sales of the technology. In
addition, the Company has agreed to pay, among other things, approximately
$330,000 in connection with a feasibility study of the products to be conducted
by Cardiff University.
GENE THERAPY TECHNOLOGY
In March 1999, the Company entered into a co-development and licensing
agreement with the Royal Free and University College Medical School, London
("Royal Free"), a long-established and renowed scientific institution. Royal
Free is the registered owner of patents relating to a DNA vector technology.
Under the terms of the agreement, the Company was granted the exclusive license
to commercially develop the technology for the treatment of liver disorders and
cancer and to market any products derived from the technology in Europe, the
U.S., Canada, Japan and the middle east, for a term expiring on the date of
expiration of all current and future patents covered by the agreement, subject
to earlier termination under certain circumstances. In consideration of the
licenses granted to the Company, the Company agreed to pay to Royal Free, among
other things, a royalty of 6% of the gross sales revenues of all products
derived from the technology, less any normal trade discounts, which shall not be
less than $3,000 in any calendar year. The Company has also agreed to pay Royal
Free a milestone payment of approximately $340,000 in addition to any royalty or
other payments to be made under the agreement upon successful completion of
Phase III clinical trials for the first of the products developed under the
agreement. In addition, the Company has agreed to pay, among other things,
certain costs associated with pre-clinical development and clinical trials of
the products developed from the technology, which are not to exceed $3,000,000.
MANUFACTURING
The Company does not have and does not intend to establish any internal
product testing, manufacturing or distribution capabilities. The Company's
strategy is to enter into collaborative arrangements with other companies for
the clinical testing, manufacture and distribution of its products. Such
collaborators are generally expected to be responsible for funding or
reimbursing all or a portion of the development costs, including the costs of
clinical testing necessary to obtain regulatory clearances and for
commercial-scale manufacturing, in exchange for exclusive or semi-exclusive
rights to market specific products in particular geographic territories.
As of the date of this report, however, the Company had only a purchase
order arrangement with a Canadian company for the manufacture and purchase of
clofarabine at the price quotations provided to the Company and had not entered
into any definitive agreements for the manufacture and distribution of any of
its products. The lead compound of the Company's selective steroid receptor
modulation technology, which the Company plans to market as Modrefen, has
historically been manufactured by Sterling-Winthrop Group Limited, from whom
Stegram acquired all right, title and interest in the lead compound. However,
the Company does not have any direct definitive agreement with Sterling-Winthrop
for the continued manufacture of Modrefen. Manufacturers of the Company's
products will be subject to cGMP prescribed by the FDA or other rules and
regulations prescribed by foreign regulatory authorities
SALES AND MARKETING
The Company has not yet established sales and marketing capabilities. The
Company intends to hire sales and marketing personnel in North America in the
next 12 months upon completion of a private financing and to rely on joint
marketing arrangements with commercial partners for the marketing, sale and
distribution of its products in Europe and other international markets; however,
as of the date of this report, the Company had no such arrangements in place. To
market any of its products directly, the Company will need to develop a
marketing and sales force with technical expertise and distribution capability
or contract with other pharmaceutical and/or health care companies with
distribution systems and direct sales forces. To the extent that the Company
enters into co-promotion or other licensing arrangements, any revenues to be
received by the Company will be dependent on the efforts of third parties.
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COMPETITION
Competition in the pharmaceutical industry is intense. Potential
competitors in the United States and Europe are numerous and include
pharmaceutical, chemical and biotechnology companies, most of which have
substantially greater capital resources, marketing experience, research and
development staffs and facilities than the Company. The Company seeks to limit
potential sources of competition by developing products that are eligible for
orphan drug designation or other forms of protection, but its competitors may
nevertheless succeed in developing similar technologies and products more
rapidly than the Company.
The generic drug industry is also intensely competitive and includes large
brand-name and multi-source pharmaceutical companies. Because generic drugs do
not have patent protection or any other market exclusivity, competitors of the
Company may introduce competing generic products, which may be sold at lower
prices or with more aggressive marketing. Conversely, as the Company introduces
branded drugs into its product portfolio, it will face competition from
manufacturers of generic drugs which may claim to offer equivalent therapeutic
benefits at a lower price.
The pharmaceutical industry is characterized by rapid and significant
technological change. The Company expects that pharmaceutical technology will
continue to develop rapidly, and the Company's future success will depend, in
large part, on its ability to develop and maintain a competitive position.
Technological development by others may result in products developed by the
Company, branded or generic, becoming obsolete before they are marketed or
before the Company recovers a significant portion of the development and
commercialization expenses incurred with respect to such products. In addition,
alternative therapies or new medical treatments could alter existing treatment
regimes, and thereby reduce the need for one or more of the Company's products.
The Company expects that its proposed products will compete on the basis
of, among other things, safety, efficacy, reliability, price, quality of life
factors (including the frequency and method of drug administration), marketing,
distribution, reimbursement and effectiveness of intellectual property rights.
The Company believes that its competitive success will be based partly on its
ability to attract and retain scientific personnel, establish specialized
research and development capabilities, gain access to manufacturing, marketing
and distribution resources, secure licenses to external technologies and
products, and obtain sufficient development capital. The Company intends to
obtain many of these capabilities from pharmaceutical or biotechnology companies
through collaborative or license arrangements. However, there is intense
competition among early stage biotechnology firms to establish such
arrangements. The Company's development products may not be of suitable
potential market size or provide a compelling return on investment to attract
other firms to commit resources to a collaboration, and even if such
collaborations can be established, the Company may not be able to secure
financial terms that meet the Company's commercial objectives.
RAW MATERIALS
The Company's raw materials (such as laboratory chemicals) and other
supply items to be used in its research and development processes are available
from many different suppliers and are generally immediately available in
sufficient quantities. The Company does not anticipate any significant problems
in the availability of, or significant price increases for, required raw
materials or other production items in the foreseeable future.
PATENTS AND PROPRIETARY RIGHTS
The Company's success will depend, in part, on its ability to obtain and
enforce protection for its products under United States and foreign patent laws
and other intellectual property laws, preserve the confidentiality of its trade
secrets and operate without infringing the proprietary rights of third parties.
The Company's policy is to file patent applications in the United States and/or
foreign jurisdictions to protect technology, inventions and improvements to its
inventions that are considered important to the development of its business. The
Company will also rely upon trade secrets, know-how, continuing technological
innovations and licensing opportunities to develop a competitive position.
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The Company, through its current license agreements, has acquired the
right to exploit the technology covered by nine issued patents and six patent
applications, covering the U.S., U.K., Europe, Canada and Japan, as well as
additional intellectual property and know-how that could be the subject of
further patent applications in the future. The Company evaluates the
desirability of seeking patent or other forms of protection for its products in
foreign markets based on the expected costs and relative benefits of attaining
such protection. The Company may not, however, be able to obtain all or any of
the patents for which it applies, and those patents which are issued to the
Company may not afford adequate protection to the Company. Further, issued
patents may be challenged, invalidated, infringed or circumvented and rights
granted thereunder may not provide competitive advantages to the Company.
Furthermore, parties not affiliated with the Company may have obtained or may in
the future obtain United States or foreign patents or may now possess or in the
future may possess proprietary rights relating to the Company's products that
will adversely affect the development or commercialization of the Company's
products or result in the Company's planned activities infringing patents owned
by others.
The Company could incur substantial costs in defending itself in
infringement suits brought against it or any of its licensors or in asserting
any infringement claims that the Company may have against others. The Company
could also incur substantial costs in connection with any suits relating to
matters for which the Company has agreed to indemnify its licensors or
distributors. An adverse outcome in any such litigation could have a material
adverse effect on the Company's business and prospects. In addition, the Company
could be required to obtain licenses under patents or other proprietary rights
of third parties and, if the Company does not obtain any such required licenses,
it could be prevented from, or encounter delays in, developing, manufacturing or
marketing one or more of its products.
The Company also relies upon trade secret protection for its confidential
and proprietary information. Third parties may independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to the Company's trade secrets or disclose such technology, in any
one or more of such events the Company might not be able to protect its trade
secrets.
The Company plans to implement a policy to require its employees,
consultants, members of the Scientific Advisory Board and parties to
collaborative agreements to execute confidentiality agreements upon the
commencement of employment or consulting relationships or a collaboration with
the Company. These agreements provide that all confidential information
developed or made known during the course of the relationship with the Company
is to be kept confidential and not disclosed to third parties except in specific
circumstances. In the case of employees, the agreements provide that all
inventions resulting from work performed for the Company, utilizing property of
the Company or relating to the Company's business and conceived or completed by
the individual during employment shall be the exclusive property of the Company
to the extent permitted by applicable law. These agreements may not, however,
provide meaningful protection of the Company's trade secrets or adequate
remedies in the event of unauthorized use or disclosure of such information.
GOVERNMENT REGULATION
Virtually all aspects of the Company's business are regulated by federal
and state statutes and governmental agencies in the United States and other
countries. The development, testing, manufacturing, processing, quality, safety,
efficacy, packaging, labeling, record-keeping, distribution, storage and
advertising of pharmaceutical products, and disposal of waste products arising
from such activities, are subject to regulation by one or more federal agencies,
including the FDA, the Department of Environmental Protection ("DEA"), the
Federal Trade Commission ("FTC"), the consumer Product Safety Commission
("CPSC"), the Occupational Safety and Health Administration ("OSHA") and the
Environmental Protection Agency ("EPA"). These activities are also regulated by
corresponding state and local agencies and equivalent foreign authorities.
All pharmaceutical manufacturers in the United States are subject to
regulation by the FDA under the authority of the Food, Drug and Cosmetics Act
(the "FDC Act"). Under the FDC Act, the federal government has extensive
administrative and judicial enforcement powers over the activities of
pharmaceutical manufacturers to ensure compliance with FDA regulations. Those
powers include, but are not limited to, the authority to initiate
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court action to seize unapproved or non-complying products, to enjoin
non-complying activities, to halt manufacturing operations that are not in
compliance with cGMP, to recall products which present a health risk, and to
seek civil monetary and criminal penalties. Other enforcement activities include
refusal to approve product applications or the withdrawal of previously approved
applications. In addition, product recalls may be issued at the discretion of
the Company, the FDA or other domestic and foreign government agencies having
regulatory authority for pharmaceutical product sales. Recalls may occur due to
disputed labeling claims, manufacturing issues, quality defects or other
reasons. The pharmaceutical products developed by the Company may be subject to
any one or more of such recalls in the future.
The Company has a variety of products under development, including line
extensions of existing products, reformulations of existing products and new
products. All "new drugs" must be the subject of an FDA-approved new drug
application ("NDA") before they may be marketed in the United States. All
generic equivalents of previously approved drugs or new dosage forms of existing
drugs must be the subject of an FDA-approved abbreviated new drug application
("ANDA") before they may by marketed in the United States. In both cases, the
FDA has the authority to determine what testing procedures are appropriate for a
particular product and, in some instances, has not published or otherwise
identified guidelines as to the appropriate procedures. The FDA has the
authority to withdraw existing NDA and ANDA approvals and to review the
regulatory status of products marketed under the enforcement policy. The FDA may
require an approved NDA or ANDA for any drug product marketed under the
enforcement policy if new information reveals questions about the drug's safety
or effectiveness. All drugs must be manufactured in conformity with cGMP and
drugs subject to an approved NDA or ANDA must be manufactured, processed,
packaged, held and labeled in accordance with information contained in the NDA
or ANDA.
Even if required FDA approval has been obtained with respect to a product,
foreign regulatory approval of a product must also be obtained prior to
marketing the product internationally. Foreign approval procedures vary from
country to country and the time required for approval may delay or prevent
marketing. In certain instances, the Company or its collaborative partners may
seek approval to market and sell certain of its products outside of the United
States before submitting an application for approval to the FDA. The regulatory
procedures for approval of new pharmaceutical products vary significantly among
foreign countries. The clinical testing requirements and the time required to
obtain foreign regulatory approvals may differ from that required for FDA
approval. Although there is now a centralized European Union ("EU") approval
mechanism for new pharmaceutical products in place, each EU country may
nonetheless impose its own procedures and requirements, many of which are
time-consuming and expensive, and some EU countries require price approval as
part of the regulatory process. Thus, there can be substantial delays in
obtaining required approval from both the FDA and foreign regulatory authorities
after all relevant applications are filed.
ANDA PROCESS. FDA approval is required before a generic equivalent to a
previously approved brand drug or new dosage form of an existing brand drug can
be marketed. Approval to market such products in the United States may be
obtained by submitting an ANDA to the FDA. Among the requirements for drug
approval by the FDA is that the manufacturing procedures and operations of
companies that manufacture products for the Company conform to cGMPs. If the FDA
believes a company is not in compliance with cGMPs, certain sanctions are
imposed upon that company including: (i) withholding from the company new drug
approvals as well as approvals for supplemental changes to existing
applications; (ii) preventing the company from receiving the necessary export
licenses to export its products; and (iii) classifying the company as an
"unacceptable supplier" and thereby disqualifying the company from selling
products to federal agencies. Moreover, in May 1992, the Generic Drug
Enforcement Act (the "Generic Act") was enacted. The Generic Act allows the FDA
to impose debarment and other penalties on individuals and companies that commit
certain illegal acts relating to the generic drug approval process. In some
situations, the Generic Act requires the FDA to debar (i.e., not accept or
review ANDAs for a period of time) a company or an individual that has committed
certain violations. It also provides for temporary denial of approval of
applications during the investigation of certain violations that could lead to
debarment and also, in more limited circumstances, provides for the suspension
of the marketing of approved drugs by the affected company. Lastly, the Generic
Act allows for civil penalties and the withdrawal of previously approved
applications. Neither the Company nor any of its employees has ever been subject
to debarment.
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NDA PROCESS. FDA approval is required before any new drug can be marketed.
An NDA is a filing submitted to the FDA to obtain approval of a drug not
eligible for an ANDA and must contain complete pre-clinical and clinical safety
and efficacy data or a right of reference to such data. Clinical trials are
typically conducted in three sequential phases. In Phase I, the product is
tested for safety, adverse effects, dosage, tolerance absorption, metabolism,
excretion and other elements of clinical pharmacology, frequently through
introduction of the compound into healthy human beings. Phase II typically
involves studies in a small sample of the intended patient population to assess
the efficacy of the compound for a specified indication, to determine dose
tolerance and the optimal dose range and to gather additional information
relating to safety and potential adverse effects. Phase III trials are
undertaken to further evaluate clinical safety and efficacy in an expanded
patient population at typically dispersed study sites, in order to determine the
overall risk-benefit ratio of the compound, and to provide an adequate basis for
product labeling.
Data from pre-clinical testing and clinical trials are submitted to the
FDA as an NDA for marketing approval and to other health authorities as a
marketing authorization application. The approval process is affected by a
number of factors, and the FDA or other health authorities may deny an NDA or
marketing authorization application if the regulatory criteria are not
satisfied. Even after initial FDA or other health authority approval has been
obtained, further studies, including Phase IV post-marketing studies, may be
required to provide additional data on safety. Additional studies generally also
are required to gain approval for the use of a product as a treatment for
clinical indications other than those for which the product was initially
tested. Also, the FDA or other regulatory authorities require post-marketing
reporting to monitor the adverse effects of the drug. Results of post-marketing
programs may limit or expand the further marketing of the products. Further, if
there are any modifications to the drug, including changes in indication,
manufacturing process or labeling or a change in the manufacturing facility, an
application seeking approval of such changes must be submitted to the FDA or
other regulatory authority. The Company has not experienced sanctions or fines
for non-compliance with the foregoing regulations.
FOREIGN REGULATORY PROCESS. To market drugs in non-U.S. jurisdictions, the
Company must also receive authorization from the respective regulatory
authorities in those jurisdictions. The requirements governing the conduct of
clinical trials, applications for marketing authorization, pricing and
reimbursement vary widely from jurisdiction to jurisdiction. In the EU,
pharmaceutical legislation requires that a Marketing Authorization Application
("MAA") for a drug produced through the use of biotechnology be submitted for
review in accordance with a centralized procedure administered by the European
Medicines Evaluation Agency (the "EMEA"), headquartered in London. If approved
by the EMEA, an MAA is recommended for acceptance by the EU. Following approval
of an MAA for a drug, the sponsoring company is required to negotiate with the
regulatory agency in each member country to establish reimbursement levels and
the maximum price at which the drug may be marketed in that country. These
reimbursement levels and maximum prices vary from country to country for the
same pharmaceutical. The regulatory requirements applicable to any product may
be modified, perhaps extensively, in the future. The Company cannot determine
what effect changes in regulations or statutes or legal interpretations, when
and if promulgated or enacted, may have on its business in the future. Moreover,
regulatory approval for marketing a proposed pharmaceutical product in any
particular jurisdiction will not necessarily result in similar approval in other
jurisdictions.
ORPHAN DRUG DESIGNATION. Under the Orphan Drug Act, the FDA may grant
orphan drug designation to drugs intended to treat a "rare disease or
condition," which generally is a disease or condition that affects populations
of fewer than 200,000 people in the United States. Orphan drug designation must
be requested before submitting an NDA, and after the FDA grants orphan drug
designation, the generic identity of the therapeutic agent and its potential
orphan use are publicized by the FDA. Under current law, orphan drug status is
conferred upon the first company to receive FDA approval to market the
designated drug for the designated indication, which also grants United States
marketing exclusivity for a period of seven years following approval of the NDA,
subject to certain limitations. Orphan drug designation does not convey any
advantage in, or shorten the duration of, the FDA regulatory approval process.
Moreover, although obtaining FDA approval to market a product with orphan drug
status can be advantageous, the scope of protection and/or the level of
marketing exclusivity that is currently afforded by orphan drug status and
marketing approval may be diminished or eliminated in the future. Moreover, NDA
approval of a drug with an orphan drug designation does not prevent the FDA from
approving the same drug for a different indication, or a molecular variation of
the same drug for the same indication. Because doctors are not
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restricted by the FDA from prescribing an approved drug for uses not approved by
the FDA, it is also possible that another company's drug could be prescribed for
indications for which a product developed by the Company has received orphan
drug designation and NDA approval.
PRODUCT LIABILITY AND INSURANCE
The Company faces exposure to product liability claims in the event that
the use of its technologies or products or those it licenses from third parties
is alleged to have resulted in adverse effects in users thereof. Receipt of
regulatory approval for commercial sale of such products does not mitigate such
product liability risks. While the Company has filed applications with a
reputable insurance company for the purpose of obtaining what it believes to be
adequate product liability insurance, as of the date of this report the Company
has not obtained any such insurance. There can be no assurance that the
precautions taken by the Company will be sufficient to avoid significant product
liability exposure. in addition, future product labeling may include disclosure
of additional adverse effects, precautions and contradictions, which may
adversely impact sales of such products.
EMPLOYEES
As of September 15, 1999, the Company had four employees, consisting of
one sales and marketing executive, two research and development executives and
one financial executive. None of the Company's employees is represented by a
labor union and the Company believes its relations with its employees are good.
CORPORATE HISTORY
The Company was incorporated as Express Finance Inc. under the laws of the
State of Delaware on August 16, 1996 and changed its name to Ascot Group Inc. on
August 26, 1998. Although the Company was initially formed to act as the U.S.
holding company for Mayhem Ltd., a U.K. corporation, it did not engage in any
active trade or business throughout the period from its inception to December
1998.
In December 1998, the Company entered into an agreement to purchase all of
the issued and outstanding shares of capital stock of Bioenvision Inc., a
development-stage company incorporated in November 1996 under the laws of the
State of Delaware ("Old Bioenvision"). Old Bioenvision primarily engaged in the
research and development of products and technologies for the treatment of
cancer and had acquired development and marketing rights to a portfolio of
platform technologies that had been developed over the past fifteen years and
from which various products were being derived. Old Bioenvision had two
wholly-owned subsidiaries, Biotechnology & Healthcare Ventures Ltd. ("BHV"), a
corporation organized under the laws of the Republic of Ireland, and Eurobiotech
Group, Inc., a company incorporated under the laws of the State of Delaware.
BHV, in turn, owned all of the outstanding shares of capital stock of each of
Bioheal Ltd., a corporation organized under the laws of the Republic of Ireland,
and Biomed (UK) Ltd., a corporation organized under the laws of the United
Kingdom.
Pursuant to the Company's agreement to acquire Old Bioenvision, the
Company effected a 1-for-15 reverse stock split of its then outstanding shares
of Common Stock and issued 7,013,897 post-reverse split shares of Common Stock
to the former stockholders of Old Bioenvision in exchange for all of the issued
and outstanding shares of capital stock of Old Bioenvision. Consequently, upon
consummation of the transaction in January 1999, the former stockholders of Old
Bioenvision became the controlling stockholders of the Company, Old Bioenvision
became a wholly-owned subsidiary of the Company and changed its name to Bionco
Marketing Inc., and the Company changed its name from Ascot Group Inc. to
Bioenvision Inc.
ITEM 2. DESCRIPTION OF PROPERTY
FACILITIES
As of the date of this report the Company does not have any interest in
real property. The Company currently uses the offices of its financial advisor
at One Rockefeller Plaza, Suite 1600, New York, New York for its principal
executive offices at no cost. This office space is used by management and
administration. To date, most of the Company's drug development programs have
been conducted at scientific institutions around the world. It is the Company's
policy to continue development at leading scientific institutions in the United
States and Europe. The Company intends to lease facilities that will serve as
its corporate headquarters in the United States upon completion of a private
financing. These facilities will be the center for all of the Company's
administrative and marketing functions in the United States. The Company does
not plan to conduct laboratory research in such facilities in the near future,
but, rather, will conduct research through collaborative arrangements with SRI
and M.D. Anderson.
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INVESTMENT POLICIES
The Company does not currently have any investments in real estate or
interests in real estate, nor in real estate mortgages nor in the securities of
or interests in persons primarily engaged in real estate. The Company generally
acquires its assets for the purpose of ultimately producing sales revenues from
the exploitation of such assets in the development of the Company's
biopharmaceutical business. The Company does not currently have any surplus cash
to invest, but the Company intends to invest any surplus cash it may have on
hand in the future in interest-bearing deposit accounts, short-term certificates
of deposit and governmental debt instruments.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Company or
any of its property is currently subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of the Company's fiscal year ended June 30, 1999.
PART II
In January 1997, the Board of Directors and stockholders approved a
1-for-1.986 reverse split of the Company's Common Stock, and in January 1999
effected a 1-for-15 reverse stock split. Unless otherwise stated, all share
amounts in this report have been adjusted for these stock splits.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The following represents the range of reported high and low bid quotations
for the Company's Common Stock on a quarterly basis since the Company's stock
commenced active trading on March 5, 1999, as reported on the Over-the-Counter
Bulletin Board of the National Association of Securities Dealers (OTCBB). The
Company's trading symbol is "BIOV." Prior to that time the Company's stock was
not listed on OTCBB and was inactive, trading in the over-the-counter "pink
sheets" under the symbol "ASGP." The quotations also reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not represent
actual transactions.
- --------------------------------------------------------------------------------
QUARTER HIGH BID LOW BID
- --------------------------------------------------------------------------------
First Quarter 1999* 5 1/2 5 1/2
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
Second Quarter 1999* 6 2 1/2
- --------------------------------------------------------------------------------
Third Quarter 5-3/8 2 1/2
- --------------------------------------------------------------------------------
*In accordance with the terms of the Acquisition Agreement between Old
Bioenvision and the Company dated December 21, 1998 (the "Acquisition
Agreement"), the Company effected a 1-for-15 reverse stock split, reducing its
issued and outstanding shares of Common Stock from 3,450,000 to 230,000,
immediately prior to issuing 7,013,897 shares of post 1-for-15 reverse stock
split Common Stock at the closing of the Acquisition on January 5, 1999.
HOLDERS. On September 15, 1999 the Company had 261 stockholders of record.
RECENT SALES OF UNREGISTERED SECURITIES
In September 1998, the Company granted options to Glen Investments
Limited, a Jersey (Channel Islands) corporation ("Glen Investments") wholly
owned by Kevin R. Leech, a U.K. citizen, to purchase up to 500,000 shares of
Common Stock at an exercise price of $1.00 per share in exchange for the
agreement by Glen to loan funds to the Company on an as-needed basis based upon
previously agreed budgets. Such optioins are presently exercisable. The issuance
of such options was exempt from registration under Regulation S promulgated
under the Securities Act based upon representations and warranties made by Glen
as to the status of Glen as an offshore buyer and Glen's covenants and
agreements not to offer or sell the subject shares within the United States at
any time such as would disqualify the private placement from the exemption under
Regulation S.
Effective as of January 5, 1999, pursuant to the Acquisition Agreement the
Company effected a 1-for-15 reverse stock split and thereafter issued 7,013,897
post-reverse split shares of Common Stock to the stockholders of Old Bioenvision
in exchange for 7,013,897 shares of common stock of Old Bioenvision, comprising
all of the issued and outstanding shares of capital stock of Old Bioenvision, in
a tax-free exchange. The issuance of such shares was exempt from registration
under Regulation S promulgated under the Securities Act based upon
representations and warranties made by the purchasers thereof who were citizens
of the United Kingdom as to their status as offshore buyers and their covenants
not to offer or sell the subject shares within the United States at any time
such as would disqualify the private placement from the exemption under
Regulation S, and under Section 4(2) of the Securities Act with respect to those
investors who were United States citizens, based upon their representations that
they were accredited investors as defined under the Commission's Rule 501(a).
