<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 0-22891
CORIXA CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 91-1654387
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1124 COLUMBIA STREET, SUITE 200
SEATTLE, WA 98104
(206) 754-5711
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's
Principal Executive Offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
As of May 1, 1998, there were 11,783,304 shares of the registrant's Common Stock
outstanding.
<PAGE> 2
Corixa Corporation
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Balance Sheets as of March 31, 1998 (unaudited) and December 31. 1997................1
Statements of Operations (unaudited) for the three months ended
March 31, 1998 and 1997 and period from September 8, 1994 (Date
of Inception) to March 31, 1998......................................................2
Statements of Cash Flows (unaudited) for the three months ended
March 31, 1998 and 1997 for the period from September 8, 1994
(Date of Inception) through March 31, 1998...........................................3
Notes to the Financial Statements....................................................4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.....................................................6
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
ITEM 2. CHANGES IN SECURITIES.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
ITEM 5. OTHER INFORMATION.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
SIGNATURES
</TABLE>
<PAGE> 3
CORIXA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
MARCH 31, DECEMBER 31,
------------ ------------
1998 1997
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................................... $ 8,281,670 $ 16,457,641
Securities available-for-sale ........................................... 49,461,555 39,859,649
Accounts receivable (including $171,026 and $61,706 receivable
from an affiliated company at March 31, 1998
and December 31, 1997, respectively) ................................. 570,952 601,940
Interest receivable ..................................................... 673,116 134,035
Prepaid expenses ........................................................ 601,182 506,578
------------ ------------
Total current assets ...................................................... 59,588,475 57,559,843
Property and equipment, net ............................................... 4,089,203 4,046,484
Deferred charges and deposits ............................................. 182,633 200,632
------------ ------------
Total assets .............................................................. 63,860,311 $ 61,806,959
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities ................................ $ 1,997,101 $ 1,571,023
Deferred revenue ........................................................ 909,165 1,096,665
Current portion of obligations and commitments .......................... 1,114,997 930,429
------------ ------------
Total current liabilities ................................................. 4,021,263 3,598,117
Long-term obligations and commitments, less current portion ............... 10,808,250 6,923,786
Stockholders' equity:
Common stock, $0.001 par value:
Authorized shares -- 40,000,000
Issued and outstanding shares -- 11,783,304 in 1998
and 11,774,214 in 1997 .............................................. 11,783 11,774
Additional paid-in capital .............................................. 66,523,351 66,466,994
Receivable for warrants ................................................. (570,119) (651,565)
Deferred compensation ................................................... (2,092,507) (2,574,949)
Accumulated comprehensive loss .......................................... (42,844) (5,355)
Deficit accumulated during development stage ............................ (14,798,866) (11,961,843)
------------ ------------
Total stockholders' equity ................................................ 49,030,798 51,285,056
------------ ------------
Total liabilities and stockholders' equity ................................ $ 63,860,311 $ 61,806,959
============ ============
</TABLE>
<PAGE> 4
CORIXA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
THREE MONTHS ENDED MARCH 31, SEPTEMBER 8, 1994
--------------------------------- (DATE OF INCEPTION)
1998 1997 TO MARCH 31, 1998
------------ ------------ -----------------
<S> <C> <C> <C>
Revenue:
Collaborative agreements $ 2,625,897 $ 3,854,985 $ 22,828,244
Government grants 170,583 315,432 2,854,330
------------ ------------ ------------
Total revenue 2,796,480 4,170,417 25,682,574
Operating expenses:
Research and development (5,892,749) (3,260,000) (39,764,328)
General and administrative (546,929) (329,748) (4,098,189)
In-process research and development -- -- (428,059)
------------ ------------ ------------
Total operating expenses (6,439,678) (3,589,748) (44,290,576)
------------ ------------ ------------
Loss from operations (3,643,198) 580,669 (18,608,002)
Interest income 828,495 161,602 3,625,732
Interest expense (146,820) (71,837) (721,271)
Other income 124,500 92,830 904,675
------------ ------------ ------------
Net loss $ (2,837,023) $ 763,264 $(14,798,866)
============ ============ ============
Basic and diluted net loss
per share $ (0.24) $ 0.29
============ ============
Shares used in computation
of basic and diluted net loss
per share 11,775,380 2,594,189
============ ============
Pro forma basic and diluted
net loss per share $ (0.24) $ 0.10
============ ============
Shares used in computation
of pro forma basic and diluted
net loss per share 11,775,380 7,745,385
============ ============
</TABLE>
<PAGE> 5
CORIXA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 8, 1994
THREE MONTHS ENDED MARCH 31, (DATE OF INCEPTION)
1998 1997 TO MARCH 31, 1998
------------- ------------- -----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $ (2,837,023) $ 763,264 $ (14,798,866)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization of deferred compensation 482,442 88,703 1,811,288
Depreciation and amortization 343,366 205,163 2,302,043
Equity instruments issued in exchange for technology
and services 55,858 -- 232,142
In-process research and development -- -- 428,059
Changes in certain assets and liabilities:
Accounts payable and accrued expenses 426,078 (292,050) 1,773,298
Prepaid expenses (94,604) (197,516) (599,617)
Deferred revenue (187,500) 17,805 909,165
Other assets 17,999 (120,569) (93,115)
Interest receivable (539,081) -- (667,965)
Accounts receivable 30,988 309,747 (576,103)
------------- ------------- -------------
Net cash provided by (used in) operating activities (2,301,477) 774,547 (9,279,671)
INVESTING ACTIVITIES
Purchases of securities available-for-sale (38,514,821) (1,646,263) (102,741,973)
Proceeds from maturities of securities available-for-sale 19,323,264 1,500,000 43,685,414
Proceeds from sale of securities 9,552,162 -- 9,552,162
Purchases of property and equipment (77,926) (501,654) (1,807,945)
Cash acquired in acquisitions -- -- 29,939
------------- ------------- -------------
Net cash used in investing activities (9,717,321) (647,917) (51,282,403)
FINANCING ACTIVITIES
Net proceeds from issuance of stock 508 1,360 61,049,152
Advances and borrowings from collaborative agreements 2,000,000 3,000,000 5,000,000
Proceeds from long term debt 2,000,000 -- 4,000,000
Principal payments on capital leases (239,127) (162,979) (1,636,119)
Payments on receivables for warrants 81,446 79,012 569,881
Other -- -- (139,170)
------------- ------------- -------------
Net cash provided by financing activities 3,842,827 2,917,393 68,843,744
Net increase (decrease) in cash and cash equivalents (8,175,971) 3,044,023 8,281,670
Cash and cash equivalents at beginning of period 16,457,641 2,088,226
------------- ------------- -------------
Cash and cash equivalents at end of period $ 8,281,670 $ 5,132,249 $ 8,281,670
============= ============= =============
SUPPLEMENTAL DISCLOSURES
Interest paid 106,215 71,837 $ 680,666
SUPPLEMENTAL SCHEDULE OF NONCASH OPERATING,
INVESTING, AND FINANCING ACTIVITIES
Assets acquired pursuant to capital leases $ 308,159 $ 815,737 $ 4,615,451
Equity instruments issued in exchange for technology
and services 55,858 -- $ 232,142
</TABLE>
<PAGE> 6
CORIXA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Corixa Corporation (the Company), a development stage company, is focused on
the discovery and early clinical development of vaccine products that induce
specific and potent pathogen- or tumor-reactive T lymphocyte (T cell)
responses for the treatment and prevention of cancers and certain infectious
diseases.