In April 1999 the Company issued an aggregate of 4,000 shares of Common
Stock to Inpharmation Ltd. in partial consideration for consulting services
rendered to the Company. The issuance of such shares was exempt from
registration under Regulation S promulgated under the Securities Act based upon
representations and warranties made by the purchaser as to its status as an
offshore buyer and its covenant not to offer or sell the subject shares within
the United States at any time such as would disqualify the private placement
from the exemption under Regulation S.
In April 1999 the Company issued 1,250 shares of Common Stock to
Christopher P. Oliver. The issuance of such shares was exempt from registration
under Regulation S promulgated under the Securities Act based upon
representations and warranties made by the purchaser as to its status as an
offshore buyer and its covenant not to offer or sell the subject shares within
the United States at any time such as would disqualify the private placement
from the exemption under Regulation S.
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DIVIDEND POLICY
The Company has never declared or paid cash dividends on its capital
stock, and the Company's Board of Directors does not intend to declare or pay
any dividends on the Common Stock in the foreseeable future. Earnings of the
Company, if any, are expected to be retained for use in expanding the Company's
business. The declaration and payment in the future of any cash or stock
dividends on the Common Stock will be at the discretion of the Board of
Directors of the Company and will depend upon a variety of factors, including
the ability of the Company to service its outstanding indebtedness and to pay
its dividend obligations on securities ranking senior to the Common Stock, the
Company's future earnings, if any, capital requirements, financial condition and
such other factors as the Company's Board of Directors may consider to be
relevant from time to time.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
OVERVIEW
The Company was organized in August 1996 for the purpose of acting as a
publicly traded holding company for Mayhem Ltd., a United Kingdom corporation.
That purpose was never realized and prior to the change in control of the
Company in January 1999, the Company did not engage in any active trade or
business. The Company is considered a development-stage company for accounting
purposes because it has not generated any material revenues to date.
Accordingly, the Company has no relevant operating history upon which an
evaluation of the Company's performance and prospects can be made. Moreover, the
Company is still subject to all of the business risks associated with a new
enterprise, including, but not limited to, risks of unforeseen capital
requirements, lack of fully developed products, failure of market acceptance,
failure to establish business relationships, reliance on outside contractors for
the manufacture and distribution of proposed products, and competitive
disadvantages as against larger and more established companies. The likelihood
of the success of the Company must be considered in light of the development
cycles of new pharmaceutical products and technologies and the competitive and
regulatory environment in which the Company operates.
The company is an international biopharmaceutical company primarily
engaged in the research and development of products and technologies for the
treatment of cancer. During its development stage the Company has been primarily
engaged in organizational activities, including developing a strategic operating
plan, entering into various collaborative agreements for the development of
products and technologies, hiring personnel and developing and testing its
products. The Company plans to begin marketing its lead product, Modrefen, on a
commercial scale in the U.K. prior to the end of December of 1999. The Company
has assembled the core of its management team, which includes a Chairman of the
Board and Chief Executive Officer, two Senior Vice Presidents and Chief Medical
Officer.
PLAN OF OPERATIONS
The Company has acquired development and marketing rights to a portfolio
of four platform technologies developed over the past fifteen years, from which
seven products and five product candidates have been derived and additional
products may be developed in the future. Although the Company intends to
commence marketing its lead product, Modrefen, and to continue developing its
existing platform technologies and commercializing products derived from such
technologies, a key element of the Company's business strategy is to continue to
acquire, in-license and develop new technologies and products that the Company
believes offer unique market opportunities and/or complement the Company's
existing product lines. Once a product or technology has been launched into the
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market for a particular disease indication, the Company plans to work with
numerous collaborators, both pharmaceutical and clinical, in the oncology
community to extend the labeling of the drug to other indications. In order to
market its products effectively, the Company intends to develop marketing
alliances with strategic partners and may co-promote and/or co-market in certain
territories.
LIQUIDITY AND CAPITAL RESOURCES
From the period of its inception through December 1998, the Company did
not engage in any active trade or business. In January 1999, the Company
consummated a merger with Old Bioenvision by effecting a 1-for-15 reverse stock
split of its then outstanding shares of Common Stock and thereafter issuing
7,013,897 post-reverse split shares of Common Stock to the former stockholders
of Old Bioenvision in exchange for all of the issued and outstanding shares of
capital stock of Old Bioenvision. Consequently, upon consummation of the merger,
the former stockholders of Old Bioenvision became the controlling stockholders
of the Company, Old Bioenvision became a wholly-owned subsidiary of the Company
and changed its name to Bionco Marketing Inc., and the Company changed its name
from Ascot Group Inc. to Bioenvision Inc.
To date, the Company has incurred significant net losses, including net
losses of $765,154 for the fiscal year ended June 30, 1998 and net losses of
$495,193 for the fiscal year ended June 30, 1999. The Company had an accumulated
deficit of $837,193 at June 30, 1998 and $1,332,386 at June 30, 1999 and, since
that date, the Company has continued to incur significant and increasing losses.
The Company anticipates that it may continue to incur significant operating
losses for the foreseeable future. There can be no assurance as to whether or
when the Company will generate material revenues or achieve profitable
operations. The Company's independent public accountants have included an
explanatory paragraph in their report on the Company's financial statements,
stating that certain factors raise substantial doubt about the Company's ability
to continue as a going concern.
In the year ended June 30, 1999 administrative expenses totaled pound 379,279
compared to pound 689,499 for the year ended June 30, 1998. The reduction in
expenses is a result of the Company realizing cost savings following
reorganization during the year.
Research and development expenses were $100,000 in the year ended June 30, 1999
compared to $-0- for the year ended June 30, 1998. The increase in research
and development costs is a result of the Company increasing its research
activities during 1999 in-line with the development of its products.
Based on its current operating plan, the Company believes that the
estimated minimum amount of net proceeds from its anticipated private financing
will be sufficient to meet its cash, operational and liquidity requirements for
at least 12 months following the completion of such financing, and that the
estimated maximum net proceeds from such private financing will be sufficient to
meet its cash, operational and liquidity requirements for at least 18 months
following the completion thereof. The Company may, however, require additional
financing within this time frame due to unanticipated changes in economic
conditions or other unforeseen circumstances. In the event the Company's plans
change or its assumptions change or prove to be inaccurate, the Company could be
required to seek additional financing sooner than currently anticipated. The
Company currently has an agreement with Glen Investments Limited, a Jersey
(Channel Islands) company wholly owned by Kevin R. Leech (a private investor who
is also the sole owner of Phoenix Ventures Limited, the holder of approximately
19% of the outstanding shares of Common Stock of the Company), whereby Glen
Investments has agreed to loan funds to the Company on an as-needed basis based
upon previously agreed budgets. A facility of pound one million is currently
available to the Company based on budgets that assume the above private
placement is successful. If the private placement proves to be unsuccessful,
Glen Investments Ltd. has agreed to support the Company for the forthcoming year
subject to satisfactory review of revised budgets. Any additional financing may
not, however, be available to the Company when needed on commercially reasonable
terms, or at all. If the Company is unable to obtain such additional financing,
the Company's operations will, in all likelihood, cease.
YEAR 2000 ISSUE
The year 2000 issue refers to the potential failures that computer systems
may incur as a result of the date change from 1999 to 2000. Many existing
computer programs use only two digits to identify a change of the century. As a
result, computer systems using these programs may be unable to properly
recognize date-sensitive data resulting in the creation of erroneous information
or system failure.
Although the Company does not currently have any computer or other systems
that may be susceptible to the year 2000 issue, the Company's products
are mostly being developed in various research institutions which may have
systems that are not year 2000 compliant. A possible worst case year 2000
scenario for the Company would be if the research institutions' systems failed.
If their networks fail for an extended period of time due to the
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year 2000 issue, the Company may no longer be able to continue developing and
testing its products. In the event such systems are not year 2000 compliant on a
timely basis, the Company will seek to develop and test its products at
institutions whose systems are year 2000 compliant. The Company has no assurance
that this can be accomplished in a timely or cost effective manner.
The Company is currently evaluating such year 2000 issues and their
potential impact on its business, and has commenced inquiries to determine the
status of preparations by the research institutions where the Company's products
are tested to become year 2000 compliant. Although the Company's management
expects to incur cots in correcting any year 2000 issues arising as a result of
such research institutions' handling of their own year 2000 issues, management
cannot currently estimate those costs. All such costs will be expensed as
incurred. The Company does not expect that the cost of addressing any year 2000
issue will be a material event or uncertainty that would cause its reported
financial information not to be necessarily indicative of future operating
results or future financial condition, or that the costs or consequences of
incomplete or untimely resolution of any year 2000 issue represent a known
material event or uncertainty that is reasonably likely to affect its future
financial results, or cause its reported financial information not to be
necessarily indicative of future operating results or future financial
condition. However, if the Company encounters any unanticipated delays in, or
costs associated with, the resolution of any year 2000 issue, the Company's
business, financial condition and results of operations could be materially
adversely affected.
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ITEM 7. FINANCIAL STATEMENTS
Page Number
-----------
Report of Independent Auditors F-1
Consolidated Balance Sheets as of June 30, 1999 F-2
Consolidated Statements of Operations for years ended
June 30, 1998 and 1999 and for the Period From August 16,
1996 (Date of Inception) Through June 30, 1999 F-3
Consolidated Statements of Stockholders' Equity for the period
from August 16, 1996 (date of inception) through June 30, 1997
and for the years ended June 30, 1998 and 1999 F-4
Consolidated Statements of Cash Flows for years ended
June 30, 1998 and 1999 and for the Period From August 16,
1996 (Date of Inception) Through June 30, 1999 F-6
Notes to Consolidated Financial Statements F-7
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
On September 30, 1999 the Company and its former auditors, Graf Repetti &
Co., LLP ("Graf Repetti") agreed to terminate their relationship as of such
date. As of October 1, 1999, the Company retained Ernst & Young as its
independent public accountants. The decision to terminate its relationship with
Graf Repettis was recommended and approved by the Board of Directors and was
based upon the Company's need to have auditors with international auditing
capability.
During the period from inception on August 16, 1996 through and including
June 30, 1998, and for the interim period from July 1, 1998 through March 31,
1999, Graf Repetti's reports on the Company's financial statements neither
contained any adverse opinions or disclaimers of opinions nor were qualified or
modified as to uncertainty, except that Graf Repetti's auditors' report on the
Company's consolidated financial statements for the fiscal period ended June 30,
1998 expressed substantial doubt about the Company's ability to continue as a
going concern owing to the Company's losses from operations and net capital
deficiency.
During the fiscal period commencing with inception on August 16, 1996 and
ended June 30, 1998, and for the interim period from July 1, 1998 through March
31, 1999, there were no disagreements with Graf Repetti on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Graf Repetti, would have caused it to make reference to the subject matter of
the disagreements in connection with its reports.
17
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A)
DIRECTORS AND EXECUTIVE OFFICERS
The names and ages of the executive officers and directors of the Company,
and their positions with the Company, are as follows:
NAME AGE POSITION
---- --- --------
Christopher B. Wood, M.D. 53 Chairman of the Board and Chief Executive
Officer
Andrew Turner 28 Senior Vice President-Finance
Stuart Smith, Ph.D. 36 Senior Vice President, Secretary and
Director
George Margetts, M.D. 65 Chief Medical Officer
Thomas Nelson CA 60 Director
- ----------
CHRISTOPHER B. WOOD, M.D. has served as the Chairman of the Board and
Chief Executive Officer of the Company since January 1999. Prior to that time,
Dr. Wood served as Chairman of the Board of Eurobiotech, a subsidiary of the
Company, from December 1996 through December 1998, as a general surgeon at a
U.K. hospital from April 1991 to March 1994, and as a specialist surgeon at The
Royal Postgraduate Medical School, London, England from April 1979 to March
1991. Dr. Wood has more than 15 years experience in the European biotechnology
sector. Dr. Wood holds an M.D. degree from the University of Wales School of
Medicine and the Fellowship of the Royal College of Physicians and Surgeons of
Edinburgh.
ANDREW TURNER has served as Senior Vice President - Finance since January
1999. Mr. Turner has had extensive experience in corporate financing techniques
and arranging the financing of technology companies. He has worked as an
independent consultant for a corporate finance company since 1997, and before
this Mr. Turner worked for a subsidiary of a publicly listed Swedish company,
focusing on sales promotion and marketing with responsibility for the financial
controls of a high turnover facility. Prior to this Mr. Turner worked for Shell
Research Laboratories implementing laboratory financial controls in the
collection of data for the finance department.
THOMAS NELSON has served as a director of the Company since January 1999.
In July 1998 Mr. Nelson became a director of Old Bioenvision and before that he
served as the Director of Finance of the Management Board of the Royal & Sun
Alliance Insurance Group from 1996 to 1998. Prior thereto, Mr. Nelson served as
Group Finance Director of the Main Board of Sun Alliance Insurance Group from
1991 to 1996, and has served as Chairman of the UK insurance industry committee
on European regulatory, fiscal and accounting issues. He has also worked with
Deloittes in Paris and as a consultant with PA Consultants Management. Mr.
Nelson is a Member of Institute of Chartered Accountants of Scotland and a
Fellow of the Institute of Cost and Management Accountants. Mr. Nelson holds a
B.A. degree from Cambridge University.
STUART SMITH, PH.D. has served as Senior Vice President and as a director
of the Company since January 1999 and as the Executive Vice President of
EuroBiotech since May 1997. Prior to that time, Dr. Smith served as Business
Development Director of CBC (Oxford) Limited, a medical communications company,
from June 1995 to May 1997. He served as Marketing Manager (Oncology) of British
Biotech Pharmaceuticals Ltd. from July 1994 to June 1995, and as International
Product Manager (Oncology) of Schering AG in Berlin, Germany from March 1992 to
June 1994. Prior thereto, Dr. Smith worked in the veterinary and public health
fields, focusing on animal health research and parasitology. Dr. Smith holds a
B.S. degree, with honors, in Biology and a Ph.D. degree in Philosophy from the
University of Aberdeen.
GEORGE MARGETTS, M.D. has served as Chief Medical Officer of the Company
since January 1999. Since 1979 Dr. Margetts has been Managing Director of
Stegram Pharmaceutical Ltd. Dr. Margetts served as Chief Executive
Officer/Managing Director of Sterling Winthrop Group between 1984 and 1989, and
as its Medical Director between 1971 and 1989. Dr. Margetts holds B. Pharm. and
M.Sc. degrees from the University of London and M.R.C.S., L.R.C.P., M.D. and
B.S. degrees from University College Hospital Medical School, London.
18
<PAGE>
Each director is elected to serve for a term of one year or until his or
her successor is duly elected and qualified. The Company's officers are elected
by, and serve at the pleasure of, the Board of Directors, subject to the terms
of any employment agreements. No family relationship exists among any directors
or executive officers of the Company.
COMPENSATION OF DIRECTORS
Non-management directors of the Company each receive a director's fee of
$1,000 per meeting for attendance at Board of Director's meetings, and are
reimbursed for actual expenses incurred in respect of such attendance. The
Company does not separately compensate employees for serving as directors. The
Company does not provide additional compensation for committee participation or
special assignments of the Board of Directors.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the outstanding equity
securities of the Company, to file initial reports of beneficial ownership and
reports of changes in beneficial ownership of such equity securities with the
Commission and any national securities exchange on which such equity securities
are listed. Such persons are required by Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based upon the Company's, the Company believes that no director, executive
officer or holder of more than 10% of the outstanding shares of Common Stock
filed on a timely basis the reports required by Section 16(a) of the Exchange
Act during, or with respect to, the year ended June 30, 1999. In particular: (i)
Christopher B. Wood, a director and the Chief Executive Officer of the Company,
and his wife, Julie Wood, each inadvertently failed to file a Form 3 and Form 5
with respect to their acquisition as of January 5, 1999 of more than 10% of the
Company's Common Stock in connection with its reorganization; (ii) Phoenix
Ventures Limited, and its sole beneficial owner, Kevin R. Leech, each
inadvertently failed to file a Form 3 and Form 5 with respect to the acquisition
as of January 5, 1999 of more than 10% of the Company's Common Stock in
connection with its reorganization; (iii) Three W Capital, Ltd. inadvertently
failed to file a Form 3 and Form 5 with respect to the acquisition as of January
5, 1999 of more than 10% of the Company's Common Stock in connection with its
reorganization; (iv) L. Wise Investments Limited, and its sole beneficial owner,
John Cole, each inadvertently failed to file a Form 3 and Form 5 with respect to
the acquisition as of January 5, 1999 of more than 10% of the Company's Common
Stock in connection with its reorganization; and (v) General Capital Investments
Limited, and its sole beneficial owner, David Chester, each inadvertently failed
to file a Form 3 and Form 5 with respect to the acquisition as of January 5,
1999 of more than 10% of the Company's Common Stock in connection with its
reorganization.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth the amount of all compensation paid by the
Company and/or its affiliates and allocated to the Company's operations for
services rendered during each of the fiscal years 1999, 1998, and 1997 to all
persons serving as the Company's Chief Executive Officer during 1999. There were
no executive officers other than the Chief Executive Officer whose total salary
and bonus compensation exceeded $100,000 during any such year.
19
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- -----------------------------
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDER- OTHER
COMPEN- STOCK LYING LTIP COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION AWARD(S) OPTIONS PAYOUTS SATION
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- -------------------- ---- ------ ---- ------- ------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Christopher B. Wood
Chief Executive 1999(1)$100,000 -0- -0- -0- -0- -0- -0-
Officer and 1998(2)$100,000 -0- -0- -0- -0- -0- -0-
Director 1997(2)$ 50,000 -0- -0- -0- -0- -0- -0-
</TABLE>
- ----------
(1) Mr. Wood's salary through January 4, 1999 was accrued by Eurobiotech
Group, Inc., a wholly-owned subsidiary of the Company.
(2) Accrued by Eurobiotech Group, Inc.
STOCK OPTIONS
The Company does not presently have any stock option plans.
EMPLOYMENT AGREEMENTS
The Company intends to enter into employment agreements with each of its
principal executive officers before the end of the current quarter. Pursuant to
such agreements, the Company's executive officers will agree to devote all or
substantial portion of their business and professional time efforts to the
business of the Company as executive officers. The employment agreements will
provide for certain compensation packages, which will include bonuses and other
incentive compensation. The agreements will also contain covenants (a)
restricting the employee from engaging in an activities competitive with the
business of the Company during the term of such employment agreements and for a
certain period thereafter, (b) prohibiting the employee from disclosure of
confidential information regarding the Company, and (c) confirming that all
intellectual property developed by the employee and relating to the business of
the Company constitutes the sole property of the Company.
In July 1998 Old Bioenvision entered into an employment agreement with
Thomas Nelson pursuant to which he agreed to serve as a director of Old
Bioenvision for a period of two years at an annual compensation of $30,000. Upon
execution of an employment agreement with the Company, Mr. Nelson's employment
agreement with Old Bioenvision will terminate. In May 1997, EuroBiotech Group,
Inc., a wholly-owned subsidiary of Old Bioenvision, entered into an employment
agreement with Stuart Smith to serve as EuroBiotech's Executive Vice President
at an annual compensation of $80,000 for a term expiring on December 31, 1999.
Upon execution of an employment agreement with the Company, Mr. Smith's
employment agreement with EuroBiotech will terminate. To date all compensation
due to Messrs. Nelson and Smith under their respective employment agreements has
been accrued.
20
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 13, 1999, certain
information concerning the shares of Common Stock beneficially owned (i) by each
director and executive officer of the Company, (ii) by all executive officers
and directors of the Company as a group, and (iii) by each stockholder that is
known to the Company to be a beneficial owner of more than 5% of the outstanding
shares of Common Stock. Unless otherwise indicated, the owners have sole voting
and investment power with respect to their respective shares.
AMOUNT OF
NAME OF BENEFICIAL PERCENTAGE
BENEFICIAL OWNER OWNERSHIP OWNERSHIP(1)
- ---------------- --------- ------------
Christopher B. Wood ........................... 2,100,000(2) 29.0%
Phoenix Ventures Limited(3) ................... 1,400,000 19.3%
L. Wise Investments Limited(4) ................ 887,500 12.3%
General Capital Limited(5) .................... 887,500 12.3%
Glen Investments Limited(6) ................... 500,000(7) 6.5 %
Stuart Smith .................................. 50,000 *
Thomas Nelson ................................. 13,750 *
All Executive Officers and
Directors as a group (5 persons) ............. 2,163,750 29.8%
- ----------
(1) Based on a total of 7,249,147 shares of Common Stock outstanding as of
October 13, 1999.
(2) Includes 318,750 shares of Common Stock owned by Julie Wood, Mr. Wood's
spouse.
(3) Phoenix Ventures Limited is a Guernsey, Channel Islands corporation
wholly-owned by Kevin R. Leech, a private investor.
(4) L. Wise Investments Limited is a Gibraltar corporation wholly-owned by
John Cole, a private investor.
(5) General Capital Limited is a Bermuda corporation wholly-owned by David
Chester, a private investor.
(6) Glen Investments Limited is a Jersey, Channel Islands corporation
wholly-owned by Kevin R. Leech, a private investor.
(7) Represents shares issuable upon exercise of currently outstanding options
granted to Glen Investments Limited. See "Certain Transactions."
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May 1998, Bioheal Ltd., a subsidiary of the Company, entered into an
agreement with Christopher B. Wood, the Chairman of the Board and Chief
Executive Officer of the Company, to co-develop a gene marker and
immunomodulator system for use in gene therapy and related technologies. Under
the terms of the agreement, Bioheal was granted the exclusive license to make,
use and sell products derived from technology, and to utilize technical
information related to the technology to obtain patent and other proprietary
rights to products developed by Bioheal and its collaborators from the
technology for a term expiring on the date of expiration of all current and
future patents covered by the agreement, subject to earlier termination under
certain circumstances. In consideration of the licenses granted to Bioheal,
Bioheal agreed to pay to Dr. Wood, among other things, a royalty of 10% of the
gross sales revenues of all products, less and discounts or deductions for
value-added taxes. In addition, Bioheal has agreed to pay, among other things,
certain costs associated with pre-clinical development and clinical trials of
such products. Under the terms of the agreement, the pre-clinical costs are not
to exceed $1,500,000, and the clinical trial costs are not to exceed $4,000,000,
unless agreed by both parties.
21
<PAGE>
The Company has an agreement with Glen Investments, a corporation wholly
owned by Kevin R. Leech, whereby Glen Investments has agreed to loan funds to
the Company on an as-needed basis based upon previously agreed budgets. Mr.
Leech is a private investor who is also the sole owner of Phoenix Ventures
Limited, a Guernsey (Channel Islands) corporation and the holder of
approximately 19% of the outstanding shares of Common Stock of the Company. In
exchange for its agreement to loan funds to the Company, the Company granted to
Glen Investments options to purchase up to 500,000 shares of Common Stock at an
exercise price of $1.00 per share, all of which options are currently
exercisable. As of the date of this Memorandum, Glen Investments had loaned the
Company a total of $280,000 (approximately pound 170,000) out of a total
facility currently of pound 1 million (approximately $1.65 million).
22
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Bioenvision, Inc. (formerly Ascot Group, Inc.) (a development stage company)
We have audited the accompanying consolidated balance sheets of Bioenvision,
Inc. (formerly Ascot Group, Inc.) (a development stage company) as of June 30,
1999, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the two years in the period ended June 30,
1999 and for the period from August 16, 1996 (inception) through June 30, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Bioenvision, Inc.
(formerly Ascot Group, Inc.) at June 30, 1999, and the consolidated results of
its operations and its consolidated cash flows for each of the two years in the
period ended June 30, 1999 and for the period from August 16, 1996 (inception)
through June 30, 1999, in conformity with accounting principles generally
accepted in the United States.
As discussed in Note 1 of Notes to consolidated Financial Statements, the
Company has incurred losses from operations and is not currently generating cash
from operations. This factor raises substantial doubt about the Company's
ability to continue as a going concern. Management's plans as to this matter are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Ernst & Young
- -------------------
Reading, England
October 13, 1999
F-1
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
June 30, June 30,
1999 1999
Amounts in Amounts in
Pounds Sterling US Dollars
(note 1)
ASSETS
Current Assets
Cash and cash equivalent 10 16
Accounts receivable 613 966
---------- ----------
623 982
Property, plant and equipment 38,405 60,546
Intangible assets 14,642 23,083
---------- ----------
53,670 84,611
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable 962,427 1,517,266
Other Liabilities - related parties 219,330 345,774
---------- ----------
Total Liabilities 1,181,757 1,863,040
Stockholders' equity
Common Stock, $.001 par value,
Authorised 25,000,000 Shares;
Issued and outstanding:
7,249,096 at June 30, 1999 17,307 27,284
Additional paid in capital 188,305 296,863
Accumulated comprehensive loss and deficit
accumulated during the development stage (1,332,386) (2,100,506)
Cumulative translation adjustment (1,313) (2,070)
---------- ----------
Total stockholders' equity (1,128,087) (1,778,429)
========== ==========
Total liabilities and stockholders' equity 53,670 84,611
========== ==========
See accompanying notes.
- --------------------------------------------------------------------------------
F-2
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended Year ended Period from Year ended
June 30, June 30, August 16, 1996 June 30,
1998 1999 (inception) 1999
through
June 30,
1999
Amounts in Pounds Sterling Amounts in
US Dollars
(note 1)
<S> <C> <C> <C> <C>
TOTAL REVENUES -- -- 21,738 --
---------- ---------- ---------- ----------
OPERATING EXPENSES
Administrative expenses 689,499 379,279 1,207,510 597,933
Research & development costs -- 100,000 100,000 157,650
Interest payable 13,631 2,215 15,846 3,492
Minority interest 44,955 -- -- --
Depreciation expense 17,069 12,800 29,869 20,179
Amortisation expense -- 899 899 1,417
---------- ---------- ---------- ----------
Operating loss 765,154 495,193 1,332,386 780,671
Income taxes -- -- -- --
---------- ---------- ---------- ----------
NET LOSS 765,154 495,193 1,332,386 780,671
========== ========== ========== ==========
Basic and diluted net
loss per share 0.14 0.07 0.11
========== ========== ==========
Shares used in computing basic
and diluted net loss per share 5,423,063 7,057,696 7,057,696
========== ========== ==========
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-3
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Comprehensive
Loss and
Common Stock Additional Retained Total
Shares Amount Paid in Capital Deficit Stockholders
Equity
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C> <C>
Shares issued at inception
(August 1996) 167,899 3,212 -- -- 3,212
Shares issued in exchange
for cash in October 1996 97,348 1,806 16,250 -- 18,056
Shares issued in November 1996
in exchange for services 71,429 2,983 26,850 -- 29,833
Shares issued in November 1996
in exchange for cash 21,428 894 6,257 -- 7,151
Shares issued in January 1997
in exchange for services 271,039 2,260 20,330 -- 22,590
Surrender of common stock in
January 1997 (35,247) (632) 632 -- --
Shares issued in April 1997 on
the inception of Biotechnology
& Healthcare Ventures Ltd. 3,315,000 4 -- -- 4
Shares issued in April 1997 on
the inception of Eurobiotech
Group, Inc. 1,375,000 6,060 97,405 -- 103,465
Net Loss -- -- -- (72,039) (72,039)
---------- ---------- ---------- ---------- ----------
Balance at 30 June 1997 5,283,896 16,587 167,724 (72,039) 112,272
Stock issued on the acquisition
of Biomed UK Ltd, in May 1998 300,000 2 -- -- 2
Stock issued on the acquisition of
Bioheal Ltd. in May 1998 535,000 2 -- -- 2
Net loss -- -- -- (765,154) (765,154)
---------- ---------- ---------- ---------- ----------
Balance at 30 June 1998 6,118,896 16,591 167,724 (837,193) (652,878)
</TABLE>
- --------------------------------------------------------------------------------
F-4
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
Accumulated
Comprehensive
loss and
Common Stock Additional Retained Total
Shares Amount Paid in Capital Deficit Stockholders
Equity
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C> <C>
Shares issued on the purchase of
the minority interest in Eurobiotech
Group, Inc. in September 1998 1,125,000 713 14,828 -- 15,541
Issuance of shares in exchange
for services in April 1999 5,200 3 5,753 -- 5,756
Net loss -- -- -- (495,193) (495,193)
---------- ---------- ---------- ---------- ----------
Balance at 30 June 1999 7,249,096 17,307 188,305 (1,332,386) (1,126,774)
========== ========== ========== ========== ==========
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-5
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended Year ended Period from Year ended
June 30, June 30, August 16, 1996 June 30,
1998 1999 (inception) 1999
through
June 30,
1999
Amounts in Pounds Sterling Amounts in
US Dollars
(Note 1)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss (765,154) (495,193) (1,332,386) (780,671)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities
Other liabilities - related party 145,000 74,330 219,330 117,181
Minority interest 44,955 -- -- --
Depreciation 17,069 12,800 29,869 20,179
Amortisation -- 899 899 1,417
Other 104 (2,370) (1,313) (3,736)
Accounts Receivable (613) -- (613) --
Accounts Payable 558,989 403,438 962,427 636,020
---------- ---------- ---------- ----------
Net cash provided (used) by operating activities 350 (6,096) (121,787) (9,610)
FINANCING ACTIVITIES
Purchase of property & equipment -- -- (68,274) --
INVESTING ACTIVITIES
Net proceeds from issuance of
common stock -- 5,756 190,071 9,074
---------- ---------- ---------- ----------
Net increase (decrease) in cash
& cash equivalents 350 (340) 10 (536)
Cash & cash equivalent at
beginning of period -- 350 -- 552
---------- ---------- ---------- ----------
Cash & cash equivalent at
end of period 350 10 10 16
========== ========== ========== ==========
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-6
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANISATION AND SIGNIFICANT ACCOUNTING POLICES.
DESCRIPTION OF BUSINESS
The Company is a development stage, biopharmaceutical company primarily focused
in the research and development of products and technologies for the treatment
of cancer. The Company has acquired development and marketing rights to a
portfolio of four platform technologies.
The Company was incorporated as Express Finance, Inc. under the laws of the
State of Delaware on August 16, 1996 and changed its name to Ascot Group, Inc.
on August 26, 1998 and further to Bioenvision, Inc. in December 1998.
BASIS OF PRESENTATION
In January 1999 the Company merged with Bioenvision, Inc, ('Old Bioenvision') a
development stage Company primarily engaged in the research and development of
products and technologies for the treatment of cancer. The transaction was
accounted for as a reorganisation of companies under common control in a manner
similar to a pooling of interests as they had a common majority shareholder. All
prior period amounts have been restated to include the financial results of Old
Bioenvision.
In September 1998, Old Bioenvision merged with Eurobiotech Group, Inc., a
development stage company involved in the research and development of products
and technologies for the treatment of cancer. The transaction was accounted for
as a combination of a reorganisation of companies under common control in a
manner similar to a pooling as they had a common majority shareholder, and the
purchase of a minority interest. All prior year amounts have been restated.
In July 1998, Old Bioenvision merged with Biotechnology & Healthcare Ventures
Limited ('BHV'), a development stage company involved in the research and
development of products and technologies for the treatment of cancer. The
transaction was accounted for as a reorganisation of companies under common
control in a manner similar to a pooling of interests as they had a common
majority shareholder. All prior period amounts have been restated to reflect the
financial results of BHV.
BHV acquired Bioheal Limited and Biomed UK Limited in May 1998, both of which
are development stage companies involved in the research and development of
products and technologies for the treatment of cancer. Both of the transactions
were accounted for as purchases and the results of Biomed UK Limited and Bioheal
Limited have been included in the financial statements of BHV from the date of
acquisition.
Where mergers have been accounted for as reorganisations under common control in
a manner similar to a pooling of interests, no fair values have been attributed
to any tangible or intangible assets, including technology rights.
The financial statements expressed in pounds sterling as of June 30, 1999 and
for the year then ended and the period August 16, 1996 (inception) to June 30,
1999 were translated in to US dollars, solely for the convenience of the reader,
at the prevailing exchange rate of (pound)1 = $1.5765. These translations should
not be construed as representations that the pound sterling amounts actually
represent US dollar amounts or that they could be converted into US dollars at
the rate indicated or at any other rate.
The Company has incurred significant losses from operations and is not currently
generating cash from operations. The Company anticipates that it may continue to
incur significant operating losses for the foreseeable future. Operations to
date have been funded principally by equity capital and borrowings. The Company
intends to continue to fund its development expenses through additional capital
raising activities, including one or more offerings of equity and/or debt
through private placements and/or public offerings.
In particular, stockholders have approved the offering, through a private
placement, of 1,000,000 shares of preferred stock in the Company. Based on its
current operating plan, the Company believes that the estimated amount of net
proceeds will be sufficient to meet its cash, operational and liquidity
requirements for at least the 12 months following the closing of such a private
placement.
In addition, the Company has entered into an agreement with Glen Investments
Ltd., a related party (see note 8) whereby Glen Investments Ltd. has agreed to
loan funds to the Company on an as-needed basis based upon previously agreed
budgets. A facility of pound 1 million is currently available to the Company
based on budgets that assume the above private placement is successful. If the
private placement proves to be unsuccessful, Glen Investments Ltd. has agreed to
support the Company for the forthcoming year, subject to satisfactory review of
revised budgets.
The Company's ability to continue to develop its infrastructure depends upon its
ability to raise equity capital through the approved private placement, the
continuing availability of funding from Glen Investments and upon its ability to
raise other additional capital. The financial statements do not include any
adjustments that may result from this uncertainty.
- --------------------------------------------------------------------------------
F-7
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates, and such differences
may be material to the financial statements.
INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (FAS 109). Under FAS 109,
deferred tax assets and liabilities are determined based on the differences
between the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates that will be in effect when the differences
are expected to reverse.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, net of accumulated
depreciation and amortisation. Depreciation and amortisation is provided on a
reducing balance basis at the rate of 25% per year.
INTANGIBLE ASSETS
Intangible assets consist of acquired development and marketing rights to
platform technologies. Acquired development and marketing rights are stated at
their cost less accumulated amortisation. Amortisation is provided on a
straight-line basis over 20 years.
RESEARCH AND DEVELOPMENT
Research and Development costs are charged to expense as incurred.
NET LOSS PER SHARE
Basic net loss per share is computed using the weighted average number of common
shares outstanding during the periods. Diluted net loss per share is computed
using the weighted average number of common shares and potentially dilutive
common shares outstanding during the periods.
Options to purchase 500,000 shares of common stock have not been included in the
calculation of net loss per share as their effect would have been anti-dilutive.
FOREIGN CURRENCY TRANSLATION
The functional currency of the Company is Pounds Sterling. The functional
currency of the Company and its subsidiary, Old Bioenvision, was previously the
US dollar. Following various re-organisations (see Note 2) all historical
amounts have been restated with the adoption of Pounds Sterling as the
functional currency. This did not have a material impact.
- --------------------------------------------------------------------------------
F-8
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. BUSINESS COMBINATIONS
During the two years ended June 30, 1999 the Company and its subsidiaries
completed a number of mergers and acquisitions. The Company merged with Old
Bioenvision, Inc. (" Old Bioenvision") on January 5, 1999, in exchange for
7,013,897 shares which was accounted for as a reorganisation of companies under
common control. Previously, on September 8, 1998, Bioenvision had merged with
Eurobiotech Group Inc. ("Eurobiotech") in exchange for 2,500,000 shares of its
common stock which was accounted for as a combination of a reorganisation of
companies under common control and the purchase of a minority interest. The
purchase price for the minority interest was (pound)15,541 and has been
allocated as follows:
(pound)
Technology rights 682,650
Less negative goodwill (667,109)
--------
Total consideration 15,541
========
The value of technology is based on an assessment performed by an independent
specialist.
In addition, on July 3, 1998 Old Bioenvision merged with Biotechnology &
Healthcare Ventures Limited ('BHV') in exchange for 4,150,000 shares of common
stock in a transaction accounted for as a reorganisation of companies under
common control.
On May 21, 1998 BHV acquired Biomed UK Limited ("Biomed") in exchange for
300,000 shares of common stock and warrants to purchase up to $900,000 of BHV
common stock. Following the acquisition of BHV by Old Bioenvision, the agreement
was amended which resulted in 300,000 shares of common stock in Old Bioenvision
being issued in lieu of the cancellation of the BHV stock and warrants. Proforma
information for the transaction has not been presented as Biomed had immaterial
operations, assets and liabilities at the date of acquisition. The value of the
shares issued was not material and approximated the value of Biomed's tangible
net assets at the date of acquisition.
Further, on May 20, 1998 BHV acquired Bioheal Limited ("Bioheal") in exchange
for 450,000 shares of common stock and warrants to purchase up to $1,600,000
worth of BHV common stock. Following the acquisition of BHV by Old Bioenvision,
the agreement was amended which resulted in 535,000 shares of common stock in
Old Bioenvision being issued in lieu of the cancellation of the BHV stock and
warrants. Proforma information for the transaction has not been presented as
Bioheal had immaterial operations, assets and liabilities at the date of
acquisition. The value of the shares issued was not material and approximated
the value of Bioheal's tangible net assets at the date of acquisition.
The following table reconciles the operating results for prior periods to the
amounts reflecting restatement of prior periods to include the results of Old
Bioenvision:
- --------------------------------------------------------------------------------
F-9
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. BUSINESS COMBINATIONS - continued
Year ended June
30, 1998
(pound)
Net loss
Bioenvision 7,561
(formally Ascot Group, Inc.)
Old Bioenvision 757,593
-------
As restated 765,154
=======
3. PROPERTY PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
June 30, 1999
(pound)
Office equipment 1,140
Motor vehicles 67,154
-------
68,294
Less: accumulated depreciation (29,889)
-------
38,405
=======
4. INTANGIBLE ASSETS
June 30, 1999
(pound)
Purchased technology 15,541
Accumulated amortisation (899)
--------
At June 30, 1999 14,642
========
- --------------------------------------------------------------------------------
F-10
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.)
(a development stage company)
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. COMMITMENTS
The Company leases its principal facilities under an operating lease
arrangement. The future minimum annual rental payments are as follows for years
ended June 30:
(pound)
2000 18,000
2001 --
2003 --
2004 --
2005 --
Thereafter --
======
18,000
======
Rent expense for 1998 and 1999 was (pound)nil and (pound)9,000 respectively and
(pound)18,000 for the period from August 16, 1996 (inception) through June 30,
1997.
The Company uses office space for its executive offices which it receives from
its financial advisor at no cost.
6. INCOME TAXES
Due to operating losses and the inability to recognise corporation tax benefit
therefrom, there is no provision for income taxes for the years ended June 30,
1998 and 1999 and for the period from August 16, 1996 (inception) through June
30, 1999.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for corporation tax purposes. Significant
components of the Company's deferred tax assets are as follows:
1998 1999
(pound) (pound)
Capitalised start-up costs (US) 141,610 48,604
Net operating loss carry forwards (US) 94,147 78,967
-------- --------
Total deferred tax assets 235,757 127,571
Valuation allowance (235,757) (127,571)
-------- --------
Net deferred tax asset -- --
======== ========
As of June 30, 1999 the Company had net operating loss carry forwards of
approximately (pound)151,000 which do not expire under UK law.
7. STOCKHOLDERS' EQUITY
In January 1997, the Board of Directors and stockholders approved a 1 for 1.986
reverse split of the Company's common stock and in January 1999 effected at 1
for 15 reverse stock split. All share and per share amounts in the accompanying
financial statements have been adjusted for these stock splits retroactively.
- --------------------------------------------------------------------------------
F-11
<PAGE>
Bioenvision, Inc. (formerly Ascot Group, Inc.) DRAFT
(a development stage company)
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 8, 1998 the Company entered to an agreement with Glen Investments,
Limited, a Jersey, Channel Islands corporation wholly owned by Kevin R. Leech,
whereby Glen Investments has agreed to loan funds to the Company on an as-needed
basis based upon previously agreed budgets. Mr Leech is a private investor who
is also the sole owner of Phoenix Ventures Limited, a Guernsey, Channel Islands
corporation and the holder of approximately 19% of the outstanding shares of
Common Stock of the Company. In exchange for its agreement to loan funds to the
Company, the Company issued to Glen Investments options to purchase up to
500,000 shares of Common Stock at an exercise price of $1.00 per share, all of
which options are currently exercisable. As such options were issued at an
exercise price greater than the fair value of common stock, no amount has been
included in the statement of operations to reflect the issuance of the options.
(pound)219,330 was outstanding under this agreement at June 30, 1999.
As of June 30, 1998 and 1999 financial advisors to the Company held 325,036
shares in the Company, which were issued in exchange for financial planning
services rendered. These services are reflected in the statement of operations
as start-up and organisational costs. They are valued at $0.01 per share, which
reflects the most recent transaction for shares.
In May 1998, Bioheal Ltd., a subsidiary of the Company, entered into an
agreement with Christopher B. Wood, the Chairman of the Board and Chief
Executive Officer of the Company, to co-develop a gene marker and
immunomodulator system for use in gene therapy and related technologies. Under
the terms of the agreement, Bioheal was granted the exclusive license to make,
use and sell products derived from technology, and to utilize technical
information related to the technology to obtain patent and other proprietary
rights to products developed by Bioheal and its collaborators from the
technology for a term expiring on the date of expiration of all current and
future patents covered by the agreement, subject to earlier termination under
certain circumstances. In consideration of the licenses granted to Bioheal,
Bioheal agreed to pay to Dr. Wood, among other things, a royalty of 10% of the
gross sales revenues of all products, less any discounts or deductions for
value-added taxes. In addition, Bioheal has agreed to pay, among other things,
certain costs associated with pre-clinical development and clinical trials of
such products. Under the terms of the agreement, the pre-clinical costs are not
to exceed $1,500,000, and the clinical trial costs are not to exceed $4,000,000,
unless agreed by both parties.
9. SUBSEQUENT EVENT
During October 1999 the stockholders approved the offering, through a private
placement, of 1,000,000 shares of Preferred Stock in the Company.
- --------------------------------------------------------------------------------
F-12
<PAGE>
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
EXHIBITS
Number Description of Exhibit
- ------ ----------------------
2.1 Acquisition Agreement between Registrant and Bioenvision Inc. dated
December 21, 1998 for the acquisition of 7,013,897 shares of
Registrant's Common Stock by the stockholders of Bioenvision Inc. (1)
3.1 Certificate of Incorporation of the Registrant. (2)
3.1a Amendment to Certificate of Incorporation filed 1/29/99.
3.2 By-Laws of the Registrant. (2)
10.1 Research and Development Contract between Eurobiotech Group Inc. and
Forschungsgesellschaft fur Biomedizinische Technik e. V. -Helmholtz
Institut dated August 18, 1997.
10.3 Research and Development Agreement between Eurobiotech Inc. and
Forschungsgesellschaft fur Biomedizinische Technik e. V. -Helmholtz
Institut dated August 18, 1997.
10.4 Sponsored Research Agreement between Eurobiotech Corporation, Ltd.
and University of Texas, MD Anderson Cancer Center dated February 26,
1998.
10.5 Co-Development Agreement between Bioheal, Ltd. and Christopher Wood
dated May 19, 1998.
10.6 Co-Development Agreement between Biomed (UK) Ltd. and
EuroLifesciences, Ltd. dated May 20, 1998.
10.7 Co-Development Agreement between Stegram Pharmaceuticals, Ltd. and
Bioenvision Inc. dated July 15, 1998.
10.8 Co-Development Agreement between Southern Research Institute and
Eurobiotech Group, Inc. dated August 31, 1998.
10.8a Agreement to Grant License from Southern Research Institute to
Eurobiotech Group, Inc. dated September 1, 1998.
10.9 Loan Agreement between Glen Investments Ltd. and Bionenvision Inc.
dated September 8, 1998 and affirmed July 15, 1999.
<PAGE>
10.10 Co-Development and Licensing Agreement between Orion Pharmaceuticals
Canada and Bioenvision Inc. dated November 1998.
10.11 Terms for a Co-Development and Licensing Agreement between WinWin
Pharmaceuticals Canada and Bioenvision Inc. dated November 3, 1998.
10.12 License Agreement between Bioenvision Inc. and Royal Free and
University College Medical School, London dated March 11, 1999.
10.13 License Agreement between Bioenvision Inc. and University College
Cardiff Consultants Limited dated June 21, 1999.
10.14 Research Agreement between Bioenvision Inc. and Cardiff University
dated July 8, 1999.
10.15 Employment agreement between EuroBiotech Group, Inc. and Stuart Smith
dated May 15, 1997.
10.16 Employment Agreement between Bioenvision Inc. and Thomas Nelson dated
July 1998.
21.1 Subsidiaries of the Registrant.
27.1 Financial Data Schedule
- ----------
(1) Incorporated by reference and filed as an Exhibit to Registrant's Current
Report on Form 8-K filed with the Securities and Exchange Commission on January
12, 1999.
(2) Incorporated by reference and filed as an Exhibit to Registrant's
Registration Statement on Form 10-12g filed with the Securities and Exchange
Commission on September 3, 1998.
<PAGE>
REPORTS ON FORM 8-K
No reports of Form 8-K were filed during the last quarter of the period covered
by this report.
24
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
BIOENVISION INC.
Date: October 14, 1999 By: /s/ Christopher B. Wood
-------------------------------------
Chairman of the Board and
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Christopher B. Wood Chairman of the Board and Chief October 14, 1999
- ----------------------------------- Executive Officer (Principal
Christopher B. Wood executive officer) and Director
/s/ Andrew Turner Senior Vice President-Finance and October 14, 1999
- ----------------------------------- Principal Accounting Officer
Andrew Turner (Principal financial and accounting
officer)
/s/ Stuart Smith Senior Vice President, Secretary October 14, 1999
- ----------------------------------- and Director
Stuart Smith
/s/ Christopher B. Wood Director October 14, 1999
- -----------------------------------
Christopher B. Wood
</TABLE>
25
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09.00 AM/ 01/29/1999
991038343 - 2654201
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ASCOT GROUP INC.
ASCOT GROUP INC., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting duly
convened and held, adopted the following resolution:
RESOLVED that the Certificate of Incorporation of the Corporation be
amended by changing the Article thereof numbered "FIRST" so that, as amended,
said Article shall be and read as follows:
"FIRST. The name of the corporation is
BIOENVISION INC.
SECOND: That the said amendment has been consented to and authorized by the
holders of a majority of the issued and outstanding stock entitled to vote by a
written consent given in accordance with the provisions of Section 228 of the
General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Section 242 and 228 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by its President, this January 29, 1999.
/s/ L.J. BOYNS
--------------------------------
Signature of President
L.J. Boyns
--------------------------------
Typed/Printed Name of Secretary
RESEARCH AND DEVELOPMENT AGREEMENT
between the Eurobiotech Inc.
712 Fifth Avenue
New York
NY 10019
USA
- hereafter called "The Sponsor"
and the Forschungsgesellschaft fur Biomedizinische Technike e. v.
- Helmholtz-Institut -
Pauwelsstrasse 20
D-52074 Aachen
German
- hereafter called "the Sponsored Party"
ss. 1
Subject of the contract
The subject of this contract is the execution of a research and development plan
entitled:
"Development of procedures and
technologies for the cryopreservation of
blood components"
The working plan (appendix 1), which has been jointly drawn up, is an integral
part of this contract.
ss. 2
Financial contributions
To balance the expenditure, the Sponsor makes a financial contribution amounting
to a total of
DM 1.662.600,00
plus the legal rate of Value Added Tax DM 249.399,00 (currently 15%)
---------------
DM 1.912.059,00
===============
the funds shall be paid according to the following schedule:
DM 318.728,25 on execution date
<PAGE>
DM 144.848,25 quarterly in advance as requested in writing by the
Sponsored Party
The payment is made to the Helmholtz-Institute, account No. 420 31 625 at the
sparkasse Aachen, bank sorting code (Biz.): 390 500 00.
The funds are used in accordance with the legal provisions governing the budget
of the State of North Rhine-Westphalia.
Any necessary travel exceeding the foreseen shall be stipulated by the project
manager (Professor Rau), it shall take place after consultation with the Sponsor
and the necessary costs shall be directly reimbursed by the Sponsor according to
the provisions of the State Law governing travel expenses, in addition to the
above-mentioned costs.
ss. 3
Publication and Confidentiality
1. The Sponsored Party undertakes to treat as confidential in all internal
information which is made available to it in the course of carrying out
the research and development plan.
2. The Sponsored Party is, however, entitled to publish, in neutral form,
research findings which emerge during the work on this research and
development plan. Also covered by the publication right is the use of
findings in study-, diploma- and PhD-theses. The Sponsored Party is
obliged to ensure that its claim on patent rights are not impaired by
those theses.
jects to the intended publication within a 6 week period, the relevant portions
of the publication shall be deleted or modified in mutual consent.
ss. 4
Liability
The Sponsored Party is liable only within the framework of ss. 831 BGB (Code of
Civil Law) for deliberate and grossly negligent actions of its employees. The
liability shall be limited, for proven damages, to 30% of the financial
contribution. No liability shall be assumed for losses resulting from faults or
for whatsoever follow-up damages.
Sponsor shall defend, indemnify, and hold harmless in any respect, the Sponsored
Party and its director, officers, agents and employees from and against all
claims relating to liability risks resulting from the application of the results
under this contract.
<PAGE>
ss. 5
Submission of the findings
The findings shall be summarized semi-annually and passed on in writing by the
Sponsored Party to the Sponsor and, where relevant, verbally explained.
The findings of the research and development plan are available to the Sponsor
continuously and without limitation on request. The contractual partners shall -
if necessary - maintain an intensive exchange of opinions during the execution
of the work.
ss. 6
Patent rights
In so far as patentable inventions and new non patentable discoveries (secret
know-how) are obtained in the context of this research and development contract
the Sponsor must be notified of these in writing. If the Sponsor declares its
interest in their economic use within 8 weeks of receipt of this notification by
the Sponsored Party, they shall be covered as contractual patent rights and
contractual know-how in a license contract which has to be established between
the partners. The Sponsor shall have the right of first refusal to obtain a
exclusive, worldwide license to make, use and/or sell these results.
In this case, Sponsor covers the resulting financial obligations which are to be
fulfilled against the employees of the Sponsored Party according to the Employee
Investors Law.
The Sponsored Party shall have an unlimited and royalty-free license of all
rights and inventions under this contract to use it for own research purposes.
ss. 7
Term of the contract
The term of the research and development contract is 36 months and begins on the
date of signature of the contract.