The accompanying unaudited financial statements of Corixa Corporation have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions for Form 10-Q.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, the information reflects all
adjustments and estimates necessary for a fair presentation of the results of
operations for the interim period presented. Interim results are not
necessarily indicative of results for a full year. The accompanying financial
statements and related footnotes should be read in conjunction with the
audited financial statements and footnotes thereto for the year ended December
31, 1997, included in the Company's Form 10-K filed with the Securities and
Exchange Commission.
NET INCOME PER SHARE CALCULATION
The Company adopted Statement of Financial Accounting Standards ("Statement")
No. 128, "Earnings per Share," in the quarter ended December 31, 1997. All pro
forma losses per share amounts for all periods have been presented to conform
to the Statement 128 requirements. Basic earnings per share is based on the
weighted average number of common shares outstanding for the period, and
excludes any dilutive effects of options, warrants and convertible securities.
Diluted earnings per share assumes the conversion of all dilutive securities,
such as options, warrants and convertible preferred stock. All outstanding
Corixa preferred stock was converted to common stock at the closing of the
Company's fourth quarter 1997 initial public offering. Accordingly, pro forma
basic and diluted loss per share for 1997 is computed on the basis of the
average number of common shares outstanding plus the effect of preferred
shares using the "if-converted" method.
<PAGE> 7
<TABLE>
<CAPTION>
March 31, March 31,
1998 1997
---------- ---------
<S> <C> <C>
Net income (loss) $(2,837,023) $762,968
Weighted average outstanding:
Common stock 11,775,380 2,594,189
Convertible preferred stock 0 5,151,196
---------- ---------
Total weighted average outstanding 11,775,380 7,745,385
Loss per share:
Basic and diluted (0.24) 0.29
Proforma basic and diluted (0.24) 0.10
</TABLE>
COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Financial Accounting Standards
Board Statement No. 130, "Reporting Comprehensive Income." Statement No. 130
establishes new rules for the reporting and display of comprehensive income
and its components; however, the adoption of this Statement had no impact on
the Company's net income or shareholders' equity. Statement 130 requires
unrealized gains or losses on the Company's available-for-sale securities and
the foreign currency translation adjustments, which prior to adoption were
reported separately in shareholders' equity, to be included in other
comprehensive income. Prior year financial statements have been reclassified
to conform to the requirements of Statement 130. Comprehensive income (loss)
for the quarters ended March 31, 1998 and 1997, were a loss of $2,874,512 and
income of $732,269, respectively.
SEGMENT REPORTING
In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." Statement No. 131 establishes standards
for the manner in which public companies report information about operating
segments in annual and interim financial statements. The Company is currently
evaluating the statement to determine whether this will have an impact on its
financial statement reporting. The Company will be required to report its
results according to Statement No. 131 guidance for its year-end 1998 results.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior years' financial
statements to conform to the 1998 presentation.
SUBSEQUENT EVENTS
In April 1998, the Company announced that it had agreed to terminate its ex-vivo
adoptive immunotherapy collaboration agreement with CellPro, Incorporated
("CellPro"). The agreement, which covered the ex-vivo use of the Company's
cancer antigens, microsphere delivery system and adjuvant technologies for the
purpose of activating and propagating tumor reactive cells outside the body, was
entered into in November, 1995 and provided less than 10% of the Company's
fiscal year 1997 revenue. Under the terms of the termination agreement, all
rights previously granted to CellPro in respect to Corixa technology in the
field of adoptive immunotherapy reverted to Corixa. The Company's first quarter
1998 results included $333,000 of research and development expense connected to
the termination in its arrangement with CellPro.
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Form 10-Q, including management's discussion and analysis of
financial condition and results of operations contains "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
including, without limitation, statements regarding regulatory approvals,
operating results and capital requirements. Except for historical information,
the matters discussed in this Form 10-Q, are forward looking statements that are
subject to certain risks and uncertainties that could cause the actual results,
performance or achievements of Corixa or its corporate partners, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, uncertainties related to the early stage of the Company's research and
development programs; uncertainties related to the effectiveness of the
Company's technology and the development of its products; dependence on and
management of existing and future corporate partnerships; dependence on
in-licensed technology; dependence on proprietary technology and uncertainty of
patent protection; history of operating losses; future capital needs and
uncertainty of additional funding; the Company's lack of manufacturing and
marketing experience and reliance on third parties to perform such functions;
existing government regulations and changes in, or the failure to comply with,
government regulations, as well as the risk factors discussed below in "Factors
Affecting Future Results" and those listed from time to time in the Company's
public disclosure filings with the Securities and Exchange Commission ("the
SEC"), including the Company's Final Prospectus for its initial public offering
filed with the SEC on October 2, 1997. The Company assumes no obligation to
update the forward-looking statements included in this Form 10-Q.
OVERVIEW
Corixa's objective is to be the leader in the discovery and
commercialization of T cell vaccine products for the treatment and prevention of
cancer and certain infectious diseases. The Company's strategy is to dedicate
its resources to vaccine discovery and to establish corporate collaborations
early in the development process for all aspects of product development and
commercialization, including research, clinical development, obtaining
regulatory approval, manufacturing and marketing. Corixa believes that this
research- and partner-driven approach creates significant scientific,
operational and financial advantages for the Company and accelerates the
commercial development of new therapeutic and prophylactic T cell vaccines.
Since the Company's inception, approximately 89% of the Company's revenue has
resulted from payments from such collaborative agreements. In particular, the
Company has entered into significant corporate partnerships with SmithKline
Beecham Biologicals S.A. ("SmithKline Beecham") with respect to tuberculosis and
breast and prostate cancer vaccine products pursuant to which the Company may
receive up to an aggregate of $65.3 million, of which up to $23 million is
payable under the breast cancer collaboration, up to $23 million is payable
under the prostate cancer collaboration and up to $19.3 million is payable under
the tuberculosis collaboration. A substantial amount of such funding is required
to be used for research and development activities pursuant to the terms of such
collaborations. SmithKline Beecham may terminate either or both of the breast
and prostate cancer programs in the event the Company does not meet certain
scientific milestones after the second anniversary of the effective date of the
respective agreements, and the tuberculosis research program as currently
extended will terminate in the event SmithKline Beecham does not further extend
the research as allowed under the agreement. . Additionally, since the Company's
inception, approximately 11% of the Company's revenue has resulted from funds
awarded through government grants. As of March 31, 1998, the Company had total
stockholders' equity of $49 million.
<PAGE> 9
Corixa has entered, and intends to continue to enter, into collaborative
agreements early in the vaccine development stage. The Company believes that
this active corporate partnering strategy enables Corixa to maintain its focus
on its fundamental strengths in vaccine discovery and research and to capitalize
on its corporate partners' strengths in product development, manufacturing and
commercialization, and significantly diminishes the Company's financing
requirements. When entering into such corporate partnering relationships, the
Company seeks to cover its research and development expenses through research
funding, milestone payments and option, technology or license fees, while
retaining significant downstream participation in product sales through either
profit-sharing or product royalties paid on annual net sales. Revenue recognized
from inception through March 31, 1998 under the Company's collaborative
agreements was approximately $22.8 million.