<PAGE>
ss. 8
Termination
If the research and development contract is terminated by the Sponsor during the
term of the contract, the obligations already entered into by the Sponsored
Party shall still be assumed.
After year one the Sponsor has the option to terminate the contract at the end
of the year one by a two-month advance notice. In this case, the obligation of
the Sponsor includes the continuation payment of the three full-time research
engineers until the end of the 24 months duration.
Sponsored Party may terminate the agreement if payment is delayed more than one
month after request.
If the contract is terminated during 3 year's term all rights and results
covered by this agreement will be transferred back to the Sponsored Party at the
expenses of Sponsor.
ss. 9
Amendments to this contract
Amendments and riders to this research and development contract must be set out
in writing.
ss. 10
Place of fulfillment and court jurisdiction
The place of fulfillment and court of jurisdiction is Aachen.
In witness whereof, the parties have executed this contract.
By: /s/ CB WOOD Date: 18-8-97
------------------------------
Its: Dr. Christopher Wood: will be transferred to Eurobiotech GmbH
President and CEO of (in foundation) in charge of
Eurobiotech Inc.
Forschungsgesellschaft fur
Biomedizinische Technike e. v.
- - Helmholtz-Institut -
By: /s/ JURGEN KESSLER Date: 18-8-97
------------------------------
J. Kefbler
Its: Chairman of the Board and
Chancellor of the Aachen
University of Technology
<PAGE>
Research and Development Project:
"DEVELOPMENT OF PROCEDURES AND TECHNOLOGIES FOR
THE CRYOPRESERVATION OF BLOOD COMPONENTS"
1. PERSONNEL COSTS
Three areas to be addressed:
(1) Cooling/freezing procedure and devices (freezing container, blood
bag)
Personnel: 1 research assistant }DM 120.000/a
1 student assistant
(2) Definition of the process and design, integration into the overall
system
Personnel: 1 research assistant }DM 120.000/a
1 student assistant
(3) Optimization and definition of the thawing and washing procedure
Personnel: 1 research assistant }DM 120.000/a
1 student assistant
Support for (1) to (3) by medical/technical ass. DM 50.000/a
---------------
Personnel costs: DM 410.000/a
- --------------------------------------------------------------------
2. EQUIPMENT
Dewar DM 40.000
Photometer DM 20.000
Bag Welding DM 15.000
HPLC DM 30.000
2 PC-data acquisition stations DM 35.000
----------
DM 140.000
3. SUPPLIES
Donor compensation DM 5.000/a
Blood bags DM 6.000/a
Solutions DM 6.000/a
Chemicals DM 6.000/a
Viability Assays DM 5.000/a
LN2 DM 5.000/a
<PAGE>
- -Mech. parts + workshop DM 10.000/a
(container, set-ups)
- -Software licenses DM 5.000/a
- -Photo, stationary, laser prints DM 5.000/a
- -Outsourcing (EM), Pathology DM 3.500/a
DM 56.500/a
In addition, an 8% overhead plus 15% VAT is to be charged.
4. EXTERNAL SERVICE
Freezing bag development (cost estimate) DM 300.000
(production, approval, quality assurance)
<PAGE>
FIRST AMENDMENT TO R&D
AGREEMENT
BETWEEN
HELMHOLTS INSTITUT
OF AACHEN, GERMANY
AND
EUROBIOTECH GROUP, INC.
A DELAWARE CORPORATION
JANUARY 19, 1998
WHEREAS, an agreement was entered into as of August 18, 1997, by and between the
Forschungsgesellschaft fur Biomedizinische Technike e. v. - Helmholtz-Institut -
("Helmholtz") and Eurobiotech Group, Inc., a Delaware corporation
("Eurobiotech").
WHEREAS, the parties to the agreement desire to extend the execution date for
payments due under this agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, and for other good
and valuable consideration, the receipt and efficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Section 2 - Financial contributions - is hereby amended to delete the
phrase "on execution date" and in its place inserting the phrase "on or before
March 1, 1998".
2. Except as otherwise amended hereby, the Agreement shall remain in
full force and effect.
3. This amendment may be executed in multiple counterparts, each of
which will be deemed to be an original, and all such counterparts will
constitute but one instrument.
<PAGE>
IN WITNESS WHEREOF, the individuals signing below on behalf of the Helmholtz and
Eurobiotech are signing in the capacities below as of the date first above
written:
HELMHOLTZ-INSTITUT
By: /s/ Signature
---------------------------------
Position:
EUROBIOTECH GROUP, INC.
By: /s/ CB WOOD
---------------------------------
Dr. CB Wood
President and CEO
AGREEMENT TO GRANT LICENSE
WHEREAS Southern Research Institute (SRI) of 2000 Ninth Avenue South,
Birmingham, Alabama 35205 and Eurobiotech Group, Inc. (Eurobiotech), a Delaware
company have entered into an Agreement to co-develop certain technology, and;
WHEREAS SRI has granted to Eurobiotech a license to co-develop the technology
and to market product(s) developed from the technology in certain territories,
as defined by the Co-development Agreement entered into by the parties, it is
further agreed;
SRI shall allow Eurobiotech to license the technology to Bioenvision, Inc, a
Delaware company that has acquired 100% of the equity holdings in Eurobiotech.
It is agreed that Bioenvision shall be bound by the terms of the Co-development
Agreement and shall make the payment due to SRI under the terms of that
Agreement.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly authorized officers on the respective dates and at the respective
places hereinafter set forth.
EUROBIOTECH: SRI:
/s/ [ILLEGIBLE] /s/ G. E. Dwyer
- -------------------------------- --------------------------------
Signature Signature
[ILLEGIBLE] G. E. Dwyer
- -------------------------------- --------------------------------
Print Name Print Name
19/8/98 9/1/98
- -------------------------------- --------------------------------
Date Date
GLEN INVESTMENTS LTD
35/39 Maxwell Chambers
Colombiere
St. Helier, Jersey, CI
July 15, 1999
Bioenvision Inc.
Trafalgar House
11 Waterloo Place
London, SWIY 4AU
Dear Sirs
As per our previous agreement we hereby confirm that we are willing to continue
loaning funds to Bioenvision Inc on an agreed budget basis.
Yours sincerely,
For and on Behalf of Glen Investments
<PAGE>
GLEN INVESTMENTS LTD
35/39 Maxwell Chambers
Colombiere
St. Helier, Jersey, CI
September 8th 1998
Bioenvision Inc.
Trafalgar House
11 Waterloo Place
London, SWIY 4AU
Dear Sirs
We hereby agree to loan funds to Bioenvision Inc, on an as needed basis
providing that we have previously agreed budgets. A condition of this is that we
have the right to call upon an option to purchase 500,000 shares at $1 should
the money lent exceed $100,000.
Yours sincerely
For and on Behalf of Glen Investments
CO-DEVELOPMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into and effective this .... day of
......1998, the same date affixed hereto by the party last signing this
Agreement, by and between Orion Pharmaceuticals Ltd ("Orion") of............and
Bioenvision, Inc ("Bioenvision") of Trafalgar House, 11 Waterloo Place, St
James's, London SW1Y 4AU
WITNESSETH
WHEREAS, Orion has rights in patents and technical information relating to the
development and uses of DNA vectors and related technologies [Technology(s)];
and
WHEREAS, Bioenvision recognizes that Orion owns inventions and intellectual
property useful in the conduct of Bioenvision's business; and
WHEREAS, Bioenvision recognizes that its anticipated business activity will
encompass the practice of technology that requires a license under patents owned
by Orion; and
WHEREAS, Bioenvision wishes to acquire certain rights to practice the inventions
of such patents and technical information; and
WHEREAS the parties have signed a "Terms for Co-Development Agreement" set forth
in Appendix I, to enter into this Agreement, and
NOW THEREFORE, in consideration of the mutual covenants herein contained and
intending to be legally bound thereby, the parties agree as follows:
1. DEFINITIONS
As usual herein the following terms shall have the meanings set forth below:
A. Co-Development Program means the joint development of the Technology by
Bioenvision and Orion.
B. Field means, and is limited to, the practice of the Patent, Invention and
Technical information licensed hereunder for use in human and animal health
applications.
C. Net Sale Price means the gross amount recognized by Bioenvision or its
affiliates for the sale of a Product(s) through normal distribution channels (as
determined by generally accepted accounting principles), less any discounts or
deductions for value added taxes incurred and not recovered by Bioenvision or
the equivalent in Great Britain or elsewhere in the Territory.
D. Invention means patented and unpatented, patentable and unpatentable,
proprietary technology ("Technology") related to DNA vectors for the treatment
of liver insufficiency, with particular reference to the treatment of
hypoalbuminaemia, developed by or on behalf of Orion, that is (i) related to
human and animal health
CONFIDENTIAL 1
<PAGE>
applications of the Technology or (ii) necessary for the practice of Technology
for human and animal health applications as disclosed and claimed in the
Patent(s).
E. Improvement means those unencumbered technology advances in the Technology
made by or on behalf of Orion during the term of this Agreement that are either
within the scope of and would constitute an infringement of the Patent claims or
use Technical Information and are within the Field. Orion shall be obligated to
include within the licenses granted only those Orion improvements developed
during the first three (3) years from the effective date of the Agreement which
would be reasonably deemed necessary for Bioenvision's practice of the
Technology, and without which such practice would constitute an infringement of
Orion's rights, unless such grant is not possible due to Orion's obligations to
a third party. Notwithstanding the limitation of Orion's obligation set forth in
the previous sentence, all Improvements developed under projects funded, in
whole or in part, by Bioenvision will be included in the licenses granted in
this Agreement. In the event tat a conflicting obligation prevents Orion from
including an Improvement within the grant of license, Orion shall use reasonable
efforts to assist Bioenvision to obtain rights from the appropriate third party
or parties.
F Licensed Technology means the Patent, Improvement, and Technical Information
relating to human and animal health applications of the Technology or
Product(s).
G. Patent means the patents and/or patent applications, covering the Technology,
Product(s), Invention or Improvement as defined above, patents to be issued
pursuant thereto, and all divisionals, continuations, continuations-in-part,
reissues, substitutions, and extensions thereof, and any patent issuing on a
patent application filed after the Effective Date of this Agreement which is
included in the grant of license hereunder and any foreign counterparts of the
foregoing.
H. Product means a product, service, test, or information which is sold or
provided for a fee and but for the license granted herein would infringe one or
more claims of a Patent, or was discovered, developed, approved, manufactured or
marketed using an Invention, Improvement or Technical Information.
I. Technical Information means unencumbered published or unpublished
confidential and proprietary information in the nature of research and
development information, knowledge and technical data, together with trade
secrets relating to the Technology, including any inventions in the possession
of and belonging solely to Orion on or prior to the Effective Date of this
Agreement and which Orion has the obligation to include in this Agreement, or
which comes into the possession of Bioenvision during the term of this Agreement
and which is generated as a consequence of access to technical information
provided by Orion. Orion shall include herein only that Technical Information
which is reasonably necessary for Bioenvision's practice of the Invention or
without which such practice would constitute an infringement of Orion's rights.
Technical Information includes only the above information which is developed by
or on behalf of Orion, or is generated pursuant to research funded, in whole or
in part, by Bioenvision.
J. Territory means worldwide..
CONFIDENTIAL 2
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2. LICENSE AND CO-DEVELOPMENT PROGRAM
A. The parties to this Agreement hereby agree to jointly co-develop the
Technology according to the terms of this Agreement which supersedes the "Heads
of Terms for a Co-Development Agreement" set forth in Appendix I and all other
written or verbal agreements, express or implied, between Orion and Bioenvision
relating to co-development of the Technology.
B. Orion hereby grants to Bioenvision, to the extent of the Field for the
Territory, an exclusive license to make, have made, use and sell Product(s),
provided Bioenvision sells Product(s) under existing Orion trade-marks or under
new trade-mark(s) to be agreed by both parties and the terms of clause 6H shall
apply to such new trademark(s).
C. The exclusive license set forth herein shall remain exclusive for so long as
Bioenvision meets the payments and other obligations set forth with regard to
the development and commercialization of the Licensed Technology or a Product.
If such conditions are not met, Orion, in its sole discretion, may elect to
terminate the Co-Development Agreement or take whatever actions it deems
necessary.
D. The licence shall continue in force until expiry of the last patent for which
the product is covered, this term to include new patents applied for during the
course of this Agreement. This term shall also continue in force until such time
as Bioenvision ceases to use any trade-mark belonging to Orion.
3. TECHNICAL INFORMATION LICENSE
A. To the extent it is able to do so, Orion hereby grants to Bioenvision, to the
extent of the Field for the Territory, an exclusive license to use the Technical
Information necessary to practice the Technology such that Bioenvision may make,
have made, use and sell Product(s), including disclosures of the Technical
Information as needed to obtain patent rights or authorization to sell or
manufacture Products or services in the Field within any political jurisdiction
requiring such disclosure.
B. The exclusive license set forth herein shall remain exclusive for so long as
Bioenvision meets the payments and other obligations set forth with regard .to
the development and commercialization of the Licensed Technology or a Product.
If such conditions are not met, Orion in its sole discretion may elect to
terminate the Co-Development Agreement or take whatever action it deems
necessary
C. (1) Orion shall make efforts to make available to Bioenvision Technical
Information in Orion's possession related to the Technology that Orion has the
obligation to disclose under this Agreement. Bioenvision shall not disclose to
third parties any Technical Information furnished by Orion during the term of
this Agreement, or any time thereafter, provided, however, that disclosure may
be made of any such Technical Information at any time: (i) with the prior
written consent of Orion, or (ii) to the extent necessary, to Bioenvision's
sublicensees and purchasers of Bioenvision's Product(s) or services, or (iii)
after the same shall have entered into the public domain through no fault of
Bioenvision or Bioenvision's subsidiaries. Disclosure of Technical Information
is permitted without a prior written consent of
CONFIDENTIAL 3
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Orion to the extent required by statute, rule or regulation of a governing body
during the course of Bioenvision's normal business practices, or in the
application or prosecution of an application for patent rights, or in connection
with securing financing for the development or commercialization of the
Technology or a Product. Bioenvision shall inform Orion of any such disclosure
and use its best efforts to protect its confidentiality under such disclosure.
Any combination of Technical Information shall not be considered in the public
domain merely because individual elements thereof are in the public domain. To
the extent that any such Technical Information is disclosed to Bioenvision's
sublicensees and purchasers of Bioenvision's Product(s) or services, the
agreements contained in this Section shall be made by Bioenvision under a
confidentiality agreement to apply to and be made binding upon all such parties.
(2) The fact that some or all of the Technical Information becomes public
knowledge shall not affect the financial obligations for use of the Technical
Information licensed under this Agreement if such Technical Information was used
or usable in the discovery, development, manufacture, or approval for sale of a
Product within the Field.
4. LICENSE FEE AND RESEARCH AND DEVELOPMENT FUNDING
A. Bioenvision shall pay the costs of any further pre-clinical development work
deemed necessary prior to commencing clinical trials, and this shall include the
development of the Product for other therapeutic applications, the use of
different formulations and preparations of the Product. The pre-clinical costs
not to exceed $1.5 million, unless agreed to buy both parties.
B. Bioenvision shall pay the costs of clinical trials of the Product. The costs
of such development will not exceed $4 million (four million U.S. dollars).
B. Bioenvision shall issue to Orion 100,000 shares of common stock of
Bioenvision Group, Inc. within 60 days of the Effective Date of this
Agreement.
C. Orion shall issue to Bioenvision shares of common stock equivalent to 20%
of the total stock of Orion, within 60 days of the Effective Date of this
Agreement
D Bioenvision shall pay the cost of prosecuting, filing and maintaining patents
and defending revocation proceedings on patents and patent applications, on the
Product within the Territory.
5. ACQUISITION
Acquisition of the Licensed Technology is meant in its broadest sense
including assignment, transfer, sublicense, merger, joint venture and so on and
so forth.
CONFIDENTIAL 4
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A. If all or part of the rights granted to Bioenvision are acquired by a third
party all current or future payments derived by Bioenvision from the transfer,
whether in cash, shares, property or any other form of payment, including but
not limited to up-front payments, milestone payments and royalties will be
divided equally between Orion and Bioenvision, after repayment to Bioenvision of
all development costs incurred by Bioenvision.
6. ROYALTY PAYMENTS
A. Bioenvision shall have exclusive rights to market the Product in the
Territory under the following terms: For the Patent and Technical Information
licenses granted herein, Bioenvision shall pay to Orion a royalty of 10% of the
Net Sale Price of all Product(s) sold to an unaffiliated third party, likely to
be a distributor or wholesaler, but not limited to such, where Bioenvision is
responsible for the marketing of the Product.
B. If the Product incorporates inventions, patents, or technical information
that is necessary for the successful commercialization of the Product and that
is obtained from sources other than Orion, the Parties agree to negotiate in
good faith a new royalty rate to reflect the contribution of such third party
inventions, patents, or technical information, but in no event shall the royalty
rate be reduced by more than 50%.
C. If this Agreement is for any reason terminated before all the earned
royalties herein provided for have been paid, Bioenvision shall immediately pay
to Orion any remaining unpaid balance of earned royalties even though the due
date provided in Article 8 has not been reached.
D. If Bioenvision shall sell the rights to the Technology in combination with
the sale, acquisition, merger or disposition of Bioenvision, Inc., Bioenvision,
Orion and the third party(ies) shall negotiate in good faith the specific
details for such sale of rights, subject to the approval of Orion which shall
not be unreasonably withheld.
E. After expiry of the last patent a royalty of 5% of net sale price for
products sold directly by Bioenvision shall be payable if Bioenvision continues
to use any or all trade-marks currently owned by Orion, or other trade-mark(s)
used by Bioenvision as defined in clause 2B
7. SUBLICENSING
A. Bioenvision shall have the right to sublicense in the Field for the
Territory.
B. Bioenvision will keep Orion routinely updated on progress of discussions and
negotiations with potential sub-licensees. Orion shall have the right to review
the form of sublicenses to be granted hereunder prior to the execution of the
same by Bioenvision. Bioenvision agrees that sublicense agreements shall conform
in all material respects to the terms and conditions of this Agreement. If Orion
has not objected within thirty (30) days of receiving the form of such agreement
describing the material terms, Bioenvision may proceed to negotiate and grant
sublicenses without further review by Orion if the form of the sublicense has
not materially
CONFIDENTIAL 5
<PAGE>
changed. Bioenvision shall provide Orion with a copy of each sublicense within
thirty (30) days of execution, and shall not grant to its sub-licensees any
Orion rights not conveyed by this Agreement.
C. If this Agreement is terminated for any reason, except breach of contract by
Orion, any sublicense shall automatically transfer to Orion, unless sublicensee
is in breach or default of sublicense, and remain in full force and effect so
long as the sublicensees performs the obligations of the sublicense, and
Bioenvision will execute such documents as may be requested by Orion to attest
to the transfer to Orion of all sublicense rights, including the right to
receive future payments.
8. PAYMENTS AND REPORTS
A. Payments owed to Orion shall be payable within thirty (30) days of receipt by
Bioenvision except as stated otherwise elsewhere in this Agreement and except
for royalties and profit-sharing compensation as a result of direct marketing of
Product by Bioenvision.
B. Royalties and profit-sharing compensation owed to Orion as a consequence of
direct marketing of Product by Bioenvision shall be due for each calendar
quarter beginning with the first calendar quarter in which sales occur and shall
be payable to Orion within forty-five (45) days following the last day of the
applicable calendar quarter. All payments from Bioenvision to Orion shall be
made in Pounds Sterling (pounds) by bank credit transfer to Orion at the address
designated in writing by Orion from time-to-time.
C. In the event that Bioenvision is prevented from making any payment to Orion
under this Agreement by virtue of restrictions on currency conversion or
repatriation under the statutes, laws, codes or governmental regulations of the
country from which the payment is to be made, then such payments may be paid by
depositing them in the currency in which accrued to Orion's account in a bank
acceptable to Orion in the country whose currency is involved. If the local
currency cannot be converted or remitted to Orion within twelve (12) months from
the initial deposit, Bioenvision shall pay Orion the equivalent of such amount
at the initially computed conversion rate (including any interest earnings) in
Pounds Sterling (pounds), and the local currency shall be transferred to an
account in a bank acceptable to Bioenvision in that country.
D. Payments to Orion hereunder shall be deemed paid as of the day on which they
are received at the address designated. Any part of a payment which is not paid
on or before the date when due shall accrue interest thereon from such date
until the date of its payment in full at two (2) percentage points over the per
annum interest rate published as the "Prime Rate" in The Wall Street Journal
(Eastern Edition), but in no event shall such rate exceed the maximum rate
permitted by applicable law.
E. Bioenvision shall deliver to Orion within forty-five (45) days after the end
of each calendar quarter a report, certified by the chief financial officer (or
equivalent) of Bioenvision, setting forth in reasonable detail the calculation
of Orion payments made during the quarter and for each calendar quarter,
including gross sales, value added
CONFIDENTIAL 6
<PAGE>
taxes, number of units sold, unit price and the like on a country-by-country
basis by Bioenvision, sublicensees, joint ventures and their affiliates.
F. The Bioenvision report to Orion shall be supported by and based upon a
similar financial report or, if permitted, a copy from each sublicensee and
other commercialization entity(ies).
G. The parties will promptly share all information generated under the
Co-Development Program pursuant to the confidentiality provisions of Article 21
and with particular respect to the pre-clinical studies and clinical trials.
9. RECORDS
Bioenvision shall keep accurate records of all operations affecting payments
hereunder, and shall permit Orion or its duly authorized agent to inspect all
such records and to make copies of or extracts from such. records during regular
business hours throughout the term of this Agreement and for a reasonable period
of not less than three (3) years thereafter. The fees charged for a Orion
authorized audit shall be paid by Orion; provided, however, that if an audit
discloses an underpayment by Bioenvision of more than five percent (5%) for such
audited period, Bioenvision shall pay the reasonable fees and expenses charged
by the firm conducting the audit.
10. OWNERSHIP OF THE TECHNOLOGY, TECHNICAL
INFORMATION AND IMPROVEMENTS
A. Orion and Bioenvision shall each retain full ownership of their existing
intellectual property rights including rights in the process of being protected
and rights conceived but not yet reduced to practice as of the effective date of
this Agreement.
B. All Improvements by Orion developed under projects funded, in whole or in
part, by Bioenvision shall be owned by Orion and shall be included in the
licenses granted in this Agreement. In the event that a conflicting obligation
prevents Orion from including such an Improvement, Orion shall use reasonable
efforts to assist Bioenvision to obtain rights from the appropriate third party
or parties.
C. All Improvements by Orion made during the first three (3) years from the
effective date of the Agreement and not developed under projects funded, in
whole or in part, by Bioenvision, shall be owned by Orion and if deemed
reasonably necessary for Bioenvision practice of the Technology, without which
such practice would constitute an infringement of Orion's rights, shall be
included to the extent necessary, as decided solely by Orion, in the licenses
granted in this Agreement, unless inclusion is not possible due to Orion's
obligations to a third party. In the event that a conflicting obligation
prevents Orion from including such an Improvement, Orion shall use reasonable
efforts to assist Bioenvision to obtain rights from the appropriate third party
or parties.
D. Bioenvision shall have the first right of negotiation to a license or other
commercial arrangement to any Orion intellectual property developed under
projects funded, in whole or in part, by Bioenvision, which does not constitute
an Improvement.
CONFIDENTIAL 7
<PAGE>
11. PATENT PROSECUTION
A. Orion shall file, prosecute and maintain all of the Patent that are the
property of Orion as of the date of this Agreement.
B. Bioenvision shall bear all patenting expenses related to the filing,
prosecution or maintenance of all Patent and Improvement licensed hereunder in
whole or in part.
C. Orion shall furnish Bioenvision with copies of all allowed claims when such
claims are allowed in the Field and in the Territory for all Patent and
Improvement licensed hereunder.
D. Orion shall provide Bioenvision with draft copies of all correspondence and
filings and related prosecution documents on the Patent and Improvement licensed
hereunder and Bioenvision shall promptly provide comments, if any, to Orion.
Orion shall confer with Bioenvision, and make reasonable efforts to adopt
Bioenvision's suggestions regarding prosecution tactics and strategy.
Notwithstanding the foregoing, Orion shall have the right to take such actions
as are reasonably necessary, in its good faith judgement, to preserve all rights
under the Patent and Improvement throughout the Territory. As soon as practical,
subsequent to the filing of any prosecution document, Orion shall provide
Bioenvision with a copy of such document. In addition, Orion shall copy
Bioenvision with any official office action and Orion responses and submissions.
Bioenvision shall bear the expenses of the activities noted in this Article
11.E.
E. Orion will inform Bioenvision at least sixty (60) days prior to any decision
having as a result the failure to file, or the abandonment of Patent
applications or failure to maintain a Patent, Patents and Improvements licensed
hereunder so that Bioenvision may take over and maintain such Patent and
Improvements in force.
F. Provided that Orion has been informed by Bioenvision at least sixty (60) days
in advance, in the event that Bioenvision decides not to pay patenting expenses
in any jurisdiction, Orion may elect to maintain such Patent and Improvements in
force and terminate Bioenvision's licenses granted as for the jurisdiction in
which Bioenvision abandoned or failed to file or maintain such Patent rights.
12. INFRINGEMENT BY TIRED PARTY
A. Either party shall notify the other party of any suspected infringement by a
third party of the Patent in the Field and the Territory, and each party shall
inform the other of any evidence of such infringement(s).
B. Bioenvision shall have the first right to institute suit for infringement(s)
in the Field and Territory so long as this Agreement remains exclusive. At
Bioenvision's expense, Orion will reasonably assist Bioenvision in such
prosecutions if so requested by Bioenvision, and will lend its name to such
actions if requested by Bioenvision or required by law. Notwithstanding the
foregoing Orion shall have the right to participate and be represented in any
such prosecutions by its own counsel at its own expense.
CONFIDENTIAL 8
<PAGE>
C. If Orion notifies Bioenvision of its desire to institute suit for
infringement(s) and Bioenvision fails to exercise its first right to do so
within ninety (90) days of such notice, then Orion may, at its own expense,
bring suit or take any other appropriate action. At Orion's expense, Bioenvision
will reasonably assist Orion in such prosecutions if so requested by Orion, and
will lend its name to such actions if requested by Orion or required by law.
Notwithstanding the foregoing Bioenvision shall have the right to participate
and be represented in any such prosecutions by its own counsel at its own
expense.
D. No settlement of any suspected infringement(s), whether or not a suit has
been instituted, may be entered into without the express written consent of
Bioenvision and Orion.
E. Any amounts recovered pursuant to an infringement suit, settlement or
otherwise shall be retained by and be the property of the party bringing the
action. In the event Bioenvision receives any monies or other consideration from
a third party as a result of Bioenvision's exercise of its rights under this
Agreement, Bioenvision shall first be reimbursed for expenses incurred and paid
for, Orion shall then receive a portion of the remainder in accordance with the
applicable provision(s) of Article 6 as applied to all such monies or other
considerations whether such monies or other considerations are denoted as
"royalties," "damages," "releases" from prior acts, or any other designation.
F. If Bioenvision fails to exercise its first right to institute suit for
infringement(s) and Orion elects not to institute suit, then Orion shall provide
Bioenvision with at least sixty (60) days notice of its intention to terminate
Bioenvision's licenses granted in those jurisdictions affected by the
infringement or to take any other action it sees fit in its best judgement.
13. REVOCATION PROCEEDINGS
A. In the event either party becomes aware of the institution by a third party
of any proceedings for the revocation of any Patent, patents or Improvements in
any country in the Territory licensed hereunder to Bioenvision, such party shall
notify the other party promptly. Bioenvision shall defend any such proceedings
at its own expense, in its own name.
B. Orion shall have the right to participate in such revocation proceedings at
Bioenvision's expense, and will lend its name to such proceedings if requested
by Bioenvision or required by law. Sublicensees of Bioenvision shall also have
the right to participate in such revocation proceedings.
C. Settlement of any revocation proceedings shall be subject to the approval of
Orion; such approval shall not be unreasonably withheld.
14. INFRINGEMENT OF THIRD PARTY RIGHTS
A. Orion will reasonably assist Bioenvision to defend or settle such third party
claim if so requested and at the expense of Bioenvision.
CONFIDENTIAL 9
<PAGE>
B Orion shall have the right to participate and be represented in any such claim
by a third party by its own counsel.
C. No settlement of any third party claim may be entered into without the
express written consent of Orion.
D. In the event, by way of counterclaim or otherwise, either party or both
parties recover any damages or other sums in any action, suit, or proceeding
involving a claim by a third party, or in settlement thereof, such recovery
shall be applied and shared as mutually agreed.
15. REPRESENTATIONS
A. Orion represents that it has the right to grant all of the rights herein.
B. Orion is unaware of any claims asserted against Orion by any third parties
with respect to Patent infringement or any other type of liability relevant to
licensing of the Inventions, which have not been disclosed to Bioenvision as of
the Effective Date of this Agreement.
C. Orion represents that it has full power, authority and legal right to enter
into this contemplated Agreement and to consummate the transactions contemplated
therein.
D. Bioenvision represents that it has full power, authority and legal right to
enter into this contemplated Agreement and to consummate the transactions
contemplated therein.
E. Bioenvision shall accept liability to the extent of the Field and for the
Territory for or on account of any injury, loss or damage, of any kind or nature
sustained by, or any damage assessed or asserted against, or any other liability
incurred by or imposed upon either party arising out of or in connection with or
resulting from (i) the production, use or sale of any Product(s) or (ii) the use
of any technical information, techniques, or practices disclosed by either
party, or (iii) any advertising or other promotional activities with respect to
any of the foregoing. If a sublicense is granted by Bioenvision to a third party
that third party shall accept all liability for any injury, loss or damage as
defined above.
16. INDEMNIFICATION
Bioenvision hereby agrees to indemnify, hold harmless and defend liability
to the extent of the Field and for the Territory Orion and its officers,
directors, representatives, agents and employees from and against any and all
demands, claims, suits or actions of any character presented or brought on
account of any injuries, losses or damages sustained by any person or property
in consequence of (i) any act or omission of Bioenvision or its agents,
employees or subcontractors, or (ii) any liability, except for any injuries,
losses or damages that specifically result from the negligence or willful
misconduct of Orion. The foregoing indemnity shall include but
CONFIDENTIAL 10
<PAGE>
not be limited to court costs, attorneys' fees, costs of investigation and costs
of defense associated with such demands, claims, suits or actions. The foregoing
indemnity shall apply only to the extent of the Field and in the Territory.
17. INSURANCE
Bioenvision shall maintain, during the term of this Agreement, reasonable
amounts of comprehensive general liability insurance, including products
liability insurance, with reputable and financially secure insurance carriers to
cover the activities of Bioenvision and its affiliates. Such insurance shall be
written to cover claims incurred, discovered, manifested, or made during or
beyond the expiration or termination of this Agreement during the period that
any product, process, or service, relating to, or developed pursuant to, this
Agreement is being commercially distributed or sold by Bioenvision or by a
sublicensee, affiliate or agent of Bioenvision. Bioenvision shall furnish to
Orion a certificate of insurance evidencing such coverage and periodically, upon
request, provide evidence that the coverage is still in effect.
18. TERM AND TERMINATION
A. This Agreement shall commence on the Effective Date and, unless sooner
terminated under this Article 18, shall expire upon the later of: (i) expiration
of the last to expire of all Patent(s), Improvement(s), and Patent(s) licensed
under this Agreement including any extensions thereof and any periods of
exclusivity granted by regulatory agencies or other governmental bodies; (ii)
Bioenvision is no longer due any payments from Sublicensee(s); or (iii)
Bioenvision is no longer directly marketing a Product.
B. The payment obligations under the licenses granted to Bioenvision for
Licensed Patents and Technical Information shall continue throughout the term as
defined in this Agreement but would be subject to good faith renegotiations upon
the expiration of the last to expire of the Licensed Patents, or upon the
abandonment of the last to be abandoned of any patent applications if no patents
have been issued, whichever is the later, unless this Agreement is sooner
terminated. Such good faith renegotiations shall take into account on a country-
by-country or regional basis but not be limited to: (i) Product competition;
(ii) utilization, incorporation and value of Technical Information; (iii) value
of Technical Information if no longer confidential or proprietary through no
fault of Bioenvision, its Sublicensee(s), contractors, financiers or any other
Bioenvision agent(s) or purchasers of Product or services having access to
Technical Information; (iv) the applicable contract or patent law or (v) prior
payment commitments.
C. Bioenvision may terminate this Agreement at any time upon ninety (90) days
written notice to Orion and upon payment of all amounts due Orion through the
effective date of the termination.
D. Upon termination of this Agreement, neither party shall be released from any
obligation that matured prior to the effective date of such termination.
Bioenvision and any sublicensee may, however, after the effective date of such
termination, sell all Products in inventory provided that Bioenvision shall pay
to Orion the royalties and
CONFIDENTIAL 11
<PAGE>
profit-sharing thereon as required by Article 6 hereof and submit the reports
required by Article 8 hereof
E. Except as provided in above, if either party shall be in default of any
obligation hereunder, the other party may terminate this Agreement by giving
Notice of Termination by Certified or Registered Mail to the party at fault,
specifying the basis for termination. If within sixty (60) days after the
receipt of such Notice of Termination, the party in default shall remedy the
condition forming the basis for termination such Notice of Termination shall
cease to be operative, and this Agreement shall continue in full force.
F. Orion shall have the right to terminate this Agreement if Bioenvision shall
cease to carry out its business as related to the Product(s), become bankrupt or
insolvent, apply for or consent to the appointment of a trustee, receiver or
liquidator of its assets or seek relief under any law for the aid of debtors.
G. Bioenvision shall inform Orion of its intention to file a voluntary petition
in bankruptcy or of another's intention to file an involuntary petition in
bankruptcy to be received at least thirty (30) days prior to filing such a
petition.
H. Notwithstanding anything else in this Agreement to the contrary, the parties
agree that Bioenvision's obligation to pay Orion any payments or other
consideration accrued but unpaid prior to termination shall survive the
termination of this Agreement.
19. CONFIDENTIALITY; PUBLICATION; PUBLICITY
A. In fulfilling their obligations under this Agreement, it may be desirable or
necessary for the parties to disclose to one another certain of their
Confidential Information. In the event of receipt of such Confidential
Information, the receiving party agrees to preserve such information as
confidential and not to disclose it to third parties or to use it except in
connection with this Agreement during the term of this Agreement and for a
period of five (5) years following its termination. The foregoing obligations
shall not apply to any information that:
1. is now in the public domain or becomes generally available to the public
through no fault of the receiving party;
2. is already known to, or in the possession of, the receiving party as can
be demonstrated by documentary evidence;
3. is disclosed to the receiving party on a non-confidential basis by a
third party having the right to make such disclosure; or
4. is independently developed by the receiving party as can be demonstrated
by documentary evidence.
In addition, to the extent reasonably necessary to fulfil its obligations
or exercise its rights under this Agreement (i) a party may disclose
Confidential Information to its Affiliates, Sub-licensees, consultants, outside
contractors, research
CONFIDENTIAL 12
<PAGE>
investigators and clinical investigators, on a need-to-know basis on condition
that such persons or entities agree to be bound by the provisions of this
Agreement, (ii) a party or its Affiliates or Sub-licensees may disclose
Confidential Information to governmental or other regulatory authorities to the
extent that such disclosure is reasonably necessary to obtain patents or
regulatory authorizations, provided the disclosing party shall request
confidential treatment thereof, and (iii) a party may disclose Confidential
Information as required by applicable law, regulation or judicial process,
provided that such party shall give the other party (x) prior written notice
thereof, (y) adequate opportunity to object to any such disclosure or to request
confidential treatment thereof, and (z) shall take all steps reasonably possible
to minimize the disclosure to that level mandated by law.
B. (i) If either party desires to publish or present the results of the
Co-Development Program, the publishing/presenting party shall provide the
non-publishing/non-presenting party a copy of the manuscript of any proposed
publication or presentation. The non-publishing/non-presenting party shall then
have thirty (30) days to review and comment on the manuscript or presentation,
and the publishing/presenting party agrees to delete any information identified
by the non-publishing/non-presenting party as its Trade Secrets or Confidential
Information.
(ii) In the event the non-publishing/non-presenting party determines that a
Patent application covering information contained in the proposed publication or
presentation should be filed, the party proposing the publication or
presentation shall delay such publication or presentation for up to sixty (60)
days after the thirty (30) days outlined in clause B(i) above to allow such
filing to be made.
C. Each party shall provide the other party with the prior opportunity to review
and approve any press releases or similar public announcements concerning this
Agreement or clinical, regulatory and commercial developments related to
Products as soon as practicable, but in no event later than 24 hours before an
announcement is made. Bioenvision shall not use the name of Orion or otherwise
refer to any organization related to Orion, except with the written approval of
Orion, such approval not to be unreasonably withheld.
20. DISPUTE RESOLUTION
A. The parties shall attempt to resolve through good faith discussions any
dispute which arises under this Agreement. Any dispute may, at the election of
either party, be referred to the chief executive officers, or the equivalent, of
each party. If they are unable to resolve the dispute, within thirty (30) days
after delivery of written notice of the dispute from one party to the other,
either party may seek to resolve it by referring the matter to an appropriate
arbitration service with experience in the field relevant to the dispute.
21. ASSIGNABILITY
A. Orion or Bioenvision shall not assign any rights under this Agreement not
specifically transferable by its terms without prior written consent of the
other party
22. REFORM
CONFIDENTIAL 13
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A. The parties agree that if any part, form, or provision of this Agreement
shall be found illegal or in conflict with any valid controlling law, the
validity of the remaining provisions shall not be affected thereby.
B. In the event the legality of any provision of this Agreement is brought into
question because of a decision by a court of competent jurisdiction of any
country in which this Agreement applies, Orion, by written notice to
Bioenvision, may revise the provision in question or may delete it entirely so
as to comply with the decision of the said court.
23. WAIVER AND ALTERATION
A. The failure of either party to insist, in any one or more instances, upon the
performance of any of the terms, covenants or conditions of this Agreement and
to exercise any right hereunder, shall not be construed as a waiver or
relinquishment of the future performance of any such term, covenant or condition
or the future exercise of such right, but the obligations of the other party
with respect to such future performance shall continue in full force and effect.
B. A provision of this Agreement may be altered only by a writing signed by both
parties.
24. MARKING
A. Bioenvision shall place in a conspicuous location on any product or its
packaging, which is made or sold under any Patent coming within this Agreement,
a patent notice in accordance with the laws concerning the marking of patented
articles.
B. Bioenvision shall include a marking provision similar to Paragraph A above in
every sublicense granted pursuant to Article 7 above.
25. IMPLEMENTATION
Each party shall execute any instruments reasonably believed by the other party
to be necessary to implement the provisions of this Agreement.
26. GOVERNING LAW
This Agreement shall be deemed to have been entered into and shall be governed
by, construed and enforced in accordance with laws of England and in the English
language, and any action brought to enforce any provision or obligation
hereunder shall be brought in a court of competent jurisdiction in the United
Kingdom.
27. HEADINGS
The headings of the articles, sections and paragraphs used in this Agreement are
included for convenience only and are not to be used in construing or
interpreting this Agreement.
28. PARTIES INDEPENDENT
CONFIDENTIAL 14
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In making and performing this Agreement, the parties act and shall act at all
times as independent entities and nothing contained in this Agreement shall be
construed or implied to create an agency, partnership or employer and employee
relationship between Bioenvision and Orion. Except as specifically provided
herein, at no time shall either party make commitments or incur any charges or
expenses for or in the name of the other party.
29. COUNTERPARTS
This Agreement shall become binding when any one or more counterparts hereof,
individually or taken together, shall bear the signatures of each of the parties
hereto. This Agreement may be executed in any number of counterparts, each of
which shall be an original as against either party whose signature appears
thereon, but all of which together shall constitute but one and the same
instrument.
30. FORCE MAJEURE
The parties shall not be responsible for failure to perform any of the
obligations imposed by this Agreement (except an obligation to pay money),
provided the failure is not due to negligence and provided such failure is
caused by fire, storms, floods, strikes, lockouts, accidents, war, riots or
civil commotions, inability to obtain railroad cars or raw materials, embargoes,
any State or Federal regulation, law, or restriction, seizure or acquisition of
the Technology or the Product(s) by the Government of the United Kingdom or the
United States of America or of any state, or of any agency thereof or by reason
of any compliance with a demand or request for such Product for any purpose for
national defense, or any other cause or contingency beyond the reasonable
control of said party (whether or not of the same kind or nature as the causes
or contingencies above enumerated) shall not subject the party so failing to any
liability to the other.
31. EXECUTION
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly authorized officers on the respective dates and at the respective
places hereinafter set forth.
BIOENVISION: ORION:
By: _______________________________ By: _________________________________
Position: _________________________ Position: ___________________________
Date: _____________________________ Date: _______________________________
CONFIDENTIAL 15
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CONFIDENTIAL 16
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "agreement") is made and effective as of the 15 May
1997, by and between EuroBiotech Group, Inc, a Delaware Corporation (the
"Company"), and Stuart Smith (the "Executive").
WHEREAS, the Company desires to retain the Executive in its employ as the
Executive Vice President of the Company for the period provided in this
Agreement, and the Executive has agreed to employment with the Company in
accordance with the contractual terms and conditions set forth below;
WHEREAS, the Company and the Executive have discussed and the Executive has
agreed that this Agreement supersedes any and all agreements, oral and written,
between the parties hereto with respect of the subject hereof, and
WHEREAS, this Agreement is intended to, and shall, set forth the definitive
agreement of the parties.
NOW, THEREFORE, for and in consideration of the recitals and premises, and
the promises, covenants and agreements contained herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Executive, and the Executive
hereby accepts such employment with the Company, for the term of employment set
forth in Section 2 hereof, all upon the terms and conditions hereafter set
forth.
2. Term. Employment shall be for a term commencing on the date hereof and,
subject to prior termination under Section 8, Section 9, Section 10, Section 12
or Section 13 hereof, expiring December 31, 1999. Notwithstanding the previous
sentence, (commencing December 31, 1999), the term of this Agreement shall
automatically be extended for one additional year upon the terms and conditions
set forth herein, unless either party to this Agreement gives the other party
written notice (delivered in accordance with Section 21 hereof and at least 90
days prior to December 31, 1999) of such party's intention not to further extend
the term of this Agreement. For purposes of this Agreement, any reference to the
"term" of this Agreement shall include the original term and any extension
thereof.
3. Duties of the Executive. The Executive shall serve as the Executive
Vice President of the Company. The Executive shall perform such executive duties
as a Executive Vice President would normally perform or as otherwise specified
in the By-Laws of the Company as in effect on the date of this Agreement, and
shall perform, in addition thereto, such other reasonable duties as the CHAIRMAN
may request. Except as may otherwise be approved in advance by the CHAIRMAN and
except during vacation periods and periods of absence due to sickness, personal
injury or other disability, the Executive shall devote substantially all of his
normal working time and his best efforts to the performance of this duties
hereunder. Notwithstanding the foregoing, nothing contained herein shall
preclude the Executive from (i) serving on the boards of directors or other
companies or organisations with the approval of the Board of Directors of the
Company (the "Board") (not to be unreasonably withheld) or (ii) pursuing his
personal, financial and legal affairs provided that such activity does not
materially interfere with the performance of the Executive's obligations
hereunder.
4. Compensation.
a) During the term of this Agreement, the Company shall pay to the
Executive a base salary and such bonus as may be awarded to the Executive from
time to time by the Board pursuant to Section 4(b) hereof.
b) For the period commencing on the date of this Agreement, and ending
December 31, 1999 the Executive's base salary shall be deemed to be $80,000 on
an annualised basis. The Executive's base salary may be increased from time to
time by the Board. During the term of the Agreement, Executive's salary shall be
reviewed at least annually by the Board to determine whether an increase beyond
the Executive's base salary is warranted and appropriate.
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Except as set forth in this Section 4, such compensation shall he payable
at the times and in the manner consistent with the Company's general policies
regarding Compensation of executive employees, but in no event less frequently
than bi-monthly.
c) In additional to the base salary provided by Section 4(b) hereof, the
Executive shall be eligible annually to receive any incentive bonus (the
"Bonus"), that the Board may grant to him based on the Company's executive
compensation plan then in effect, based on the CHAIRMAN's assessment of the
Executive's individual performance, which decision shall be made by the Board in
its sole discretion. The CHAIRMAN shall give written notice to the Executive of
the grant of any such Bonus and the amount thereof upon direction of the Board
and Compensation Committee. Such Bonus shall be payable on the next date on
which the Executive is entitled to receive a payment of his base compensation.
The Board may from time to time authorise such additional compensation to the
Executive, in cash, property, options or warrants as the Board may determine in
its sole discretion to be appropriate.
5) Executive Benefits
a) In addition to the compensation described in Section 4, the Company
shall make available to the Executive and his eligible dependants such benefits
which are comparable to those provided to other executive and management
employees of the Company, including without limitation, any group
hospitalisation, health, dental care or sick leave plan, life or other insurance
or death benefit plan, travel or accident insurance, retirement income or
pension plan, employee stock option plan or other present or future group
employee benefit plan or programme of the Company for which key executives are
or shall become eligible, and Executive shall be eligible to receive during the
period of his employment under this Agreement, and, to the extent provided in
Section 11 and Section 13 hereof, during any subsequent period for which he
shall be entitled to receive payment from the Company under Section 11 or
Section 13 hereof, all benefits for which key executives are eligible under
every such plan or program to the extent permissible under the general terms and
provisions of such plans and programmes in accordance with the provisions
thereof provided that expect,to the extent specifically set forth in Section
4(c), 11, 12 and 13, the Executive shall not be permitted to participate in
management incentive programs or in termination pay programs. The Executive
shall be eligible to participate in any such plan or program under the terms and
conditions applicable to other executive and management employees and in a
manner commensurate with the Executive's position and level of responsibility
with the Company as compared to the position and level of responsibility of
other executive and management employees of the Company as determined by the
Board in its sole discretion.
b) In addition to any life insurance coverage made available to the
Executive under Section 5(a) hereof the Company shall provide, at its sole cost
and expense, to the Executive a term life insurance contract on the Executive's
life in an amount one (1) time his annual base compensation, the proceeds of
which shall be payable to such beneficiary as Executive may designate.
c) The Company shall allow the Executive to participate in the Company car
scheme during the term of this Agreement.
d) The Executive shall be entitled to 4 weeks paid vacation per year, which
shall be pro-rated for partial years. Executive may carry over from year to year
up to 500 hours of unused vacation time. Notwithstanding anything herein to the
contrary, the Executive may not take more than two (2) weeks vacation during any
twelve (12) week period without the prior written permission of the Company,
which shall not be unreasonably withheld.
6. Expenses
The Company shall also pay or reimburse the Executive for all reasonable and
necessary expenses incurred by the Executive in connection with his duties on
behalf of the company in accordance with the general policies of the Company and
his employment by the Company pursuant to this Agreement.
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7. Place of Performance. In connection with his employment by the Company,
unless otherwise agreed by the Executive, the Executive shall be based at the
principal executive offices of the Company, except for travel reasonable
required for Company business.
8. Termination. The Company may terminate Executive's employment hereunder
for Cause which shall mean;
a) The Executive's conviction by, or entry of a plea of guilty or
nolocontendere in, a court of competent and final jurisdiction for any crime
involving moral turpitude or punishable by imprisonment in the jurisdiction
involved (provided that if the Executive's conviction is subsequently
overturned, and the Company had terminated the Executive pursuant to this
Section 8(a), such termination shall be deemed to be without Cause and the
Executive shall be entitled to receive the payments and benefits set forth in
Section 11, together with interest at the then current prime rate as reported in
the Wall Street Journal, from the date such payments are made to the Executive);
b) Executive's breach of any of the covenants contained in Section 25 of
this Agreement;
c) Executive's commission of an act of fraud, whether prior to or
subsequent to the date hereof, upon Employer,
d) Executive's continuing repeated wilful failure or refusal to perform his
duties as required by this Agreement, provided, that termination of Executive's
employment pursuant to this subparagraph (d) shall not constitute valid
termination for cause unless Executive shall have first received written notice
from the Board stating with specificity the nature of such failure or refusal
and affording Executive at least fifteen (15) days to correct the act or
omission complained of;
e) Gross negligence, insubordination, or material violation by Executive of
any duty of loyalty to the Company or any other material misconduct on the part
of Executive, provided that termination of Executive's employment pursuant to
this subparagraph (e) shall not constitute valid termination for cause unless
Executive shall have first received written notice from the Board stating with
specificity the nature of such failure or refusal and affording Executive at
least fifteen (15) days to correct the actor omission complained of;
f) A material breach of this Agreement by the Executive as determined by
the Company after the Executive has been given written notice of such alleged
breach, and not less than thirty (30) days to cure such alleged breach or such
longer period as may be reasonably necessary to cure such breach provided that
the Executive is diligently pursuing such cure.
9) Resignation
a) In the event that (i) the Company shall during the term of this
Agreement (A) fail to continue the Executive as Executive Vice President of the
Company, (B) reduce the Executive's base salary below the minimum amount
specified in Section 4(a) without the Executive's prior written consent, (C)
violate any material term of this Agreement, provided that the Executive gives
the Company written notice of such violation and the Company fails to cure such
violation within 30 days or such longer period (the "Cure Period") as may be
reasonably necessary to cure such violation provided that the Company is
diligently pursuing such cure, then the Executive, at his sole option, may give
notice to the Company at any time within ten (10) days after the expiration of
the Cure Period of his election to resign and terminate this Agreement
("Permitted Resignation") effective immediately upon receipt of such notice
(delivered in accordance with Section 21 hereof), or effective upon such other
date (not later than ten (10) days following such notice) that the Executive may
designate in such notice; (ii) the Executive is required to move more than fifty
[50] miles from the then place of performance of the Executive, as defined under
Section 7 herein, or due to a "Change of Control," which shall mean the
occurrence during the term of this Agreement of any the following events;
A) the Company is merged, consolidated or reorganised into or with another
corporation or other legal persona, and as a result of such merger,
consolidation or reorganisation less than fifty percent (50%) of the combined
voting power of the then outstanding securities entitled to vote
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generally in the election of directors ("Voting Stock") of such corporation or
person immediately after such transaction are held in the aggregate by the
holders of Voting Stock of the Company immediately prior to such transaction; or
B) The Company sells or otherwise transfers all or substantially all of its
assets to another corporation or other legal person, and as a result of such
sale or transfer less than fifty percent (50%) of the combined voting power of
the ten outstanding Voting Stock of such corporation or person immediately after
such sale or transfer is held in the aggregate by the holders of Voting Stock of
the Company immediately prior to such sale or transfer, or
C) If, during any period of two consecutive years, (i) individuals who at
the beginning of any such period constitute the Directors of the Company and
(ii) such other persons as are nominated or elected by a vote of the Directors
of the company, collectively, cease for any reason to constitute at least a
majority of the Directors of the Company; provided, however, that for purposes
of this clause 9(b)(C) each Director who is first elected, or first nominated
for election by the Company's stockholders, by a vote of the Director's of the
Company (or a committee thereof) then still in office who were Director's of the
company at the beginning of any such period will be deemed to have been a
Director of the company at the beginning of such period.