The Company has experienced significant operating losses in each year
since its inception. As of March 31, 1998, the Company's accumulated deficit was
approximately $14.8 million. The Company may incur substantial additional
operating losses over at least the next several years. Such losses have been and
may continue to be principally the result of the various costs associated with
the Company's discovery, research and development programs, and preclinical and
clinical activities. Substantially all of the Company's revenue to date has
resulted from corporate partnerships, other research, development and licensing
arrangements, research grants and interest income. The Company's ability to
achieve a consistent, profitable level of operations is dependent in large part
upon entering into collaborative agreements with corporate partners for product
discovery, research, development and commercialization, obtaining regulatory
approvals for its products and successfully manufacturing and marketing
commercial products. There can be no assurance that the Company will be able to
achieve consistent profitability. In addition, payments under collaborative
agreements and licensing arrangements will be subject to significant
fluctuations in both timing and amounts, resulting in quarters of profitability
and quarters of losses by the Company. Therefore, the Company's results of
operations for any period may fluctuate significantly and may not be comparable
to the results of operations for any other period.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
Total Revenue
Revenue for the first quarter of 1998 decreased to $2.8 million from
$4.2 million for the same period in 1997, a decrease of 33%. Revenue for the
quarter consisted primarily of ongoing research and development revenue from
partnership programs. The reduction in total revenue from first quarter 1997
primarily results from a significant technology access fee recognized upon the
commencement of the Company's collaborations with SmithKline Beecham in the
areas of breast cancer and prostate cancer. Revenue of $500,000 and $300,000 was
recognized during the three months ended March 31, 1998 and 1997, respectively,
in conjunction with the collaboration agreement with GenQuest, Inc.
("GenQuest").
Research and Development Expenses
Research and development expenses increased to $5.9 million for the
three months ended March 31, 1998 from $3.3 million for the same period in 1997,
an increase of 79%. The increase was primarily attributable to increased payroll
and personnel expenses incurred as the Company hired additional research and
development personnel, increased purchases of laboratory supplies, a $333,000
charge to reflect termination of a collaboration with CellPro, Inc., increased
equipment depreciation and facilities expenses in connection with expansion of
the Company's research efforts and included of the research and development
portion of amortized deferred compensation expense associated with the grant of
certain stock options. This non-cash compensation expense will continue to be
recognized over the remaining vesting period of such options, through June 2001.
Research and development expenses of approximately $500,000 and $300,000 were
incurred during the three months ended March 31, 1998 and 1997, respectively, in
conjunction with the GenQuest collaboration agreement. The Company expects
research
<PAGE> 10
and development expenses to increase in the future to support the expansion of
its research and development activities.
General and Administrative Expenses
General and administrative expenses increased to $547,000 for the three
months ended March 31, 1998, from $330,000 for the same period in 1997, an
increase of 66%. The increase was primarily due to increased expenses related to
business development and the general and administrative portions of the
amortized deferred compensation expense associated with the grant of certain
stock options. The Company expects general and administrative expenses to
increase in the future to support the expansion of its business activities.
Interest Income
Interest income increased to $828,000 for the three months ended March
31, 1998, from $162,000 for the same period in 1997. This increase resulted from
higher average cash balances in the first three months of 1998 compared to the
first three months of 1997.
Interest Expense
Interest expense increased to $147,000 for the three months ended March
31, 1998, from $72,000 for the same period in 1997. This increase resulted from
higher loan balances and capital lease balances outstanding in 1998.
Other Income
Other income increased to $125,000 for the three months ended March 31,
1998, from $93,000 for the same period in 1997. The balance through March 31,
1998 consists of proceeds from management and administrative services agreements
with GenQuest, Inc. and the Infectious Disease Research Institute, a
not-for-profit, grant-funded private research institute, respectively, pursuant
to which the Company provides services with respect to corporate management,
record keeping, personnel administration, human resources and treasury services
as required by such agreements.
Deferred Compensation
Deferred compensation of approximately $3.9 million was recorded in
fiscal year 1997, representing the difference between the exercise prices of
645,000 shares of Common Stock subject to options granted during the first half
of 1997 and the deemed fair value of the Company's Common Stock on the grant
dates. Deferred compensation expense of approximately $482,000 and $89,000 was
amortized for the three months ended March 31, 1998 and 1997, respectively.
Option Payment
During 1997, the Company entered into an option agreement with
SmithKline Beecham pursuant to which the SmithKline Beecham agreed to advance
consideration in exchange for exclusive options to license two of Corixa's
early-stage cancer vaccine research programs. In the event such options are
exercised, the consideration will be credited against future milestone payments
or converted to Common Stock of Corixa. In January 1998, pursuant to the
agreement, SmithKline Beecham advanced $2 million to extend the expiration of
one of the options from March 1, 1998 until September 1, 1999. If this extended
option is not exercised before September 1, 1999 and if the other option is not
exercised or extended before September 1, 1998, the Company will be required to
refund the consideration related to one or both option(s), as applicable, over a
three-year period beginning March 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception through
collaborative agreements, government grants, private placements of equity
securities, capital leases and an initial public offering of its Common Stock.
From inception through March 31, 1998, the Company's operations have used cash
of $9.3 million. The October 1997 initial public offering and preceding private
placements of equity
<PAGE> 11
securities have provided the Company with proceeds of approximately $61.0
million. The Company has drawn $5.0 million from advances under collaborative
agreements, $4.6 million through capital lease financings and $4.0 million on a
bank loan. As of March 31, 1998, the Company had approximately $57.7 million in
cash, cash equivalents and securities available-for-sale.
The Company has invested $6.4 million in property and equipment since
inception, including equipment acquired under capital lease financings of $4.6
million. The Company expects capital expenditures to increase over the next
several years as it expands its facilities and acquires scientific equipment to
support the planned expansion of its research and development efforts.
The Company believes that the proceeds from the initial public offering,
its existing capital resources, committed payments under its existing
collaborative agreements and licensing arrangements, equipment financing and
interest income will be sufficient to fund its current and planned operations
until at least September 30, 1999. The Company intends to enter into additional
corporate collaborations that will provide funding for all or a part of the
Company's research and development activities. The Company's future capital
requirements will depend on many factors, including, among others, the
following: continued scientific progress in its discovery, research and
development programs; the magnitude and scope of these activities; the ability
of the Company to maintain existing, and enter into additional, corporate
collaborations and licensing arrangements; progress with preclinical studies and
clinical trials; the time and costs involved in obtaining regulatory approvals;
the costs of acquiring companies with complementary technology, the costs
involved in preparing, filing, prosecuting, maintaining, defending and enforcing
patent claims; and the potential need to develop, acquire or license new
technologies and products and other factors not within the Company's control.
The Company intends to seek additional funding through some or all of the
following methods: corporate collaborations, licensing arrangements, public or
private equity or debt financings and capital lease transactions. There can be
no assurance, however, that additional financing will be available on acceptable
terms, if at all. If sufficient capital is not available, the Company may be
required to delay, reduce the scope of, eliminate, or divest one or more of its
discovery, research or development programs, any of which could have a material
adverse effect on the Company's business, financial condition and results of
operations.