10. Death. The term of this Agreement shall terminate on the death of the
Executive.
11. Termination Payments and Benefits. If the Executive's employment
hereunder is terminated by the Executive by Permitted Resignation or by the
Company other than for Cause, prior to the end of the term of this Agreement,
then the Company shall be obligated to pay to the Executive certain termination
payments and make available certain benefits as follows:
a) Termination Payment. The Company shall pay to the Executive a lump sum
in cash, payable within ten (10) business days after the effective date of such
termination, equal to one time the sum of (i) the Executive's base salary
pursuant to Section 4(a) plus (ii) the Executive's average annual bonus granted
pursuant to Section 4(c) hereof during the two-year period (or such shorter
period during which the Executive is employed by the Company) immediately
preceding the Executive's termination, prorated for a partial year. In addition,
(i) if at the time of termination the remainder of the term is greater than one
(1) year, and the Executive remains unemployed one (1) year, and the Executive
remains unemployed one (1) year after the termination date, the Executive shall
be entitled to receive his base salary pursuant to Section 4(a) from such one
(1) year anniversary of the termination date until the earlier of (A) the end of
the term or (B) the date on which the Executive becomes employed (subject to
the limitation that the total amount paid to the Executive pursuant to this
Section 11(a) shall not exceed the total amount of base salary the Executive
would have received pursuant to Section 4(a) between the termination date and
the end of the term) and (ii) if at the time of termination the remainder of the
term is less than one (1) year, the Executive will receive one (1) time the
amount otherwise provided in this Section 11(a). Notwithstanding any provision
to the contrary contained herein, the Executive shall be entitled to receive the
payments provided for in the second sentence of this Section 11(a) (A) only for
so long as the Executive uses all reasonable means available to him to
diligently pursue new employment and (B) provided the Executive accepts a
reasonable offer of employment. It shall be within the company's sole and
absolute discretion to determine whether the Executive has complied with the
provisions of this Section 11(a).
b) Benefits. Notwithstanding any provision to the contrary in any option
agreement or other agreement or in any plan, except as provided for under
Section 8(a), (i) all of the Executive's outstanding stock options shall
immediately vest and become exercisable and the Executive shall have the full
term of the option to exercise any of the Executive's stock options, and (ii)
all restrictions on any other equity awards relating to continued performance of
services shall lapse.
Subject to Section 15, for one year following the termination of this
Agreement, the Company shall use its reasonable best efforts to maintain in full
force and effect for the continued benefit of the Executive all employee welfare
benefit plans and perquisite programs in which the Executive was
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entitled to participate immediately prior to the Executive's termination or
shall arrange to make available to the Executive benefits substantially similar
to those which the Executive would otherwise have been entitled to receive if
his employment had not been terminated; provided, however, that (i) if the
remainder of the term exceeds one (1) year, the Company shall use its reasonable
best efforts to continue to provide such benefits to the Executive until the end
of the term and (ii) if the remainder of the term is less than one (1) year, the
obligation of the Company pursuant to this Section 11(b) shall extend for only
one year (1) year following the termination date. Such welfare benefits shall be
provided to the Executive on the same terms and conditions (including, without
limitation, employee contributions toward the premium payments) under which the
Executive was entitled to participate immediately prior to his termination.
Notwithstanding the foregoing, with respect to the Executive's continued
coverage under the Company's medical and dental plan, or a successor plan,
pursuant to this provision, the Executive's "qualifying event" for purposes of
the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") shall be
his date of termination from the Company.
12. Other Termination. If the Company terminates this Agreement for Cause
or if the Executive terminates this Agreement for any reason other than by
Permitted Resignation or if the Executive dies or in the event of the
Executive's Disability, then the Company and the Executive shall have no further
obligation hereunder except as follows or except as provided in any available
plan, program or agreement:
a) The Company shall pay the Executive his then current minimum base salary
through the effective date of such termination;
b) If the Executive terminated this Agreement other than by Permitted
Resignation, he shall receive such benefits, if any, as are afforded by the
Company under its then existing policies applicable to employees who voluntarily
terminate their employment; and
c) The Executive shall have the rights set forth in Section 13 hereof in
the event of termination of this Agreement upon his Disability.
13. Disability
a) In the event of the Executive's Disability (as defined herein) during
the term of this Agreement, the Executive's duties and obligations hereunder
shall cease and the Company shall pay to the Executive in cash, for each
calendar year until the Executive reaches the age of 65 and at the times at
which the Executive would have received payment of his base salary, an amount
equal to 60% of the sum of (i) the Executive's highest annual base salary
pursuant to Section 4(a) than in effect for the period prior to the Executive's
Disability. For this purpose, the Company shall maintain in full force and
effect during the term of this Agreement an insurance policy with an insurance
company that reasonably shall provide for the payment of such amounts to the
Executive upon his Disability.
b) "Disability" shall be defined as in the insurance policy referenced in
Section 13(a) hereof.
c) For the period during which the Executive is entitled to receive
payments under this Section 13, the Company shall use its reasonable best
efforts to maintain in full force and effect for the continued benefit of the
Executive all employee welfare benefit plans, as provided for under the
insurance policy limits, except for life insurance provided for under Section
5(b); and except for the automobile allowance set forth in Section 5(c). Such
welfare benefits shall be provided to the Executive on the same terms and
conditions (including employee contributions toward the premium payments) under
which the Executive was entitled to participate immediately prior to his
Disability.
d) The Company shall have no obligation under this Section 13 if the
Executive is not insurable under an insurance policy with a reasonably priced
premium, as determined by the Company in its sole absolute discretion.
14. No other Termination Compensation. Except as specifically provided in
Sections 11, 12 and 13 hereof, upon termination of this Agreement for any
reason, the Executive shall not be entitled
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to any severance pay or to any other compensation or payments (by way of salary,
damages or otherwise) of any nature relating to this Agreement or otherwise
relating to or arising out of his employment by the Company.
15. Mitigation Obligation. The Executive shall mitigate damages including
the amount of any payment provided for pursuant to Section 13 by seeking other
employment or otherwise; provided, however, that the Executive is under no
obligation to mitigate any amount provided for by insurance policies under
Section 13 hereof.
16. Arbitration. Any dispute between the parties under this Agreement
shall be submitted to arbitration and such arbitration shall be conducted in
accordance with the rules of the International Chamber of Commerce ("ICC"). Each
of the parties hereto shall appoint one person as an arbitrator to hear and
determine any such dispute and if the two arbitrators so chosen shall be unable
to agree, then the two arbitrators shall select a third impartial arbitrator
whose decision shall control. All arbitrators selected shall have previously
engaged in and conducted arbitration's for at least the past three (3) years in
accordance with die rules of ICC. The arbitrators shall have the right only to
interpret and apply the provisions of this Agreement and may not change any of
its provisions except as permitted by Section 23 hereof. The arbitrators shall
permit reasonable pre-hearing discovery of facts, to the extent necessary to
establish a claim or defence to a claim, subject to supervision by the
arbitrators. The determination of the arbitrators shall be conclusive and
binding upon the parties and judgement upon the same may be entered in any court
having jurisdiction thereof. The arbitrators shall give written notice to the
parties stating his or their determination, and shall furnish to each party a
signed copy of such determination. Arbitration hereunder shall be final and
binding on the parties and may not be appealed. The expenses of arbitration,
including reasonable attorneys' fees, shall be borne by the losing party or as
the arbitrators shall otherwise equitably determine.
17. Indemnification. To the maximum extent permitted under the corporate
laws of the State of Delaware or, if more favourable, the By-Laws of the Company
as in effect on the date of this Agreement, (a) the Executive shall be
indemnified and held harmless by the Company, as provided under such corporate
laws or such By-Laws, as applicable, for any and all actions taken or matters
undertaken, directly or indirectly, in the performance of his duties and
responsibilities under this Agreement or otherwise on behalf of the Company, and
(b) without limiting clause (a), the Company shall indemnify and hold harmless
the Executive from and against (i) any claim, loss, liability, obligation,
damage, cost, expense, action, suit, proceeding or cause of action
(collectively, "Claims") arising from or out of or relating to the Executive's
performance as an officer, director, employee or agent of the Company or any of
its affiliates or in any other capacity, including, without limitation, any
fiduciary capacity, in which the Executive serves at the request of the Company,
and (ii) any cost or expense (including, without limitation, fees and
disbursements of counsel) (collectively, "Expenses") incurred by the Executive
in connection with the defence or investigation thereof. If any Claim is
asserted or other matter arises with respect to which the Executive believes in
good faith the Executive is entitled to indemnification as contemplated hereby,
the Company shall pay the Expenses incurred by the Executive in connection with
the defence or investigation of such Claim or matter (or cause such Expenses to
be paid) on a monthly basis, provided that the Executive shall reimburse the
Company for such amounts, plus simple interest thereon at the then current prime
rate as reported in the Wall Street Journal as in effect from time to time,
compounded annually, if the Executive shall be found, as finally judicially
determined by a court of competent jurisdiction, not to have been entitled to
indemnification hereunder.
18. Agreement. This Agreement supersedes any and all other agreements,
either oral or written, between the parties hereto with respect to the subject
matter hereof, and contains all of the covenants and agreements between the
parties hereto with respect to such subject matter, and Executive has received
legal counsel regarding the entirety of the Agreement.
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19. Withholding of Taxes. The Company may withhold from any amounts payable
under this Agreement all federal, state, city or other taxes as the Company is
required to withhold pursuant to any law or government regulation or ruling.
20. Successors and Binding Agreement.
a) The Company will reasonably require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganisation or otherwise) to
all or substantially all of the business or assets of the Company, by agreement
in form and substance satisfactory to the Executive acting reasonably, expressly
to assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform if no such succession had taken
place. This Agreement will be binding upon and inure to the benefit of the
Company and any successor to the Company, including, without limitation, any
persons acquiring directly or indirectly all or substantially all of the
business or assets of the Company whether by purchase, merger, consolidation,
reorganisation or otherwise (and such successor shall thereafter be deemed the
"Company" for the purposes of this Agreement).
b) This Agreement will inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributes and legatees.
c) The rights of the Company under this Agreement may without the consent
of Executive, be assigned by the Company in its sole and unfettered discretion
(a) to any person, firm, corporation, or other business entity which at any
time, whether by purchase, merger, or otherwise, directly or indirectly,
acquires all or substantially all of the assets or business of the Company, or
(b) to any subsidiary or affiliate of the Company (the "Company Group"), or any
transferee, whether by purchase, merger or otherwise, which directly or
indirectly acquires all or substantially all of the assets of the Company or any
other member of the Company Group.
21. Notices. For all purposes of this Agreement, all communications,
including, without limitation, notices, consents, request or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to
have been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof confirmed), or five business days after
having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or three business days after having been sent by a
nationally recognised overnight courier service such as Federal Express, UPS, or
Purolator, addressed to the Company (to the attention of the Secretary of the
Company) at its principal executive offices and to the Executive at his
principal residence, or to such other address as any party may have furnished to
the other in writing and in accordance herewith, except that notices of changes
of address shall be effective only upon receipt.
22. Governing Law. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Delaware, without giving effect to
the principles of conflict of laws of such state.
23. Severability and Reformation. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of the parties under this Agreement would not
be materially and adversely affected thereby, such provision shall be fully
separable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part thereof,
the remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected by the illegal, invalid or unenforceable provision or
by its severance therefrom, and, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible, and the parties
hereto request the court or any arbitrator to whom disputes relating to this
Agreement are submitted to reform the otherwise illegal, invalid or
unenforceable provision in accordance with this Section 23.
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24. Survival of Provisions. Notwithstanding any other provision of this
Agreement, the parties' respective rights and obligations under Sections 4, 5,
11, 12, 13, 14, 15, 16, 17, and 19 hereof and under any other Sections that
provide a party with rights (including without limitation, rights to receive
payments) that have not been fully satisfied as of such termination or
expiration, will survive any termination or expiration of this Agreement or the
termination of the Executive's employment for any reason whatsoever.
25. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. Unless otherwise noted, references to
"Sections" are to sections of this Agreement. The captions used in this
Agreement are designed for convenient reference only and are not to be used for
the purpose of interpreting any provision of this Agreement.
26. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same Agreement. The delivery by facsimile
of an executed counterpart of this Agreement shall be deemed to be an original
and shall have the full force and effect of an original copy.
IN WITNESS WHEREOF, the parties hereof have executed this Agreement as of
the day and year first above written.
/s/ Stuart Smith
---------------------------
Stuart Smith
EUROBIOTECH GROUP INC.
By: /s/ SIGNATURE
--------------------
Name: /s/ SIGNATURE
--------------------
Title: /s/ SIGNATURE
--------------------
8
RESEARCH AGREEMENT
(1) BIOENVISION INC.
(2) CARDIFF UNIVERSITY
<PAGE>
THIS AGREEMENT is made the 8 day of July 1999
BETWEEN:-
(1) BIOENVISION INC., a Delaware corporation with its main office at
Trafalgar House, 11 Waterloo Place, London SW1Y 4AU ("Bloenvision"); and
(2) CARDIFF UNIVERSITY of P0 Box 923, Cardiff, CE1 3TE ("CU").
Cardiff University is the public name of the University of Wales, Cardiff
WHEREAS:-
A. CU has represented to Bioenvision that CU has knowledge and expertise in
the field of cancer therapy; and
B. CU's patenting and licensing company University College Cardiff
Consultants Limited ("UC3") is the proprietor and beneficial owner of
rights and interest in the Technology (as hereinafter defined); and
C. Bioenvision is interested in the field of cancer therapy and is prepared
to receive Confidential Information from CU upon and subject to the terms
hereinafter appearing; and
D. The parties wish to provide for CU to perform a Feasibility Study and for
Bioenvision to carry out an Evaluation (as hereinafter defined) during
the term of this Agreement and for UC3 to grant a licence of equal date
herewith to Bioenvision under the Technology.
NOW in consideration of these presents and of the payment by Bioenvision to CU
of the sum of (pound) 197,981 plus VAT in the form of fees for a Feasibility
Study IT IS HEREBY AGREED as follows:
1 DEFINITIONS
1.1 In this Agreement:-
(i) "Effective Date" means the date first set out above;
(ii) "the Feasibility Study" means the tests and studies and
evaluations to be conducted by CU on Bioenvision's behalf, as more
fully described in Schedule 1 hereto;
(iii) "the Evaluation" is the evaluation of technical and commercial
potential of the Technology to he carried out by Bioenvision:
<PAGE>
(iv) "the field means the field of "cancer therapy in humans and
animals";
(v) "Confidential Information" means all technical and commercial
information and data passed from a Discloser to a Recipient,
including all elements of the Technology, and is further defined
and qualified in Clause 7;
(vi) "the Discloser" is the party making Confidential Information
available to the other;
(vii) "the Recipient" is the party receiving Confidential Information
from the other;
(viii) "Bioenvision" means Bioenvision Inc. and includes subsidiary
companies including Eurobiotech;
(ix) "the Patents" means a patent or patents filed by UC3 as further
defined in Schedule 2 hereto and any patent that may be granted
pursuant to such application(s) and/or any patent claiming
priority from any of the foregoing including supplementary
certificates of protection. "The Patents" shall also include one
patent application to be filed immediately after execution of this
Agreement by UC3 on each of the subjects of i) 1,2-diphenylethanes
and 1,3-diphenylpropanes and derivatives and ii) benzyl tetralins
and derivatives.
(x) "Improvements" means intellectual property, data and results
generated by CU during the Feasibility Study and includes any
patent(s) filed by UC3 in respect of the same;
(xi) "Technology" means Patents, Improvements and Confidential
Information of CU.
1.2 Reference to any statute or statutory provision includes a reference to
that statute or statutory provision as from time to time amended
extended or reenacted.
1.3 Words importing the singular number shall include the plural and vice
versa, words importing the masculine shall include the feminine and
neuter and vice versa, and words importing persons shall include bodies
corporate, unincorporated associations and partnerships.
1.4 Headings to clauses and paragraphs are for ease of reference only and
shall not affect the interpretation or construction of this Agreement.
The Schedules forms part of this Agreement and shall be construed
accordingly.
2 CONDUCT OF FEASIBILITY STUDY
<PAGE>
2.1 The Feasibility Study shall be carried out over a period of not more than
thirty six (36) months from the Effective Date by CU within its Welsh
School of Pharmacy.
2.2 CU shall use its reasonable endeavours within the scope of its knowledge
and experience to conduct the Feasibility Study in accordance with the
terms of this Agreement.
2.3 CU will provide Bioenvision with all the scientific results of the
Feasibility Study on a quarterly basis. A full written report will reach
Bioenvision no later than the end of the second week after the completion
of the Feasibility Study.
2.4 The Feasibility Study as described in Schedule 1 will be conducted in tw6
phases as described below, for a sum of (pound) 197,941 exclusive of VAT.
Payments by Bioenvision to CU will be made within thirty (30) days of
receipt of quarterly invoices, submitted at the start of each quarter.
The first payment shall be due on appointment of the first postdoctoral
researcher. Total payments for the first phase shall be (pound) 95,090
plus VAT. Total payments for the second phase shall be (pound) 102,851
plus VAT, subject to 2.5 below.
2.5 The first phase of the Feasibility Study will begin on or soon after the
Effective Date and will require the work of two postdoctoral researchers
who shall each be employed by CU for twelve (12) months. As these
researchers may not be recruited simultaneously, it is recognised that
the first phase may last up to twenty four (24) months, although CU shall
use all reasonable efforts to restrict this period to not more than
eighteen (18) months. Progress of the Feasibility Study shall be reviewed
by Bioenvision at least two months before the end of the twelve (12)
month employment contract of the first researcher to be recruited, and
Bioenvision shall have the opportunity to review their funding on
completion of the first phase (including the option to terminate the
Feasibility Study in accordance with the terms of Clause 9 below).
Bioenvision shall inform CU in writing of its decision based on such
review before the end of the twelve (12) month employment contract of the
first researcher to be recruited.
2.6 Subject to Bioenvision's approval as defined in 2.5 above, the second
phase of the Feasibility Study shall begin on completion of the twelve
(12) month employment contract of the first researcher to be recruited.
The second phase shall require the work of two postdoctoral researchers
who shall each be employed by CU for twelve (12) months.
3 CONDUCT OF THE EVALUATION
3.1 During the course of the Feasibility Study CU will answer all reasonable
questions and queries put by Bioenvision concerning the Feasibility
Study.
<PAGE>
3.2 At the end of the Feasibility Study or on termination of this Agreement
Bioenvision will provide CU with a written report of its conclusions,
including an assessment of market potential.
4 LICENSING
4.1 CU hereby undertakes that it will assign to UC3 with full title guarantee
and free from encumbrances (to the extent that it has not already done
so) all of CU's right, title and interest in and to the Technology for
the full term thereof including all extensions thereto and renewals
thereof together with all rights, powers and benefits arising or accrued
therefrom including (without limitation) the right to sue for damages and
other remedies in respect of any such rights.
4.2 CU acknowledges that the Technology shall be licensed to Bioenvision
under the terms of a Licence Agreement entered into by Bioenvision and
UC3 and executed on the same date as this Research Agreement ("the
Licence Agreement").
4.3 Neither CU no UC3 shall enter into discussions or negotiations with any
third party or third parties (other than Bioenvision) with a view to the
grant of a licence to any third party (whether on an exclusive or
non-exclusive basis) under the Technology for the manufacture, use and/or
sale of any products in the Field until the conclusion or termination of
this Agreement.
4.4 In this Agreement the restrictions contained in clause 4.3 shall for the
avoidance of doubt apply only in respect of the grant of any licence
under the Technology in respect of the Field (and negotiations in
connection therewith) and shall not otherwise restrict UC3 and/or CU.
4.5 For the avoidance of doubt, nothing in this Agreement shall restrict CU
from undertaking any research or development work utilising the
Technology provided that in doing so CU acts in accordance with the terms
of this Agreement and the Licence Agreement.
5 IMPROVEMENTS
5.1 Improvements resulting directly from the Feasibility Study shall be the
property of CU.
5.2 The necessity for and timing of any applications by UC3 for patents
and/or similar protective applications for Improvements shall be
discussed between the parties.
6 COMMENCEMENT
<PAGE>
The Feasbility Study shall commence as soon as may reasonably be
practicable following the execution of this Agreement by both parties.
7 CONFIDENTIALITY
7.1 Except as provided in sub-clause 7.4 below, during the term of this
Agreement all Confidential Information (howsoever recorded or stored),
which is disclosed by the Discloser to or otherwise comes into the
possession of a Recipient shall be regarded as confidential and the
property of the Discloser and shall not be disclosed by the Recipient to
third parties or used by the Recipient for any purpose other than stated
in this Agreement.
7.1.1 Bioenvision shall be entitled to disclose Confidential Information
in confidence to potential approved sub-licensees of the
Technology (pursuant to the Licence Agreement) but only to the
extent strictly necessary to enable such persons to evaluate
whether they wish to become approved sub-licensees.
7.1.2 Bioenvision shall be entitled to disclose Confidential Information
in confidence to approved financial institutions and potential
investors in Bioenvision, to the extent necessary to enable
Bioenvision to attract investment.
7.2 The Recipient shall be responsible and liable to the Discloser for any
non-observance or breach of the terms of confidentiality herein contained
by its or their employees. Each party shall restrict disclosure of
Confidential Information to its employees having a need to know such
Confidential Information for the purposes of the performance of their
obligations and responsibilities hereunder.
7.3 The obligations governing confidentiality and/or use contained in this
Clause 7 shall continue for the term of this Agreement and for ten (10)
years thereafter.
7.4 The provisions governing confidentiality and/or non-use contained in this
clause 7 shall not apply to any part of the Confidential Information
which the Recipient is able to demonstrate:
(i) was lawfully in the Recipient's possession and known to it prior
to disclosure or receipt thereof; or
(ii) was in the public domain or the subject of public knowledge at the
time of disclosure to or receipt thereof by the Recipient; or
(iii) becomes part of the public domain or the subject of public
knowledge after the date of disclosure to or receipt thereof by
the Recipient but through no fault of the Recipent; or
<PAGE>
(iv) becomes availiable to the Recipient form a third party not in
breach of legal obligation of confidentiality to Bioenvision or CU
or UC3 in respect thereof; or
(v) is required to be disclosed by law or by order of any court of
competent jurisdiction or by order of any regulatory authority.
7.5 CU further undertakes that any reports produced by Bioenvision under the
terms of this Agreement shall not be disclosed to third parties.
8 PUBLICATION
Bioenvision recognises that under CU policy, CU shall seek to publish
details of the Technology subsequent to UC3 filing any relevant patent
applications. Bioenvision agrees that CU shall be permitted to present at
symposia, international, national, or regional professional meetings, and
to publish in journals, theses, dissertations or otherwise of their own
choosing, details of the project and any such patents, provided, however,
that CU shall discuss any such publication or presentation with
Bioenvision and Bioenvision shall have been furnished copies of any
proposed publication or presentation at least two (2) months in advance
of the submission of such proposed publication or presentation to a
journal, editor, or other third party. Bioenvision shall have two (2)
months, after receipt of said copies, to object to such proposed
presentation or proposed publication because there is further patentable
subject matter which needs protection. In the event that Bioenvision
makes such objection, said researcher(s) shall refrain from making such
publication or presentation for a maximum of six (6) months from date of
receipt of such objection in order for UC3 to file UK and/or other patent
application(s) directed to the patentable subject matter contained in the
proposed publication or presentation.
9 TERM & TERMINATION
9.1 This Agreement shall commence on the Effective Date and shall (subject as
otherwise provided elsewhere in this Agreement) remain in force until the
completion of the Feasibility Study unless terminated by Bioenvision as
described in 2.5 above PROVIDED THAT any party ("the Terminating Party")
shall have the right to terminate this Agreement by notice in writing to
the other parties upon the happening of any of the following events:
9.1.1 if any other party ("the Defaulting Party") is guilty of any
breach non-observance or non-performance of any of its obligations
hereunder and does not remedy the same (if capable of remedy)
within thirty days of notice of such failure or breach being given
by the Terminating Party; or
<PAGE>
9.1.2 if the Defualting Party ceases to carry on business or is unable
to pay its debts in the ordinary course of business or enters into
liquidation or analogous proceeding in any jurisdiction outside
the United Kingdom (other than for the purpose of a solvent
reconstruction or amalgamation) or has a receiver, administrator
or administrative receiver (or analogous person in any
jurisdiction outside the United Kingdom) appointed over the whole
or any part of its assets; or
9.1.3 if, before the end of the Feasibility Study Bioenvision judges
that the outcome will be of no commercial benefit to Bioenvision,
this Agreement may be terminated, subject to Bioenvision paying
all sums and for all uncancellable commitments to which CU and UC3
are obligated for the project. These uncancellable commitments
shall include but not be limited to the costs of employment of
fixed-term staff engaged specifically for the project, and no
individual employment contract shall extend for more than twelve
(12) months.