FACTORS AFFECTING FUTURE RESULTS
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company will require substantial capital resources in order to
conduct its operations. The Company intends to seek such additional funding
through some or all of the following methods: corporate partnerships, public or
private equity or debt financings and capital lease transactions. If the Company
were to undertake additional equity financings significant dilution to
stockholders could result. If sufficient capital is not available, the Company
may be required to delay, reduce the scope of, eliminate or divest one or more
of its discovery, research or development programs, any of which could have a
material adverse effect on the Company's business, financial condition and
results of operations. A substantial number of the payments to be made by
Corixa's corporate partners and other licensees are dependent upon the
achievement by the Company of development and regulatory milestones. Failure to
achieve such milestones would have a material adverse effect on the Company's
future capital needs. In addition, the Company has entered into an option
agreement with SmithKline Beecham pursuant to which SmithKline Beecham has
agreed to pay certain consideration in exchange for exclusive options to license
two of Corixa's early-stage cancer antigen discovery programs. In January 1998,
SmithKline Beecham exercised the contract extension provisions for one of the
early stage cancer targets. If this option is not exercised by September 1,
1999, the Company will be required to refund the consideration attributable to
such option over a three year period of time, beginning March, 2000.
<PAGE> 12
DEPENDENCE ON KEY PERSONNEL
The Company is highly dependent on the principal members of its
scientific and management staff, the loss of whose services might significantly
delay or prevent the Company's achievement of its scientific or business
objectives. Competition among biotechnology and biopharmaceutical companies for
qualified employees is intense, and the ability to retain and attract qualified
individuals is critical to the Company's success. There can be no assurance that
the Company will be able to attract or retain such individuals currently or in
the future on acceptable terms, or at all, and the failure to do so would have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, the Company does not maintain "key person"
life insurance on any officer, employee or consultant of the Company.
Corixa also has relationships with scientific collaborators at academic
and other institutions, some of whom conduct research at the Company's request
or assist the Company in formulating its research and development strategy.
These scientific collaborators are not employees of the Company and may have
commitments to, or consulting or advisory contracts with, other entities that
may limit their availability to the Company. The Company has limited control
over the activities of these scientific collaborators and, except as otherwise
required by its license, consulting and sponsored research agreements, can
expect only limited amounts of time to be dedicated to the Company's activities
by such individuals. Failure of any such persons to devote sufficient time and
resources to the Company's programs could have a material adverse effect on the
Company's business, financial condition and results of operations. In addition,
these collaborators may have arrangements with other companies to assist such
companies in developing technologies that may prove competitive to those of
Corixa.
INTENSE COMPETITION
The biotechnology and biopharmaceutical industries are intensely
competitive. Several biotechnology and biopharmaceutical companies, as well as
certain research organizations, currently engage in or have in the past engaged
in efforts related to the development of vaccines for the treatment and
prevention of cancer and various infectious diseases, as well as the development
of diagnostic products for infectious disease indications.
Many companies, including Corixa's corporate partners, as well as
academic and other research organizations, are also developing alternative
therapies to treat cancer and infectious diseases and, in this regard, are
competitive with the Company. Moreover, technology controlled by third parties
that may be advantageous to the Company's business may be acquired or licensed
by competitors of the Company, thereby preventing the Company from obtaining
such technology on favorable terms, or at all.
Many of the companies developing competing technologies and products
have significantly greater financial resources and expertise in discovery,
research and development, manufacturing, preclinical and clinical testing,
obtaining regulatory approvals and marketing than Corixa or its corporate
partners. Other smaller companies may also prove to be significant competitors,
particularly through collaborative arrangements with large and established
companies. Academic institutions, government agencies and other public and
private research organizations may also conduct research, seek patent protection
and establish collaborative arrangements for discovery, research, clinical
development and marketing of products similar to those of the Company. These
companies and institutions compete with the Company in recruiting and retaining
qualified scientific and management personnel as well as in acquiring
technologies complementary to the Company's programs. Corixa and its corporate
partners will face competition with respect to product efficacy and safety, the
timing and scope of regulatory approvals, availability of resources,
reimbursement coverage, price and patent position, including potentially
dominant patent positions of others. There can be no assurance that competitors
will not develop more effective or more affordable products, or achieve earlier
patent protection or product commercialization than the Company and its
corporate partners, or that such competitive products will not render the
Company's products obsolete.
<PAGE> 13
UNCERTAINTIES RELATED TO EARLY STAGE OF DEVELOPMENT
Corixa is at an early stage in the development of its therapeutic,
prophylactic and diagnostic products. To date, almost all of the Company's
revenue have resulted from payments made under agreements with its corporate
partners, and the Company expects that most of its revenue for the foreseeable
future will continue to result from existing corporate partnerships and future
corporate partnerships, if any. The Company has generated only minimal revenue
from diagnostic product sales and no revenue from therapeutic product sales
since inception. Vaccine products that may result from the Company's research
and development programs are not expected to be commercially available for a
number of years, if at all, and it will be a number of years, if ever, before
Corixa will receive any significant revenue from commercial sales of such
products.
UNCERTAINTIES RELATED TO TECHNOLOGY AND PRODUCT DEVELOPMENT
The Company's technological approach to the development of therapeutic
and prophylactic vaccines for cancers and certain infectious diseases is
unproven in humans. Products based on the Company's technologies are currently
in the discovery, preclinical or early clinical investigation stages, and to
date, neither the Company nor any of its corporate partners have conducted any
clinical trials that incorporate the Company's proprietary microsphere delivery
systems or its proprietary adjuvants. In addition, no therapeutic vaccines for
cancer or infectious diseases targeted by the Company have been successfully
commercialized by the Company or others.
A majority of Corixa's programs are currently in the discovery stage or
in preclinical development, and only two of the Company's therapeutic vaccine
products have advanced to Phase I clinical trials. The Company's vaccines have
not been demonstrated to be safe or effective in clinical settings. There can be
no assurance that any of the Company's programs will move beyond its current
stage of development. Assuming clinical trials of any product are successful and
other data are satisfactory, the Company or its applicable corporate partner
will submit an application to the FDA and appropriate regulatory bodies in other
countries to seek permission to market the product. Typically, the review
process at the FDA takes several years, and there can be no assurance that the
FDA will approve the Company's or its corporate partner's application or will
not require additional clinical trials or other data prior to approval.
DEPENDENCE ON AND MANAGEMENT OF EXISTING AND FUTURE CORPORATE
PARTNERSHIPS
The success of Corixa's business strategy is largely dependent on its
ability to enter into multiple corporate partnerships and to effectively manage
the numerous relationships that may exist as a result of this strategy. Corixa
has established significant relationships with several corporate partners as of
March 31, 1998. For example, the Company has entered into three collaboration
and license agreements with SmithKline Beecham for the research, development and
commercialization of vaccine products aimed at the prevention and/or treatment
of tuberculosis, breast cancer and prostate cancer. In addition, Corixa has
established corporate partnerships with Abbott Laboratories and Pasteur Merieux
Connaught among others. The Company derived 93% and 94% of its revenue during
the year ended December 31, 1997 and the quarter ended March 31, 1998,
respectively, from research and development and other funding under such
corporate partnerships. The termination of any of these corporate partnerships
would have a material adverse effect on the Company's business, financial
condition and results of operations. Several of the Company's corporate partners
have entered into agreements granting them options to license certain aspects of
the Company's technology. There can be no assurance that any such corporate
partner will exercise its option to license such technology. The Company has
also entered into corporate partnerships with several companies for the
development, commercialization and sale of diagnostic products incorporating the
Company's proprietary antigen technology. There can be no assurance that any
such diagnostic corporate partnership will ever generate significant revenue.
Furthermore, Corixa is currently engaged in discussions with a number of
pharmaceutical and diagnostic companies with respect to potential corporate
partnering arrangements covering various aspects of the Company's technologies.
However, due
<PAGE> 14
in part to the early stage of Corixa's technologies, the process of establishing
corporate partnerships is difficult, time-consuming and involves significant
uncertainty, and there can be no assurance that such discussions will lead to
the establishment of any new corporate partnership on favorable terms, or at
all, or that, if established, any such corporate partnership will result in the
successful development of any of the Company's products or the generation of
significant revenue.
Because the success of the Company's business is largely dependent upon
its ability to enter into multiple corporate partnerships and to effectively
manage the numerous issues that arise from such partnerships, management of
these relationships will require, at a minimum, significant time and effort from
Corixa's management team and effective allocation of the Company's resources to
multiple projects, as well as an ability to obtain and retain management,
scientific and other personnel sufficient to accomplish the foregoing.
POTENTIAL DILUTION RELATED TO CORPORATE PARTNERSHIPS
In connection with the Company's collaboration agreement with GenQuest,
the Company, GenQuest and certain stockholders of GenQuest entered into a Call
Option Agreement under which the Company has the right to purchase a significant
majority of the outstanding shares of GenQuest's capital stock in exchange for
shares of the Company's Common Stock at a purchase price determined in
accordance with the Call Option Agreement. The Call Option Agreement does not
obligate the Company to purchase any shares of GenQuest, nor does it preclude
the Company from purchasing shares of GenQuest or the assets of GenQuest at a
price different from that set forth in the Call Option Agreement. If Corixa were
to exercise this right or otherwise issue shares of its capital stock in an
acquisition of GenQuest, other corporate partners or any other entity, the
stockholders of Corixa would face immediate and potentially significant
dilution.
DEPENDENCE ON IN-LICENSED TECHNOLOGY
In addition to its dependence on existing and future corporate
partnerships, Corixa's success is also dependent on its ability to enter into
licensing arrangements with commercial or academic entities to obtain technology
that is advantageous or necessary to the development and commercialization of
Corixa's products. In the event the Company is unable to obtain or maintain
licenses to technology advantageous or necessary to the Company's business,
Corixa and its corporate partners may be required to expend significant time and
resources to develop or in-license similar technology, and there can be no
assurance that the Company and its corporate partners will be successful in this
regard. If the Company cannot acquire or develop necessary technology, it may be
prevented from commercializing certain of its products.
DEPENDENCE ON PROPRIETARY TECHNOLOGY AND UNCERTAINTY OF PATENT
PROTECTION
Corixa's success will depend in part on its ability and that of its
corporate partners to obtain and enforce their respective patents and maintain
trade secrets, both in the United States and in other countries. As of March 31,
1998, the Company owned or had licensed 14 issued United States patents that
expire at various times between December 2008 and October 2014, 75 corresponding
issued foreign patents, 114 pending United States patent applications, as well
as 15 corresponding international filings under the Patent Cooperation Treaty
and 220 pending foreign national patent applications. The Company has licensed
certain patent applications from Southern Research Institute ("SRI") related to
the Company's microsphere encapsulation technology, one of which is currently
the subject of an opposition proceeding before the European Patent Office. There
can be no assurance that SRI will prevail in this opposition proceeding or that
any patents will issue in Europe related to such technology. There can also be
no assurance that the Company's or its corporate partners' current patents, or
patents that issue on pending applications, will not be challenged, invalidated,
infringed or circumvented, or that the rights granted thereunder will provide
proprietary protection or competitive advantages to Corixa.
<PAGE> 15
The commercial success of Corixa depends significantly on its ability to
operate without infringing the patents and proprietary rights of third parties,
and there can be no assurance that the Company's and its corporate partners'
technologies do not or will not infringe the patents or proprietary rights of
others. A number of pharmaceutical companies, biotechnology companies,
universities and research institutions may have filed patent applications or may
have been granted patents that cover technologies similar to the technologies
owned, optioned by or licensed to the Company or its corporate partners. In
addition, the Company is unable to determine the patents or patent applications
that may materially affect the Company's or its corporate partners' ability to
make, use or sell any products.
Litigation may also be necessary to enforce patents issued or licensed
to the Company or its corporate partners or to determine the scope and validity
of a third party's proprietary rights. Corixa could incur substantial costs if
litigation is required to defend itself in patent suits brought by third
parties, if Corixa participates in patent suits brought against or initiated by
its corporate partners or if Corixa initiates such suits, and there can be no
assurance that funds or resources would be available to the Company in the event
of any such litigation. Additionally, there can be no assurance that the Company
or its corporate partners would prevail in any such action. An adverse outcome
in litigation or an interference to determine priority or other proceeding in a
court or patent office could subject the Company to significant liabilities,
require disputed rights to be licensed from other parties or require the Company
or its corporate partners to cease using certain technology, any of which may
have a material adverse effect on the Company's business, financial condition
and results of operations.
FLUCTUATIONS IN FUTURE EARNINGS
Substantially all of the Company's revenue to date have resulted from
corporate partnerships, other research, development and licensing arrangements,
research grants and interest income. The Company's ability to achieve a
consistent, profitable level of operations is dependent in large part upon
entering into agreements with corporate partners for product discovery,
research, development and commercialization, obtaining regulatory approvals for
its products and successfully manufacturing and marketing commercial products.
The Company expects that its quarterly results will vary as it enters new
agreements, and receives license and/or milestone payments. The Company expects
operating expenses to continue to increase as it adds to the number and scope of
its research and development programs, enters into clinical trials and as it
adds additional laboratory and office space. In addition, payments under
corporate partnerships and licensing arrangements will be subject to significant
fluctuations in both timing and amounts, resulting in quarters of profitability
and quarters of losses by the Company. Therefore, the Company's results of
operations for any period may fluctuate significantly and may not be comparable
to the results of operations for any other period.
GOVERNMENT REGULATION
The preclinical testing and clinical trials of any products developed by
the Company or its corporate partners and the manufacturing, labeling, sale,
distribution, export or import, marketing, advertising and promotion of any new
products resulting therefrom are subject to rigorous regulation by federal,
state and local governmental authorities in the United States, the principal one
of which is the U.S. Food and Drug Administration ("FDA"), and by similar
agencies in other countries. Any product developed by the Company or its
corporate partners must receive all relevant regulatory approvals or clearances
before it may be marketed in a particular country. The regulatory process, which
includes extensive preclinical studies and clinical trials of each product in
order to establish its safety and efficacy, is uncertain, can take many years
and requires the expenditure of substantial resources. Delays in obtaining
regulatory approvals or clearances would adversely affect the marketing of any
products developed by the Company or its corporate partners, impose significant
additional costs on the Company and its corporate partners, diminish any
competitive advantages that the Company or its corporate partners may attain and
adversely affect the Company's ability to receive royalties and generate revenue
and profits. There can be no assurance that, even after such time and
expenditures, any required approvals or clearances will be obtained for any
products developed by or in collaboration with the Company. Noncompliance with
applicable
<PAGE> 16
requirements can result in enforcement actions by the FDA including, among other
things, fines, injunctions, civil penalties, recall or seizure of products,
refusal of the FDA to grant pre-market clearances or approvals, withdrawal of
marketing approvals and criminal prosecution. Any such action would have a
material adverse effect on the Company's business, financial condition and
results of operations.