9.2 Upon termination of this Agreement for whatever reason:
9.2.1 CU and UC3 shall as soon as practicable after termination of this
Agreement either destroy or return (at Bioenvision's option) all
of Bioenvision's Confidential Information (save for reports as
defined in Clause 3.2 hereof), and all copies and extracts thereof
in its possession and shall certify in writing to Bioenvision that
all such information has been destroyed or returned as the case
may be.
9.2.2 Bioenvision shall as soon as practicable after termination of this
Agreement either destroy or return (at CU or UC3's option) all of
CU's Confidential Information (save for the report as defined in
Clause 2.3 hereof) and all copies and extracts thereof in its
possession and shall certify in writing to CU that all such
information has been destroyed or returned as the case may be.
9.3 The termination of this Agreement for any reason shall be without
prejudice to the rights and obligations of the parties thereunder
accruing up to and including the date of such termination. Clause 7 shall
continue notwithstanding termination of this Agreement.
10 FORCE MAJEURE
No party hereto shall be liable nor deemed to be liable to any other
party for failure or delay in meeting any obligation hereunder due to
strikes or lockouts (whether of their own employees or those of others)
acts of God, warfare, flood, acts of government or governmental agency or
any other cause beyond the control of the party which had a duty to
perform.
<PAGE>
11 SEVERABILITY
If any provision of this Agreement is found by any court or
administrative body of competent jurisdiction to be invalid or
unenforceable the invalidity or unenforceability of such provision shall
not affect the other provisions of this Agreement and all provisions not
affected by such invalidity or unenforceability shall remain in full
force and effect unless severance of the invalid or unenforceable
provision would reasonably frustrate the commercial purposes of this
Agreement. The parties hereby agree to attempt to substitute for any
invalid or unenforceable provision a valid or enforceable provision which
achieves to the greatest extent possible the economic objectives of the
invalid or unenforceable provision without itself being invalid or
unenforceable.
12 ASSIGNMENT
This Agreement shall be binding upon and inure for the benefit of the
successors of the parties hereto. Save as provided herein neither party
shall have the right to assign this Agreement or any rights under it to
any third party without the prior written consent of the other party.
13 WAIVER
The waiver by any party of a breach or default of any of the provisions
of this Agreement by any other party shall not be construed as a waiver
of any succeeding breach of the same or other provisions nor shall any
delay or omission on the part of any party to exercise or avail itself of
any right power or privilege that it has or may have hereunder operate as
waiver of any breach or default by any other party.
14 NOTICE
Any notice, consent or other communication authorised or required to be
given hereunder or for the purposes hereof may be served by any party on
the other and shall be in writing and sent by personal delivery or by
recorded delivery or registered post or fax, in the case of personal
delivery or post to the addresses of the parties set out above or to such
other address as may have been notified by any party as their address for
service and in the case of fax, to the following numbers or to such other
number as may have been given by any party as its fax number for service.
<PAGE>
CU, FAO Mr Geraint Jones: 44 1222874189
Bioenvision, FAO Mr Chris Wood 44 171 8397570
Any notice sent by post shall be deemed to have been served five (5) days
after the time that the same shall have been posted. Any notice served by
fax shall be deemed to have been served twenty-four hours after
transmission.
15 ENTIRE AGREEMENT
This Agreement including the Confidentiality Agreement constitutes the
entire and only Agreement between the parties hereto relating to the
subject matter hereof and overrides and supersedes any prior arrangements
or oral discussion between the parties.
16 NO PARTNERSHIP
Nothing in this Agreement shall create a partnership or joint venture
between the parties hereto each of whom acts as an independent principal
and not as the agent or partner of the other and no party shall have any
authority to enter into any engagements or make any representation or
warranty on behalf of or pledge the credit of or otherwise bind or oblige
the other party hereto.
17 ANNOUNCEMENTS
Save as required by law or by competent regulatory authority no party
shall make any public announcements as to the existence of this Agreement
or as to its contents without the prior written consent of the other
parties such consent not to be unreasonably withheld.
18 LAW
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter contained herein and shall be governed by
the laws of England and Wales. The parties will seek to resolve disputes
between them by an Alternative Dispute Resolution ("ADR") technique
recommended by the Centre for Dispute Resolution ("CEDR"). If the parties
fail to settle the dispute within thirty (30) days following their
agreement to involve CEDR or either party refuses to submit to ADR, the
dispute shall be referred to the jurisdiction of the courts of England
and Wales.
<PAGE>
19 MISCELLANEOUS
19.1 This Agreement may not be amended, supplemented or otherwise modified
except by an instrument in writing executed by all parties hereto with
the same formality as this Agreement is executed.
19.2 Each party hereto shall be responsible for the payment of its own costs
(and not those of the other party) in connection with the negotiation
preparation and execution hereof.
19.3 Each party hereto represents and warrants to the other that the
signatories hereto for and on behalf of that party have been fully
empowered to execute this Agreement on its behalf and that all necessary
action has been taken and all requisite approvals have been obtained to
authorise such execution.
19.4 All sums expressed in this Agreement or otherwise payable in accordance
with the terms of this Agreement are expressed exclusive of VAT which
shall (if due) be payable in addition at the applicable rate from time to
time.
IN WITNESS whereof the parties hereto have executed and delivered this Agreement
as a Deed the day and year first above written.
Signed by
for and on behalf of
Bioenvision
/s/ [ILLEGIBLE]
Signed by
for and on behalf of
Cardiff University
/s/ Geraint W Jones Geraint W Jones Director, Research and
Consultancy Division
<PAGE>
SCHEDULE I
THE FEASIBILITY STUDY
<PAGE>
SCHEDULE 2
THE PATENTS
LICENSE AGREEMENT
THIS AGREEMENT dated 11 March 1999 is between:
(1) UNIVERSITY COLLEGE LONDON, incorporated in the United Kingdom by Royal
Charter, acting through its Royal Free and University College Medical
School, whose address is Rowland Hill Street, London NW3 2PF ("Royal
Free"), and
(2) BIOENVISION, INC., incorporated in Delaware whose principal place of
business is at Trafalgar House, 11 Waterloo Place, St. James's, London SW1Y
4AU ("Bioenvision"),
RECITALS:
A. Royal Free is the registered owner of Patents (as defined below) and has
developed technical information ("Know-how", as defined below) relating to
the development and uses of an eukaryotic gene expression cassette with
muscle element promotors and related technologies.
B. Bioenvision recognizes that Royal Free owns inventions and intellectual
property useful in the conduct of Bioenvision's business.
C. Bioenvision also recognizes that its anticipate business activity will
encompass the practice of technology that requires a license under patents
owned by Royal Free.
D. Bioenvision wishes to acquire rights under the Patents and to use the
Know-how for the development and commercialization of Licensed Products in
the Field and in the Territory, in accordance with the provisions of this
Agreement.
IT IS AGREED as follows:
1 DEFINITIONS
In this Agreement, the following words shall have the following meanings:
AFFILIATE In relation to a Party, means any entity or person which
controls, is controlled by, or is under common control with
that Party. For the purposes of this definition, "control"
shall mean direct or indirect beneficial ownership of 50%
(or, outside a Party's home territory, such lesser
percentage as is the maximum, permitted level of foreign
investment) or more of the share capital, stock or other
participating interest carrying the right to vote or to
distribution of profits of that entity or person, as the
case may be.
COMMENCEMENT DATE The date of signature of this agreement (subject to the
terms of clause 2. 1).
1
<PAGE>
DELIVERED ITEMS Has the meaning given in Clause 3.2.
FIELD means, and is limited to, the practice of the Invention and
Know-how embodied in the patent application referred to in
Schedule 1 and licensed hereunder for the treatment of
disorders associated with liver dysfunction, disease
conditions characterized by decreased production of liver
proteins e.g. albumin, cancer, and endocrine disorders that
may affect liver function in human and animal applications.
KNOW-HOW Technical information in the Field:
(a) Developed in the Laboratory under the
supervision of the Principal
Investigator prior to the Commencement
date and relating directly to the
inventions claimed in the Patents; or
(b) Developed in the course of the Project
(i) in the Laboratory under the
supervision of the Principal
Investigator or (ii) by Bioenvision.
LABORATORY The laboratory of the Principal Investigator within Royal
Free's Department of Anatomy and Developmental Biology.
LICENSED PRODUCTS Any and all products that are manufactured, sold or
otherwise supplied by Bioenvision or its sub-licensees and
which (a) are within any Valid Claim of the Patents and/or
(b) incorporate, or their development made use of, any of
the Know-how.
NET RECEIPTS The amounts received by Bioenvision or its
Affiliates from the grant of sub-licenses under the Patents
and Know-how, less any Value Added Tax or other sales tax.
NET SALES VALUE The invoiced price of Licensed Products sold by Bioenvision
or its Affiliates to independent third parties in arm's
length transactions exclusively for money or, where the sale
is not at arm's length, the price that would have been so
invoiced if it had been at arm's length, after deduction of
normal trade discounts actually granted and any credits
actually given, and, provided the amounts arc separately
charged on the relevant invoice any costs of packaging,
insurance, carriage and freight, any value added tax or
other sales tax, and any import duties or similar applicable
government levies.
PARTIES Royal Free and Bioenvision, and "Party" shall mean either of
them.
PATENTS Any and all of the patents and patent applications referred
to in Schedule 1, and any and all of the patents and patent
applications (if
2
<PAGE>
any) which may be made during the term of this Agreement and
which form part of the Project IPR, including any
continuations, continuations in part, extensions, reissues,
divisions, and any patents, supplementary protection
certificates and similar rights that are based on or derive
priority from the foregoing.
PRINCIPAL
INVESTIGATOR Professor Geoffrey Goldspink
PROJECT The further development by the Parties of the inventions and
developments described in the Patents and the Know-how. The
Parties anticipate that the Project shall be conducted in
accordance with the provisions of Schedule 3.
PROJECT IPR Any and all inventions, know-how, data and other
development made in the Course of the Project, and any
patent applications, patents and other intellectual property
that may be generated in respect of such inventions,
know-how, data and developments during the term of this
Agreement.
TERRITORY European Community, United States of America, Canada, Middle
East, Japan.
VALID CLAIM A claim of a patent or patent application that has not
expired or been held invalid or unenforceable by a court of
competent jurisdiction in a final and non-appealable
judgment.
2 GRANT OF RIGHTS
2.1 The parties agree to execute a Co-development agreement for the pursuit
of the Project to be executed within 30 days (or some other period
agreed between the parties) of the Commencement Date. If such a
Co-development is not executed, then this License Agreement will
terminate.
2.1.1 Licenses. Royal Free hereby grants to Bioenvision, subject to
the provisions of this Agreement:
2.1.2 an exclusive license in the Field under the Patents, with the
right to sub-license, subject to clause 2.3 below, to develop,
manufacture, have manufactured, use and sell Licensed Products
but only in the Field in the Territory; and
2.1.3 an exclusive license in the Field to use the Know-how, with
the right to sub-license, subject to clause 2.3 below, to
develop, manufacture, have manufactured, use and sell Licensed
Products but only in the Field in the Territory.
2.2 Formal licenses. The Parties shall execute such formal licenses as may
be necessary or appropriate for registration with Patent Offices and
other relevant authorities in particular
3
<PAGE>
territories. In the event of any conflict in meaning between any such
license and the provisions of this Agreement, the provisions of this
Agreement shall prevail wherever possible. Prior to the execution of
the formal license(s) (if any) referred to above, the Parties shall so
far as possible have the same rights and obligations towards one
another as if such license(s) had been granted. The Parties shall use
reasonable endeavors to ensure that, to the extent permitted by
relevant authorities, tills Agreement shall not form part of any public
record.
2.3 Sub-licensing. Bioenvision shall be entitled to grant sub-licenses of
its rights under tills Agreement to any person, provided that:
2.3.1 the royalties and other consideration provided for in the
sub-license shall be at an amount or rate which is not less
than the amount or rate provided for in this Agreement;
2.3.2 the sub-license shall include obligations on the sub-licensee
which are equivalent to the obligations on Bioenvision under
this Agreement;
2.3.3 the sub-license shall terminate automatically on the
termination of this Agreement for any reason;
2.3.4 within 30 days of the grant of any sub-license Bioenvision
shall provide to Royal Free a true copy of it; and
2.3.5 Bioenvision shall be responsible for any breach of the
sub-license by the sub-licensee, as if the breach had been
that of Bioenvision under this Agreement, and Bioenvision
shall indemnify Royal Free against any loss, damages, costs,
claims or expenses which are awarded against or suffered by
Royal Free as a result of any such breach by the sublicensee.
2.4 Reservation of rights. Royal Free reserves the non-exclusive right to
use the Know-how and the Patents in the Field for the purposes of
academic research and teaching. Royal Free shall have the exclusive,
worldwide, sub-licensable right to use, develop and commercialize
Project IPR outside the Field,
2.5 No other license. It is acknowledged and agreed that no license is
granted by Royal Free to Bioenvision other than the license(s)
expressly granted by the provisions of this clause 2. Without prejudice
to the generality of the foregoing Royal Free reserves all rights under
the Patents and Know-how outside the Field.
2.6 Quality. Bioenvision shall ensure that all of the Licensed Products
marketed by it and its sublicensees are of satisfactory quality and
comply with all applicable laws and regulations in each part of the
Territory.
4
<PAGE>
3 KNOW-HOW AND CONFIDENTIAL INFORMATION
3.1 Provision of Know-how. Upon Bioenvision's reasonable request, Royal
Free shall arrange for the Principal Investigator to supply Bioenvision
with all Know-how in his possession that Royal Free is at liberty to
disclose and has not previously been disclosed and which is reasonable
necessary or desirable to enable Bioenvision to undertake the further
development of the Licensed Products. The Know-how shall be subject to
the confidentiality provisions of Clause 3.5. The method of such supply
shall be agreed between the Principal Investigator and Bioenvision but
shall not require the Principal Investigator to undertake more than 2
man-days of work, unless otherwise agreed in writing between the
Parties. If it is agreed that the Principal Investigator shall travel
to Bioenvision's premises in connection with Such supply, Bioenvision
shall reimburse all reasonable travel, accommodation mid subsistence
costs incurred.
3.1 Status of Know-now. Bioenivision acknowledges that the Know-how is at
an early stage of development. Accordingly, specific results cannot be
guaranteed and any results, materials, information or other items,
including without limitation Know-how (together "Delivered Items")
produced under or in connection with this Agreement are provided "as
is" and without any express or implied warranties, representations or
undertakings. As examples, but without limiting the foregoing, Royal
Free does not give any warranty that Delivered Items are of
merchantable or satisfactory quality, are fit for any particular
purpose, comply with any sample or description, or are viable,
uncontaminated, safe or non-toxic.
3.2 Responsibility for development of Licensed Products. Bioenvision shall
be exclusively responsible for the technical and commercial development
and manufacture of Licensed Products and for incorporating any
modifications or developments thereto that may be necessary or
desirable and for all Licensed Products sold or supplied, and
accordingly Bioenvision shall indemnify Royal Free in the terms of
Clause 7.3.
3.3 Use of Know-how. Bioenvision undertakes that for a period of 10 years
from the Commencement Date or for so long as any substantial part of
the Know-how remains subject to the obligations of confidence of Clause
3.5, whichever is the shorter, it will not use the Know-how for any
purpose except as expressly licensed hereby and in accordance with the
provisions of this Agreement.
3.4 Confidentiality obligations. Each Party ("Receiving Party") undertakes:
3.4.1 to maintain as secret and confidential all Know-how and other
technical or commercial information obtained directly or
indirectly from the other Party ("Disclosing Party") in the
course of or in anticipation of this Agreement and to respect
the Disclosing Party's rights therein,
3.4.2 to use the same exclusively for the purposes of this
Agreement,and
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3.4.3 to disclose the same only to those of its employees,
contractors and sub-licensees pursuant to this Agreement (if
any) to whom and to the extent that such disclosure is
reasonably necessary for the purposes of this Agreement.
3.5 Exceptions to obligations. The provisions of Clause 3.5 shall not apply
to Know-how and other information which the Receiving Party can
demonstrate by reasonable, written evidence-.
3.5.4 was, prior to its receipt by the Receiving Party from the
Disclosing Party, in the possession of the Receiving Party and
at its free disposal; or
3.5.5 is subsequently disclosed to the Receiving Party without any
obligations of confidence by a third party who has not
derived it directly or indirectly from the Disclosing Party;
or
3.5.6 is or becomes generally available to the public through no act
or default of the Receiving Party or its agents, employees,
Affiliates or Sub-licensees', or
3.5.7 the Receiving Party is required to disclose to the courts of
any competent jurisdiction, or to any government regulatory
agency or financial authority, provided that the Receiving
Party shall (i) inform the Disclosing Party as soon its is
reasonably practicable, and (ii) at the Disclosing Party's
request seek to persuade the court, agency or authority to
have the information treated in a confidential manner, where
this is possible under the court, agency or authority's
procedures; or
3.5.8 in the case of information disclosed by Royal Free to
Bioenvision, is disclosed to actual or potential customers for
Licensed Products in so far as such disclosure is reasonably
necessary to promote the sale or use of Licensed Products,
provided that the customers sign a written confidentiality
undertaking at least as restrictive as Clauses 3.5 and 3.6.
3.6 Disclosure to employees. The Receiving Party shall procure that all of
its employees, contractors and sub-licensees pursuant to this Agreement
(if any) who have access to any of' the Disclosing Party's Information
to which Clause 3.5 applies, shall be made aware of and subject to
these obligations and shall have entered Into written undertakings of
confidentiality at least as restrictive as Clauses 3.5 and 3.6 and
which apply to the Disclosing Party's information.
3.7 The fact that some or all of the Know-how becomes public knowledge
shall not affect the financial obligations for use of the Know-how
licensed under this Agreement if such Know-how was used or usable in
the discovery, development, manufacture, or approval for sale of
Licensed Products within the Field.
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4 PAYMENTS
4.1 Payments for development work and clinical trials.
4.1.1 Bioenvision shall pay the costs of any further pre-clinical
development work deemed necessary prior to commencing clinical
trials for the Project, and this shall include the development
of Licensed Products for other therapeutic applications, the
use of different formulations and preparations of Licensed
Products.
4.1.2 Bioenvision shall pay the costs of clinical trials of Licensed
Products. The costs of such development will not exceed $3
million (three million U.S. dollars).
4.1.3 Bioenvision shall pay the cost of prosecuting, filing and
maintaining patents and defending revocation proceedings on
patents and patent applications, on the Licensed Products
within the Territory that shall become due after the date of
this Agreement.
4.1.4 Bioenvision shall pay to Royal Free a milestone payment of
(pound)200,000 in addition to any royalty or other payments on
successful completion of the first Phase III trial for the
first of the Licensed Products developed under this Agreement.
4.2 Initial payment. Within 30 days of the Commencement Date, the
Bioenvision shall pay to Royal Free the non-refundable, sum of ~20,000
(pounds sterling) which shall be the first installment of the monies
due under Clause 4. 1 (a)
4.3 Royalties. Bioenvision shall pay to Royal Free a royalty being a
percentage of the Net Sales Value of all Licensed Products or any part
thereof sold by Bioenivision or its sub-licensees. The percentage shall
be the higher of the following, alternative percentages which applies
to the Licensed Product in question.
4.3.1 6 per cent in the case of Licensed Products which are within
a Valid Claim of a Patent
in the country of manufacture or sale; or
4.3.2 6 percent in the case of Licensed Products which incorporate
or whose development made use of any of the Know-how.
4.4 Combination Product. If any 1icensed Products are incorporated in any
other product ("Combination Product") supplied by the Bioenivision or
its sub-licensees and the Licensed Product is not priced separately
from the Combination Product , the Net Sales Value of such Licensed
Product shall be deemed to be that proportion of the Net Sales Value of
the Combination Product which is attributable to the Licensed Product,
comparing the manufacturing cost of the Licensed Product with that of
the Combination Product, as in the following formula: Net Sales Value
of Licensed Product = (manufacturing cost of Licensed Product divided
by total manufacturing cost of Combination Product) x Net Sales Value
of Combination Product.]
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4.5 Minimum royalties. If the royalties payable under Clause 4.3 are less
than $3,000 (USD) ("Minimum Royalty") in any calendar year after year
three of this agreement, Bioenvision shall pay to Royal Free the amount
by which the said royalties are less than the Minimum Royalty within 60
days of the end of such calendar year, failing which Royal Free shall
be entitled to terminate this Agreement and all licenses granted under
this Agreement by notice in writing to the Bioenvision given at any
time after the expiry of the said 60 day period. If this Agreement ends
on any day other than the end of a calendar year (ie December 31st),
the Minimum Royalty due for that year shall be reduced, pro-rata, ie
the minimum amount due shall be the Minimum Royalty for a complete year
multiplied by the number of days of the final calendar year during
which this Agreement was in force, and divided by 365 days.
4.6 Third party royalties. If, during the continuation of this Agreement,
Bioenvision considers it necessary to obtain a license from any third
party ("Third Party License") in order to avoid infringing such third
party's patent(s) in the course of manufacture or sale of Licensed
Products, the royalties payable under this Agreement shall be reduced
by the amount of royalties paid under the Third Party License provided
that the amount of royalty payable by Bioenvislon to Royal Free in any
quarterly period shall not be reduced by more than 50% of the amount
which would have been payable in the absence of this clause 4.6.
4.7 Payment dates.
4.7.1 Royalties due under this Agreement shall be paid within 60
days of the end of each quarter ending on 31 March, 30 June,
30 September and 31 December, in respect of sales of Licensed
Products made during such quarter and within 60 days of the
termination of this Agreement;
4.7.2 If this Agreement is for any reason terminated before all the
earned royalties herein provided for have been paid,
Bioenvision shall immediately pay to Royal Free ally remaining
unpaid balance of carried royalties even though the due date
provided in Clause 4.2 has not been reached.
4.8 Payment terms. All sums due under this Agreement:
4.8.1 are exclusive of Value Added Tax which where applicable will
be paid by Bioenvision to Royal Free in addition;
4.8.2 shall be paid in pound sterling by irrevocable, confirmed
letter of credit drawn on a London bank, and in the case of
sales or sub-license income received by Bioenvision in a
currency other than pounds sterling, the royalty shall be
calculated in the other currency and then converted into
equivalent pounds sterling at the buying rate of such other
currency as quoted by Barclays Bank plc in London as at the
close of business on the last business day of the quarterly
period with respect to which the payment is made;
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4.8.3 shall be made without deduction of income tax or other taxes
charges or duties that may be imposed, except insofar as
Bioenvision is required to deduct the same to comply with
applicable laws. The Parties shall cooperate and take all
steps reasonably and lawfully available to them, at the
expense of Royal Free, to avoid deducting such taxes and to
obtain double taxation relief. If Bioenvision is required to
make any such deduction it shall provide Royal Free with
such certificates or other documents as it can reasonably
obtain to enable Royal Free to obtain appropriate relief
from double taxation of the payment in question; and
4.8.4 shall be made by the due date, failing which Royal Free may
charge interest on any outstanding amount on a daily basis at
a rate equivalent to 3% above the Bank of England base lending
rate then in force.
4.9 Exchange controls, etc. If at any time during the continuation of this
Agreement Bioenvision is prohibited from making any of the payments
required hereunder by a governmental authority in any country then
Bioenvision will within the prescribed period for making the said
payments in the appropriate manner use its best endeavors to secure
from the proper authority in the relevant country permission to make
the said payments and will make them within 7 days of receiving such
permission. If such permission is not received within 30 (thirty) days
of Bioenvision making a request for such permission then, at the option
of Royal Free, Bioenvision shall deposit the royalty payments due in
the currency of the relevant country either in a bank account
designated by Royal Free within such country or such royalty payments
shall be made to an associated company of Royal Free designated by
Royal Free and having offices in the relevant country designated by
Royal Free.
4.10 Royalty statements. Bioenvision shall send to Royal Free at the same
time as each royalty payment is made in accordance with clause 4.3 a
statement setting out, in respect of each territory or region in which
Licensed Products are sold, the types of Licensed Product sold, the
quantity of each type sold, and the total Net Sales Value in respect of
each type, expressed both in local currency and pounds sterling and
showing the conversion rates used, during the period to which the
royalty payment relates.
4.11 Records.
4.11.1 Bioenvision shall keep at its normal place of business
detailed and up to date records and acCOL111tS showing the
quantity, description and value of Licensed Products sold by
it, and the amount of sub-licensing revenues received by it in
respect of Licensed Products, on a country by country basis,
and being sufficient to ascertain the royalties due under this
Agreement.
4.11.2 Bioenvison shall make such records and accounts available, on
reasonable notice, for inspection during business hours by an
independent chartered accountant nominated by Royal Free for
the purpose of verifying the accuracy of any statement or
report given by Bioenvision to Royal Free under this Clause 4.