POSSIBLE VOLATILITY OF STOCK PRICE
The market prices for securities of biotechnology companies have in the
past been, and can in the future be expected to be, especially volatile. The
market price of the Company's Common Stock has been and is likely to continue to
be subject to substantial volatility depending upon many factors, including
announcements regarding the results of discovery efforts, preclinical and
clinical activities, technological innovations or new commercial products
developed by the Company or its competitors, changes in government regulations,
changes in the Company's patent portfolio, developments or disputes concerning
proprietary rights, changes in existing corporate partnerships or licensing
arrangements, the establishment of additional corporate partnerships or
licensing arrangements, the progress of regulatory approvals, the issuance of
new or changed stock market analyst reports and/or recommendations, and economic
and other external factors, as well as operating losses by the Company,
fluctuations in the Company's financial results and the degree of trading
liquidity in the Common Stock. These factors could have a material adverse
effect on the Company's business, financial condition and results of operations
and the price of the Company's Common Stock in the public market.
For a more complete discussion of risks and uncertainties involving the
Company's business, please see the risk factors described under the heading
"Factors That May Affect Future Results of Operations" set forth in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997.
<PAGE> 17
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
In connection with its initial public offering of Common Stock (the
"Offering") in 1997, the Company filed a Registration Statement (the
"Registration Statement") on Form S-1, SEC File No. 333-32147, which was
declared effective by the Commission on October 2, 1997. The net offering
proceeds to the Company after deducting the total expenses was $40,778,100. The
entire amount of the net proceeds has been allocated for general corporate
purposes, including working capital requirements of the Company. None of the net
proceeds of the Offering were paid directly or indirectly to any director,
officer, general partner of the Company or their associates, persons owning 10
percent or more of any class of equity securities of the Company, or an
affiliate of the Company. This use of proceeds does not represent a material
change in the use of proceeds described in the prospectus of the Registration
Statement.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) See Index to Exhibits.
(b) No reports on Form 8-K were filed by the Registrant during
the quarter ended March 31, 1998.
<PAGE> 18
CORIXA CORPORATION
Index to Exhibits for Form 10-Q for the quarter ended March 31, 1998
<TABLE>
<CAPTION>
Exhibit No. Exhibit Description
- ----------- -------------------
<S> <C>
10.1 Amendment No. 1 to the Breast Cancer Collaboration and
License Agreement dated March 1, 1997 by and between
Corixa Corporation and SmithKline Beecham Biologicals S.A.
10.2 Amendment No. 1 to the Prostate Cancer Collaboration and
License Agreement dated March 1, 1997 by and between
Corixa Corporation and SmithKline Beecham Biologicals S.A.
10.3 Amendment No. 1 to the Option Agreement dated March 1,
1997 by and between Corixa Corporation and SmithKline
Beecham Biologicals S.A.
27.1 Financial Data Schedule
</TABLE>
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORIXA CORPORATION
By: /s/ Michelle Burris
--------------------------------------
MICHELLE BURRIS
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Date: May 14, 1998
<PAGE> 1
EXHIBIT 10.1
AMENDMENT NO. 1
TO THE
BREAST CANCER COLLABORATION AND LICENSE AGREEMENT
This Amendment No. 1 (the "Amendment") to the Breast Cancer
Collaboration and License Agreement (the "Breast Cancer Agreement") is made
effective as of February 5, 1998 (the "Effective Date") by and between Corixa
Corporation, a Delaware corporation having its principal place of business at
1124 Columbia Street, Suite 200, Seattle, Washington 98104 ("Corixa") and
SmithKline Beecham Biologicals Manufacturing S.A., a Belgian corporation with
its principal place of business at Rue de l'Institut 89, B-1330 Rixensart,
Belgium ("SB").
RECITALS
WHEREAS, Corixa and SB entered into the Breast Cancer Agreement dated as
of March 1, 1997 pursuant to which Corixa and SB agreed to collaborate in the
research and development of antigens for the development of Vaccine product(s)
for the prevention and/or treatment of any form of breast cancer; and
WHEREAS, Corixa and SB now wish to amend the Breast Cancer Agreement in
certain respects as hereinafter provided; and
WHEREAS, Corixa and SB wish that all other terms and conditions of the
Breast Cancer Agreement remain in full force and effect.
NOW, THEREFORE, the parties hereby agree as follows:
1. Capitalized terms in this Amendment shall have the same meaning as
those in the Breast Cancer Agreement, unless specifically defined in this
Amendment. All section and paragraph references refer to sections or paragraphs,
as applicable, in the Breast Cancer Agreement. References to the term
"Agreement" in the Breast Cancer Agreement shall be deemed to include this
Amendment.
2. Except as expressly modified herein, the Breast Cancer Agreement
shall remain in full force and effect in accordance with its terms. To the
extent there are any inconsistencies or ambiguities between this Amendment and
the Breast Cancer Agreement, the terms of this Amendment shall supersede the
Breast Cancer Agreement.
3. The following shall be inserted at the end of Section 1(o):
"Solely for purposes of Sections 4(a) and 5(b) of this Agreement,
the Licensed Field shall be deemed not to include the Joint Field. For the
purpose of all other Sections contained in this Agreement, the Licensed Field
shall be deemed to include the Joint Field."
4. The following shall be inserted following the end of Section 1(dd):
<PAGE> 2
(ee) "Competitive Joint Field Product" shall mean (i) a product
in the Joint Field that would otherwise infringe Corixa Patents or Joint
Research Patents, or (ii) any other breast cancer Vaccine product in the Joint
Field comprised of at least one (1) or more Corixa Antigens and/or Research
Program Antigens.
(ff) "Joint Field" shall mean the use of [XXX]
5. (a) In Section 4(a), "(i)" shall be inserted at the beginning of
the first sentence before "Subject to . . .", and "and outside the Joint Field"
shall be inserted in the second sentence between ". . . Licensed Field . . ."
and "; any commercial . . .".
(b) The following shall be inserted at the end of Section 4(a):
"(ii) Subject to the terms and conditions of this Agreement,
including, without limitation, the license payments and royalty provisions in
Sections 5 and 6 below, Corixa hereby grants to SB a co-exclusive license (with
Corixa or its exclusive sublicensee), with the right to sublicense, under Corixa
Patents, Joint Research Program Patents, Know-How and any SPC to make, have
made, use, have used, sell, offer for sale, have sold, keep and import any and
all Products in the Joint Field in the Territory in any formulation,
configuration, combination and/or with any delivery system. For purpose of
clarity, the foregoing license shall include rights of SB to Corixa Antigens
and/or Research Program Antigens in and outside the BC field but in the Joint
Field; any commercial use of Corixa Antigens and/or Research Program Antigens in
the Joint Field shall be subject to the royalties set forth in Section 6 in the
same manner as royalties are paid on Products thereunder."
6. (a) In the table in Section 5(b), "by SB" shall be inserted in
the first sentence after "achievement" and before "of each."
(b) In the table in Section 5(b), "in Licensed Field" shall be
inserted in each of the following places: following ". . . IND" in subsection
5(b)(i), after ". . . clinical trials" in subsection 5(b)(ii), after ". . .
clinical trials" in subsection 5(b)(iii), between ". . . regulatory approval . .
." and " . . . in U.S." in subsection 5(b)(iv), between "Regulatory approval . .
." and ". . . in at least . . ." in subsection 5(b)(v) and between "Regulatory
approval . . ." and ". . . in U.S." in subsection 5(b)(vi).
<PAGE> 3
(c) The following shall be inserted at the end of the table in
Section 5(b):
<TABLE>
<S> <C>
(vii) Start of Phase I clinical [XXX]
trials for first Product in the
Joint Field
(viii) Start of Phase III [XXX]
clinical trials for first Product
in the Joint Field
(ix) Submission of the first [XXX]
Product in the Joint Field for
regulatory approval in U.S.
(x) Regulatory approval of the [XXX]
first Product in the Joint Field
in at least [XXX]
(xi) Regulatory approval of the [XXX]
first Product in the Joint Field
in U.S.
(xii) Start of Phase III [XXX]
clinical trials for the second
Product in the Joint Field
(xiii) Regulatory approval of [XXX]
the second Product in the Joint
Field in [XXX]
or regulatory approval of a second
indication for the first Product in
the Joint Field
</TABLE>
(d) The paragraph immediately below the table in Section 5(b) is
amended in its entirety to read as follows:
[XXX} of the milestone payments set forth
in Subparagraphs 5(b)(iv), (v), (vi), (ix), (x) and (xi) above and [XXX]
of the milestone payments set forth in Subparagraph 5(b)(xiii) above are
fully creditable against future royalties payable pursuant to Section 6,
provided such royalties will not be reduced by more than [XXX] in
any given year. Any uncredited portion will be carried forward for credit in
subsequent years."
<PAGE> 4
(e) The following shall be inserted as a new paragraph following
the paragraph immediately below the table in Section 5(b):
"In the event a Competitive Joint Field Product is in at least
Phase I clinical trials or has received regulatory approval and is available for
commercial sale in any of the countries listed in Subparagraphs 5(b)(vii)
- - (xiii) above at the time the corresponding applicable milestone payment set
forth in Subparagraphs 5(b)(vii) - (xiii) becomes due and payable in accordance
with the terms hereof, then SB shall pay only [XXX] of such
milestone payment to Corixa. In addition, in the event Corixa receives a
corresponding milestone payment(s) for such Competitive Joint Field Product from
a Third Party, Corixa shall pay SB [XXX] of the amount of such
milestone payment(s) actually received by Corixa."
7. (a) In the first sentence of Section 6(a), "in the Licensed
Field, whether outside or inside the Joint Field, as applicable," shall be
inserted between ". . . Products sold . . ." and ". . . in countries . . .".
(b) In the table in Section 6(a), "Outside the Joint Field" shall
be inserted in the first heading following "Net Sales".
(c) The following shall be inserted as an additional table and a
new paragraph following the existing table in Section 6(a):
<TABLE>
<CAPTION>
Net Sales in the Patent in
Joint Field Country of Sale Minimum Royalty
- ----------- --------------- ---------------
<S> <C> <C>
[XXX] [XXX] [XXX]
[XXX] [XXX] [XXX]
[XXX] [XXX] [XXX]
</TABLE>
"In the event a Competitive Joint Field Product is in at least
Phase I clinical trials or has received regulatory approval and is available for
commercial sale in any country at the time the corresponding Patent Royalty
applicable to such country becomes due and payable in accordance with the terms
hereof, then SB shall pay [XXX] of such Patent Royalty to
Corixa. In addition, in the event Corixa receives corresponding patent royalties
from a Third Party for net sales of such Competitive Joint Field Product in such
country, Corixa shall pay SB [XXX] of the amount of such royalties
actually received by Corixa, provided that such royalties are on the net sales
of a Competitive Joint Field Product sold in a country where current claims of
any patent covering such Competitive Joint Field Product are issued or are
pending for up to [XXX] from the date of first filing anywhere in the
world."
8. In the first sentence of Section 13(d), the words "the Prostate
Cancer Collaboration and License Agreement of even
<PAGE> 5
date herewith and the Option Agreement of even date herewith" shall be deleted
and replaced with the words "the Prostate Cancer Collaboration and License
Agreement dated March 1, 1997, the Option Agreements dated March 1, 1997 and
Amendments to said: (a) Tuberculosis Collaboration and License Agreement; (b)
Prostate Cancer Collaboration and License Agreement; and (c) Option Agreements".
9. In the first sentence of Section 16(d) of the Breast Cancer
Agreement, "Licensed" shall be inserted between "... Products in the ..." and
"... Field ...".
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to be executed by its duly authorized officer as of the date first written
above.
Agreed to and accepted by: Agreed to and accepted by:
CORIXA CORPORATION SMITHKLINE BEECHAM
BIOLOGICALS
MANUFACTURING S.A.
/s/ Mark McDade /s/ Jean Stephenne
_____________________ By: _______________________
Mark McDade Name: Jean Stephenne
Chief Operating Officer Its: Senior Vice President
and General Manager
<PAGE> 1
Exhibit 10.2
AMENDMENT NO. 1
TO THE
PROSTATE CANCER COLLABORATION AND LICENSE AGREEMENT
This Amendment No. 1 (the "Amendment") to the Prostate Cancer
Collaboration and License Agreement (the "Prostate Cancer Agreement") is made
effective as of February 5, 1998 (the "Effective Date") by and between Corixa
Corporation, a Delaware corporation having its principal place of business at
1124 Columbia Street, Suite 200, Seattle, Washington 98104 ("Corixa") and
SmithKline Beecham Biologicals Manufacturing S.A., a Belgian corporation with
its principal place of business at Rue de l'Institut 89, B-1330 Rixensart,
Belgium ("SB").
RECITALS
WHEREAS, Corixa and SB entered into the Prostate Cancer Agreement dated
as of March 1, 1997 pursuant to which Corixa and SB agreed to collaborate in the
research and development of antigens for the development of Vaccine product(s)
for the prevention and/or treatment of any form of prostate cancer; and
WHEREAS, Corixa and SB now wish to amend the Prostate Cancer Agreement
in certain respects as hereinafter provided; and
WHEREAS, Corixa and SB wish that all other terms and conditions of the
Prostate Cancer Agreement remain in full force and effect.
NOW, THEREFORE, the parties hereby agree as follows:
1. Capitalized terms in this Amendment shall have the same meaning as
those in the Prostate Cancer Agreement, unless specifically defined in this
Amendment. All section and paragraph references refer to sections or paragraphs,
as applicable, in the Prostate Cancer Agreement. References to the term
"Agreement" in the Prostate Cancer Agreement shall be deemed to include this
Amendment.
2. Except as expressly modified herein, the Prostate Cancer Agreement
shall remain in full force and effect in accordance with its terms. To the
extent there are any inconsistencies or ambiguities between this Amendment and
the Prostate Cancer Agreement, the terms of this Amendment shall supersede the
Prostate Cancer Agreement.
3. The following shall be inserted at the end of Section 1(o):
"Solely for purposes of Sections 4(a) and 5(b) of this Agreement,
the Licensed Field shall be deemed not to include the Joint Field. For the
purpose of all other Sections contained in this Amendment, the Licensed Field
shall be deemed to include the Joint Field."
<PAGE> 2
4. The following shall be inserted following the end of Section 1(dd):
(ee) "Competitive Joint Field Product" shall mean (i) a product
in the Joint Field that would otherwise infringe Corixa Patents or Joint
Research Patents, or (ii) any other prostate cancer Vaccine product in the Joint
Field comprised of at least one (1) or more Corixa Antigens and/or Research
Program Antigens.
(ff) "Joint Field" shall mean the use of [XXX]
5. (a) In Section 4(a), "(i)" shall be inserted at the beginning of
the first sentence before "Subject to . . .", and "and outside the Joint Field"
shall be inserted in the second sentence between ". . . Licensed Field . . ."
and "; any commercial . . .".