The accountant shall be required to keep confidential all
information learnt during any
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such inspection, and to disclose
to Royal Free only such details as may be necessary to report
on the accuracy of Bioenvision's statement or report. Royal
Free shall be responsible for the accountant's charges unless
the accountant certifies that there is an inaccuracy of more
than 5 per cent in any royalty statement, in which case
Bioenvision shall pay his charges in respect of that
inspection.
4.11.3 Bioenvision shall ensure that Royal Free has the same rights
as those set out in this Clause 4.12 in respect of any
sub-licensee of Bioenvision which is sub-licensed under the
Patents or Know-how pursuant to this Agreement.
5 COMMERCIALIZATION
5.1 Bioenvision shall diligently proceed to develop and commercially
exploit Licensed Products to the maximum extent worldwide.
5.2 Without prejudice to the generality of Bioenvision's obligations under
Clause 5.1, Bioenvision shall provide at least annually to Royal Free
an updated, written Development Plan, showing all past, current and
projected activities taken or to be taken by Bioenvision to bring
Licensed Products to market and maximize the sale of Licensed Products
worldwide. Royal Free's receipt or approval of any such plan shall not
be taken to waive or qualify Bioenvision's obligations under Clause 5,
1.
5.3 If Royal Free considers at any time during the period of this Agreement
that Bioenvision has without legitimate reason failed to proceed
diligently to develop and commercially exploit Licensed Products, Royal
Free shall be entitled to refer to an independent expert the following
questions:
5.3.1 whether Bioenvision has acted diligently; and if not
5.3.2 what specific action Bioenvision should have taken ("Specific
Action") in order to have acted diligently.
5.4 The independent expert shall be appointed in accordance with the
provisions of Schedule 2 and his decision shall be final and binding
on the Parties.
5.5 If the expert determines that Bioenvision has failed to comply with its
obligations under this Clause 5, and if Bioenvision fails to take the
Specific Action within 6 months of the expert giving his decision in
accordance with Schedule 2, Royal Free shall be entitled, by giving, at
any time within 3 months after the end of that 6 month period, not less
than 3 months notice to terminate this Agreement and the licenses
granted to Bioenvision under Clause 2.
6 INTELLECTUAL PROPERTY
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6.1 Obtain and maintain the Patents.
6.1.1 Bioenvision shall at its own cost and expense:
6.1.1.1 co-operate with Royal Free and its partners outside the Field
(if any) and endeavor to obtain valid Patents in the Field so
as to secure the broadest monopoly reasonably available; and
6.1.1.2 pay all renewal fees in respect of the Patents as and when
due;
provided that if Bioenvision wishes to abandon any such
application or not to maintain any such Patent (or to cease
funding such application or Patent) it shall give 3 months
prior written notice to Royal Free and oil the expiry of
such notice period Bioenvision shall cease to be licensed
under the patent application or patent identified in the
notice.
6.1.2 Without prejudice to the provisions of Clause 6.2.(a), the
Parties agree that all Project IPR shall be jointly owned by
the Parties as beneficial owners in common, subject to the
provisions of this Agreement.
6.2 Infringement of the Patents.
6.2.1 Each Party shall inform the other Party promptly if it becomes
aware of any infringement or potential infringement of any of
the Patents in the Field, and the Parties shall consult with
each other to decide the best way to respond to such
infringement.
6.2.2 If the Parties fail to agree on a joint programme of action,
including how the costs of any such action are to be borne and
how any damages or other sums received from such action arc to
be distributed, then Bioenvision shall be entitled to take
action against the third party at its sole expense and it
shall be entitled to all damages or other sums received from
such action, after reimbursing Royal Free for any reasonable
expenses incurred in assisting it in such action. Royal Free
shall agree to be joined in any suit to enforce such rights
subject to being indemnified and secured in a reasonable
manner as to any costs, damages, expenses or other liability
and shall have the right to be separately represented by its
own counsel at its own expense. If the alleged infringement is
both within and outside the Field, the Parties shall also
co-operate with Royal Free's other partners (if any) in
relation to any such action.
6.3 Infringement of third party rights.
6.3.1 If any warning letter or other notice of infringement is
received by a Party, or legal suit or other action is brought
against a Party, alleging infringement of third party rights
in the manufacture, use or sale of any Licensed Product or use
of any
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Patents, that Party shall promptly provide full details to
the other Party, and the Parties shall discuss the best way
to respond.
6.3.2 Bioenvision shall have the right but not the obligation to
defend such Suit and shall have the right to settle with such
third party, provided that if any action or proposed
settlement involves the making of any statement, express or
implied, concerning the validity of any Patent, the consent of
Royal Free must be obtained before taking such action or
making, such Settlement.
6.3.3 Royal Free shall have the right to participate and be
represented in any such claims by a third party by its own
legal representation, the cost to be borne by Royal Free.
6.3.4 In the event, by way of counterclaim or otherwise, either
Party or both Parties recover any, damages or other sums in
any action, Suit, or proceedings Involving a claim by a third
party, or in settlement thereof, Such recovery shall be
applied and shared as mutually agreed.
6.4 Revocation proceedings.
6.4.1 In the event either Party becomes aware of the institution by
a third party of any proceedings for the revocation of any
Patent, patents [or Improvements) in any Country in the
Territory licensed hereunder to Bioenvision, such Party shall
notify the other Party promptly. Bioenvision shall defend any
Such proceedings at its own expense, in its own name.
6.4.2 Royal Free shall have the right to participate in such
revocation proceedings at Bioenvision's expense, and will lend
its name to such proceedings if requested by Bioenvision or
required by law. Sub-licensees of Bioenvision shall also have
the right to participate in such revocation proceedings.
6.4.3 Settlement of any revocation proceedings shall be subject to
the approval of Royal Free; such approval shall not be
unreasonably withheld
7 WARRANTIES AND LIABILITY
7.1 Warranties by Royal Free. Royal Free warrants, represents and
undertakes as follows:
7.1.1 subject to Clause 7.3, it is the absolute and unencumbered
owner of the Patents and has caused its directors and
employees to execute such assignments of the Patents as may be
necessary to give title to the Patents to Royal Free; and
7.1.2 it has not done, and will not do nor agree to do during the
continuation of this Agreement, any of the following things if
to do so would be inconsistent with the exercise by
Bioenvision of the rights granted to it under this Agreement,
namely:
7.1.2.1 grant or agree to grant any rights in the Patents or any
improvements thereto; or
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7.1.2.2 assign, mortgage, charge or otherwise transfer any of the
Patents or (subject to clause 9.3 below) any of its rights or
obligations under this Agreement.
7.2 No other warranties.
7.2.1 Each of Bioenvision and Royal Free acknowledges that, in
entering into tills Agreement, it does not do so in reliance
oil any representation, warranty or other provision except as
expressly provided in this Agreement, and any conditions,
warranties or other terms implied by statute or common law are
excluded from this Agreement to the fullest extent permitted
by law.
7.2.2 Without limiting the scope of Clause 7.2.(a), Royal Free does
not give any warranty, representation or undertaking:-
7.2.2.1 as to the efficacy or usefulness of the Patents or Know-how;or
7.2.2.2 that any of the Patents is or will be valid or
subsisting or (in the case of an application) will proceed
to grant; or
7.2.2.3 that the use of any of the Patents or Know-how, the
manufacture, sale or use of the Licensed Products or the
exercise of any of the rights granted under this Agreement
will not infringe any other intellectual property or other
rights of any other person; or
7.2.2.4 as imposing any obligation on Royal Free to bring or prosecute
actions or proceedings against third parties for infringement
or to defend any action or proceedings for revocation of any
of the Patents; or
7.2.2.5 as imposing any liability on Royal Free in the event that any
third party supplies Licensed Products to customers located in
the Territory.
7.3 Indemnity.
7.3.1 Bioenvision shall indemnify and hold harmless Royal Free,
Royal Free and their respective officers, employees,
consultants, agents and representatives (the "Indemnitees")
against all third party Claims which may be asserted against
or suffered by any of the Indemnitees and which relate to:-
(a) the use of any Delivered Items, or
(b) the manufacture, distribution, sale, supply or use of
any Licensed Products or any other products or
services which incorporate any Delivered Items,
by or on behalf of Bioenvision, its Affiliates or
sub-licensees, or subsequently by any third party, including
without limitation claims based on product liability laws.
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7.4 For the purpose of this clause 7.3, "Claims" shall mean all demands,
claims and liability (whether criminal or civil, in contract, tort or
otherwise) for losses, damages, legal costs and other expenses of any
nature whatsoever and a costs and expenses incurred in connection
therewith.
7.5 Liability. Notwithstanding any other provision of this Agreement, no
Party shall be liable to any other Party to this Agreement in contract,
tort, negligence, breach of statutory duty or otherwise for any loss,
damage, costs or expenses of any nature whatsoever incurred or suffered
by that other party or its Affiliates of ail indirect or consequential
nature including without limitation any economic loss or other loss of
turnover, profits, business or goodwill.
8 DURATION AND TERMINATION
8.1 Commencement and Termination by Expiry. This Agreement, Mid die
licenses granted hereunder, shall come into effect on the Commencement
Date and unless terminated earlier in accordance with this Clause 8,
shall continue in force on a country by country basis until the later
of:
8.1.1 the date on which all the Patents have expired or
been revoked without a right of further appeal, and
8.1.2 the tenth anniversary of the Commencement Date;
and on such date this Agreement and the licenses granted
hereunder shall terminate automatically by expiry.
8.2 Early termination.
8.2.1 Bioenvision may terminate this Agreement at anytime on 90 days
notice in writing to Royal Free.
8.2.2 Without prejudice to any other fight or remedy, either Party
may terminate this Agreement at any time by notice in writing
to the other Party ("Other Party"), such notice to take effect
as specified in the notice:-
8.2.2.1 if the Other Party is in breach of this Agreement and, in the
case of a breach capable of remedy within 90 days, the breach
is not remedied within 90 days of the Other Party receiving
notice specifying the breach and requiring its remedy; or
8.2.2.2 if the Other Party becomes insolvent, or if an order is made
or a resolution is passed for the winding up of the Other
Party (other than voluntarily for the purpose of solvent
amalgamation or reconstruction), or if an administrator,
administrative receiver or receiver is appointed in respect of
the whole or any part of the Other Party's assets or business,
or if the Other Party makes any
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composition with its creditors or takes or suffers any
similar or analogous action in consequence of debt.
8.2.3 Royal Free may forthwith terminate this Agreement by giving
written notice to Bioenvision if Bioenvision or its Affiliate
or sub-licensee commences legal proceedings, or assists any
third party to commence legal proceedings, to challenge the
validity or ownership of any of the Patents.
8.3 Consequences of termination.
8.3.1 Upon termination of this Agreement by expiry under clause 8.1
above, Bioenvision shall have the non-exclusive right to use
the Know-how without charge or other obligation to Royal Free.
8.3.2 Upon termination of this Agreement for any reason otherwise
than in accordance with Clause 8.1:
8.3.2.1 Bioenvision and its sub-licensees shall be entitled to sell,
use or otherwise dispose of (subject to payment of royalties
under clause 4) any unsold or unused stocks of the Licensed
Products for a period of 6 months following the date of
termination;
8.3.2.2 subject to paragraph (a) above, Bioenvision shall no longer be
licensed to use or otherwise exploit any way either directly
or indirectly the Patents in so far and for as long as any of
the Patents remains in force or the Know-how;
8.3.2.3 subject to paragraph (a) above, Bioenvision shall consent to
the cancellation of any formal license granted to it, or of
any registration of it in any register, in relation to any of
the Patents;
8.3.2.4 the provisions of certain clauses shall continue in force,
to be defined; and
8.3.2.5 subject as provided in this Clause 8.3.(b) and 8.3.(c) and
8.3.(d), and except in respect of any accrued rights, neither
party shall be under any further obligation to the other.
8.3.3 Upon termination of this Agreement for any reason otherwise
than in accordance with Clause 8.1, and at Royal Free'
request, the Parties shall negotiate in good faith the terms
of an agreement between them on reasonable commercial terms
under which Bioenvision would:
8.3.3.1 transfer to Royal Free exclusively all clinical and
other data relating to the development of Licensed Products;
8.3.3.2 to the extent possible, seek to have any product licenses,
pricing approvals and other permits and applications
transferred into the name of Royal Free or its nominee;
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8.3.3.3 grant Royal Free an exclusive, worldwide license, with the
rights to grant sub-licenses, under any improvements and other
intellectual property owned or controlled by Bioenvision
relating to the Licensed Products; and
8.3.3.4 grant Royal Free or its nominee the right to continue to use
any product name that had been applied to the Licensed
Products prior to termination of this Agreement.
8.3.4 If the Parties are unable to agree the terms of an agreement
as described in Clause 8.3.(c) within 90 days of Royal Free
requesting the negotiation of such an agreement, either Party
may refer the terms for settlement by an independent expert
who shall be appointed in accordance with the provisions of
Schedule 2 and whose decision shall be final and binding on
the Parties. The Parties shall promptly execute an agreement
on the terms agreed between them or settled by the expert.
9 GENERAL
9.1 Force majeure. Neither Party shall have any liability or be deemed to
be in breach of this Agreement for any delays or failures in
performance of this Agreement which result from circumstances beyond
the reasonable control of that Party, including without limitation
labor disputes involving that Party. The Party affected by such
circumstances shall promptly notify the other Party in writing when
such circumstances cause a delay or failure in performance and when
they cease to do so.
9.2 Amendment. This Agreement may only be amended in writing signed by duly
authorized representatives of Royal Free and Bioenvision.
9.3 Agreement and third party rights.
9.3.1 Subject to Clause 9.3.(b) below, neither Party shall assign,
mortgage charge or otherwise transfer any rights or
obligations under this Agreement, nor any of the Patents or
rights under the Patents, without the prior written consent of
the other Party
9.3.2 Either Party may assign all its rights and obligations under
this Agreement together with its rights in the Patents to any
company to which it transfers all for all [or party] of its
assets or business, PROVIDED that the assignee undertakes to
the other Party to be bound by and perform the obligations of
the assignor under this Agreement. However a Party shall not
have such a right to assign this Agreement if it is insolvent
or any other circumstance described in Clause 8.2.(b) applies
to it.
9.4 Waiver. No failure or delay on the part of either Party to exercise any
right or remedy under this Agreement shall be construed or operate as a
waiver thereof, nor shall any single or partial exercise of any right
or remedy preclude the further exercise of such right or remedy.
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9.5 Invalid clauses. If any provision or part of this Agreement is held to
be invalid, amendments to this Agreement may be made by the addition or
deletion of wording as appropriate to remove the invalid part or
provision but other wise retain the provision and the other provisions
of this Agreement to the maximum extent permissible under applicable
law.
9.6 No Agency. Neither Party shall act or describe itself as the agent of
the other, nor shall it make or represent that it has authority to make
any commitments on the other's behalf.
9.7 Interpretation. In this Agreement:
9.7.1 the headings are used for convenience only and shall not
affect its interpretation;
9.7.2 references to persons shall include incorporated and
unincorporated persons; references to the singular include the
plural and vice versa; and references to the masculine include
the feminine;
9.7.3 references to Clauses and Schedules mean clauses of, and
schedules to, this Agreement;
and
9.7.4 references to the grant of "exclusive" rights shall mean that
the person granting the fights shall neither grant the same
rights (in the same Field and Territory) to any other person,
nor exercise those rights directly to the extent that and for
as long as the Licensed Products are within Valid Claims of
unexpired Patents.
9.8 Notices.
9.8.1 Any notice to be given under this Agreement shall be in
writing and shall be sent by first class mail or air mail, or
by fax confirmed by first class mail or air mail) to the
address of the relevant Party set out Lit the head of this
Agreement, or to the relevant fax number set out below, or
such other address or fax number as that Party may from time
to time notify to the other Party in accordance with this
Clause 9.8. The fax numbers of the Parties are as follows:
Royal Free 44 171 794 3505; Bioenvision: 44 171 839 7510.
9.8.2 Notices sent as above shall be deemed to have been received
three working days after the day of posting (in the case of
inland first class mail), or seven working days after the date
of posting (in the case of air mail), or on the next working
day after transmission (in the case of fax message, but only
if a transmission report is generated by the sender's fax
machine recording a message from the recipient's fax machine,
confirming that the fax was sent to the number indicated above
and confirming that all pages were successfully transmitted).
9.9 Law and Jurisdiction. The validity, construction and performance
of this Agreement shall be governed by English law and shall be
subject to the exclusive jurisdiction of the
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English
courts to which the parties hereby submit, except that a Party may seek
an interim injunction in any court of competent jurisdiction.
9.10 Further action. Each Party agrees to execute, acknowledge and deliver
such further instruments, and do all further similar acts, as may be
necessary or appropriate to carry out the purposes and intent of this
Agreement.
9.11 Announcements. Neither Party shall make any press or other public
announcement concerning any aspect of this Agreement, or make any use
of the name of the other Party in connection with or in consequence of
this Agreement, without the prior written consent of the other Party.
9.12 Entire agreement. This Agreement, including its Schedules, sets out the
entire agreement between the Parties relating to its subject matter and
supersedes all prior oral or written agreements, arrangements or
understandings between them relating to such subject matter. The
Parties acknowledge that they are not relying on any representation,
agreement, term or condition which is not set out in this Agreement.
AGREED by the parties through their authorised signatories:-
For and on behalf of For and on behalf of
UNIVERSITY COLLEGE LONDON BIOENVISION, INC.
/s/ C.A. TARHAN /s/ C.B. WOOD
- ------------------------- -------------------------
signed signed
C.A. Tarhan C.B. Wood
- ------------------------- -------------------------
print name print name
Finance Director &
Head of Administration CEO
- ------------------------- -------------------------
Title Title
1/3/99 24/2/99
- ------------------------- -------------------------
date date
18
<PAGE>
Schedule 1
The Patent
1) Patent number (published as) - WO 98/4933
(international application number)
- PCT/GB98/01198
Priority date 25 April 27
Territories designated Japan, USA, Europe (all territories)
2) Patent number 07/500,375
Derived from PCT/GB 94/01114
Priority date 20 May 1993
Territory designated Japan
19
<PAGE>
Schedule 2
Appointment of expert
1. Pursuant to Clause 5.3, Royal Free may serve notice on Bioenvision
("Referral Notice") that it wishes to refer to an expert (the "Expert") the
questions set out in that Clause.
2. The parties shall agree the identity of a single independent, impartial
expert to determine such questions. In the absence of such agreement within 30
days of the Referral Notice, the questions shall be referred to an expert
appointed by the President of Law Society of England and Wales.
3. 60 days after the giving of a Referral Notice, both parties shall
exchange simultaneously statements of case in no more than 10,000 words, in
total, and each side shall simultaneously send a copy of its statement of case
to the Expert.
4. Each party may, within 30 days of the date of exchange of statement of
case pursuant to paragraph 3 above, serve a reply to the other side's statement
of case of not more than 10,000 words. A copy of any such reply shall be
simultaneously sent to the Expert.
5. The expert shall make his decision on the said questions on the basis
of written statements and supporting documentation only and there shall be no
oral hearing. The Expert shall issue his decision in writing within 30 days of
the date of service of the last reply pursuant to paragraph 4 above or, in the
absence of receipt of any replies, within 60 days of the date of exchange
pursuant to paragraph 3 above.
6. The Expert's decision shall be final and binding on the parties.
7. The Expert's charges shall be borne equally by the parties.
20
<PAGE>
Schedule 3
Summary of Development programme
DESCRIPTION OF PROJECT
DRAFT TIMETABLE
21
<PAGE>
GENE TRANSFER FOR THE TREATMENT OF LIVER DYSFUNCTION
RATIONALE. Methods of treating specific genetic diseases by gene therapy have
been proposed Genetic diseases which have been the subject of preliminary
clinical trials include cystic fibrosis (CF) and adenosine dearninase (ADA)
deficiency This programme is not concerned with a genetic condition but gene
transfer to treat patients with liver damage and who have undergone partial
hepatectomy or who have extensive liver damage from other causes. This is based
on the finding that a single intramuscular injection of cDNA in a suitable
vector, can be use to introduce proteins such as blood clotting factors, growth
factors and serum albumen which are normally produced by the healthy liver.
These can be expressed systemically until the liver recovers or throughout life.
The common clinical problems due to chronic hepatic insufficiency following
liver disease, damage and resection result in hypoalbuminaemia and deficiency of
certain factors such as growth and blood clotting factors. Factor VIII is
produced by the normal liver and inadequate supplies result haemophilia A which
is a life threatening condition. Sufferers from haemophilia are unable to clot
blood properly at the site of wounds. In addition to the dangers this poses for
the treatment of open cuts, the inability to clot blood properly causes damage
to joints and to internal tissues, e.g. muscle Liver also produces growth
factors such as insulin like growth factor- I (IGF-1) which is required for the
repair and protection of tissues including the heart. It is also required for
the repair of the damaged liver. Hence its introduction will enhance the
ability of the liver to recover.
Treatment of hypoalbuminaemia can in theory be achieved by infusing serum
albumen but this has to be of high purity and it has a short half life.
Treatment of haemophilia A is possible by the administration of Factor VIII.
Until recently, albumen and factors such as Factor VIII had to be prepared by
concentration of blood donations which is problematic in that the preparations
could be contaminated with infectious agents such as Hepatitis B virus,
Hepatitis C virus HIV and prions; which cause spongiforin encephalopathies. The
gene for albumen and Factor VIII has been cloned and this has allowed the
production of recombinant Factor VIII that are of higher purity than blood
concentrates. However the administration of exogenous Factor VIII peptide to a
patient is very expensive and repeated doses are required every few days.
It has been reported that plasmid DNA injected into the muscle of rodents and
other mammals is taken up by the cells of such animals but the injected DNA does
not integrate into t he cells. The direct transfer of DNA into muscle cells in
this manner has been proposed as a means of somatic gene transfer (Wells and
Goldspink, FEBS Letters 1992, 306; 203-205). In order to develop this for use in
supplementing liver function a number of practical difficulties still remain.
Encouraging results have been obtained for expressing albumen as well as
clotting factors systemically by injecting their cDNA in a plasmid vector under
the control of our myosin regulatory elements. We have, somewhat surprisingly,
found that this enables the functional protein to be exported from the muscle
cell, thus permitting delivery of the protein, via the bloodstream, to a desired
site of action. Furthermore, we have fOL111d that the use of a muscle specific
promoter provides a steady constitutive level of expression which allows an
effective amount of protein to be produced.
22
<PAGE>
THE PROPOSED WORK INVOLVES
1) Making different plasmid constructs which include the appropriate
muscle specific gene regulatory elements in order to obtain appropriate levels
of systemic expression. This includes multimerization of promoter and enhancer
elements to increase expression levels where required.
2) Constructing and testing other types of vectors including the adeno
associate vectors (AAVs) into which our regulatory elements as well as the
appropriate cDNAs will be included.
3) Expression of albumen, clotting factors VII, VIII and XI and IGF will
be assessed in skeletal muscle, blood, liver and germ cells for the different
types of constructs in nude and normal mice that have been subjected to partial
hepatectomy
4) The determination of the duration of expression of the different
vectors over a period of time up to one year and to assess any immune reaction
to the vectors as well as the engineered gene product in normal as well as nude
(immune incompetent) mice.
The duration of the about investigations is expected to be three years after it
should be appropriate to carry out clinical trials using the constructs deemed
most suitable for the treatment of liver dysfunction.
BUDGET
<TABLE>
<CAPTION>
YEAR 1 YEAR 2 YEAR 3 TOTAL:
<S> <C> <C> <C> <C>
Postdoctoral Molecular Biologist 29,824 30,928 32,078 93,830.00
Level 2.
University Technician, Grade C 17,855 17,855 17,855 53,565.00
Materials & Consumables: 8,900 8,767 8,383 26,050.00
Animals & Food 2,000 2,900 2,000 6,900.00
200 male nude mice (MF-1)@ ---------
(pound)26.50/mouse.
Maintenance for 10 weeks
average @ 80p/week/mouse
180,345.00
Overheads @ 50% 90,172.50
----------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCAIL STATEMENTS FOR THE YEARS ENDED JUNE 30, 1998
AND 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> JUN-30-1998 JUN-30-1999
<PERIOD-START> JUL-01-1997 JUL-01-1998
<PERIOD-END> JUN-30-1998<F1> JUN-30-1999
<CASH> 552 16
<SECURITIES> 0 0
<RECEIVABLES> 966 966
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,518 982
<PP&E> 107,666 107,666<F2>
<DEPRECIATION> (26,941) (47,120)
<TOTAL-ASSETS> 82,243 84,611
<CURRENT-LIABILITIES> 1,109,839 1,863,040
<BONDS> 0 0
0 0
0 0
<COMMON> 18,038<F3> 27,284
<OTHER-SE> (1,045,634) (1,805,713)
<TOTAL-LIABILITY-AND-EQUITY> 82,243 84,611
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 1,105,779 777,179
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 21,489 3,492
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,197,466) (780,671)
<EPS-BASIC> (0.22) (0.11)
<EPS-DILUTED> (0.22) (0.11)
<FN>
<F1>Reflects restated financial information for the Company and its subsidiaries on a consolidated
basis and the pooling of interests arising from a reorganization as of January 5, 1999.
<F2>Intangibles excluded for fiscal year ended June 30, 1999.
<F3>Minority interests not shown for fiscal year ended June 30, 1998.
</FN>
</TABLE>