(b) The following shall be inserted at the end of Section 4(a):
"(ii) Subject to the terms and conditions of this Agreement,
including, without limitation, the license payments and royalty provisions in
Sections 5 and 6 below, Corixa hereby grants to SB a co-exclusive license (with
Corixa or its exclusive sublicensee), with the right to sublicense, under Corixa
Patents, Joint Research Program Patents, Know-How and any SPC to make, have
made, use, have used, sell, offer for sale, have sold, keep and import any and
all Products in the Joint Field in the Territory in any formulation,
configuration, combination and/or with any delivery system. For purpose of
clarity, the foregoing license shall include rights of SB to Corixa Antigens
and/or Research Program Antigens in and outside the PC Field but in the Joint
Field; any commercial use of Corixa Antigens and/or Research Program Antigens in
the Joint Field shall be subject to the royalties set forth in Section 6 in the
same manner as royalties are paid on Products thereunder."
6. (a) In the table in Section 5(b), "by SB" shall be inserted in
the first sentence after "achievement" and before "of each."
(b) In the table in Section 5(b), "in Licensed Field" shall be
inserted in each of the following places: following ". . . IND" in subsection
5(b)(i), after ". . . clinical trials" in subsection 5(b)(ii), after ". . .
clinical trials" in subsection 5(b)(iii), between ". . . regulatory approval . .
." and ". . . in U.S." in subsection 5(b)(iv), between "Regulatory approval . .
." and ". . . in at least . . ." in subsection 5(b)(v) and between "Regulatory
approval . . ." and ". . . in U.S." in subsection 5(b)(vi).
<PAGE> 3
(c) The following shall be inserted at the end of the table in
Section 5(b):
<TABLE>
<S> <C>
(vii) Start of Phase I clinical [XXX]
trials for first Product in the
Joint Field
(viii) Start of Phase III [XXX]
clinical trials for first Product
in the Joint Field
(ix) Submission of the first [XXX]
Product in the Joint Field for
regulatory approval in U.S.
(x) Regulatory approval of the [XXX]
first Product in the Joint Field
in at least [XXX]
(xi) Regulatory approval of the [XXX]
first Product in the Joint Field
in U.S.
(xii) Start of Phase III [XXX]
clinical trials for the second
Product in the Joint Field
(xiii) Regulatory approval of [XXX]
the second Product in the Joint
Field in [XXX]
or regulatory approval of a second
indication for the first Product
in the Joint Field
</TABLE>
(d) The paragraph immediately below the table in Section 5(b) is
amended in its entirety to read as follows:
[XXX] of the milestone payments set forth
in Subparagraphs 5(b)(iv), (v), (vi), (ix), (x) and (xi) above and fifty [XXX]
of the milestone payments set forth in Subparagraph 5(b)(xiii) above are
fully creditable against future royalties payable pursuant to Section 6,
provided such royalties will not be reduced by more than [XXX] in
any given year. Any uncredited portion will be carried forward for credit in
subsequent years."
<PAGE> 4
(e) The following shall be inserted as a new paragraph following
the paragraph immediately below the table in Section 5(b):
"In the event a Competitive Joint Field Product is in at least
Phase I clinical trials or has received regulatory approval and is available for
commercial sale in any of the countries listed in Subparagraphs 5(b)(vii)
- - (xiii) above at the time the corresponding applicable milestone payment set
forth in Subparagraphs 5(b)(vii) - (xiii) becomes due and payable in accordance
with the terms hereof, then SB shall pay only [XXX] of such
milestone payment to Corixa. In addition, in the event Corixa receives a
corresponding milestone payment(s) for such Competitive Joint Field Product from
a Third Party, Corixa shall pay SB [XXX] of the amount of such
milestone payment(s) actually received by Corixa."
7. (a) In the first sentence of Section 6(a), "in the Licensed
Field, whether outside or inside the Joint Field, as applicable," shall be
inserted between ". . . Products sold . . ." and ". . . in countries . . .".
(b) In the table in Section 6(a), "Outside the Joint Field" shall
be inserted in the first heading following "Net Sales".
(c) The following shall be inserted as an additional table and a
new paragraph following the existing table in Section 6(a):
<TABLE>
<CAPTION>
Net Sales in the Patent in
Joint Field Country of Sale Minimum Royalty
- ----------- --------------- ---------------
<S> <C> <C>
[XXX] [XXX] [XXX]
[XXX] [XXX] [XXX]
[XXX] [XXX] [XXX]
</TABLE>
"In the event a Competitive Joint Field Product is in at least
Phase I clinical trials or has received regulatory approval and is available for
commercial sale in any country at the time the corresponding Patent Royalty
applicable to such country becomes due and payable in accordance with the terms
hereof, then SB shall pay [XXX] of such Patent Royalty to
Corixa. In addition, in the event Corixa receives corresponding patent royalties
from a Third Party for net sales of such Competitive Joint Field Product in such
country, Corixa shall pay SB [XXX] of the amount of such royalties
actually received by Corixa, provided that such royalties are on the net sales
of a Competitive Joint Field Product sold in a country where current claims of
any patent covering such Competitive Joint Field Product are issued or are
pending for up to [XXX] from the date of first filing anywhere in the
world."
8. In the first sentence of Section 13(d), the words "the Breast Cancer
Collaboration and License Agreement of even date herewith and the Option
Agreement of even date herewith"
<PAGE> 5
shall be deleted and replaced with the words " the Breast Cancer Collaboration
and License Agreement dated March 1, 1997, the Option Agreements dated March 1,
1997 and Amendments to said: (a) Tuberculosis Collaboration and License
Agreement; (b) Breast Cancer Collaboration and License Agreement; and (c) Option
Agreements".
9. In the first sentence of Section 16(d) of the Prostate Cancer
Agreement, "Licensed" shall be inserted between "... Products in the ..." and
"... Field ...".
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to be executed by its duly authorized officer as of the date first written
above.
Agreed to and accepted by: Agreed to and accepted by:
CORIXA CORPORATION SMITHKLINE BEECHAM
BIOLOGICALS
MANUFACTURING S.A.
/s/ Mark McDade /s/ Jean Stephenne
_____________________ By: _______________________
Mark McDade Name: Jean Stephenne
Chief Operating Officer Its: Senior Vice President,
General Manager
<PAGE> 1
EXHIBIT 10.3
AMENDMENT NO. 1
TO OPTION AGREEMENT
This Amendment No. 1 (the "Amendment") to the Option Agreement (the
"Option Agreement") is made effective as of February 5, 1998 (the "Effective
Date") by and between Corixa Corporation, a Delaware corporation having its
principal place of business at 1124 Columbia Street, Suite 200, Seattle,
Washington 98104 ("Corixa") and SmithKline Beecham Biologicals Manufacturing
S.A., a Belgian corporation with its principal place of business at Rue de
l'Institut 89, B-1330 Rixensart, Belgium ("SB").
RECITALS
WHEREAS, Corixa and SB entered into the Option Agreement dated as of
March 1, 1997 pursuant to which Corixa granted SB an option to enter into
agreements for antigens for vaccine products for the prevention and/or treatment
of colon and/or ovarian cancers in accordance with the terms of the Option
Agreement.
WHEREAS, Corixa and SB now wish to amend the Option Agreement as
hereinafter provided.
NOW, THEREFORE, the parties hereby agree to amend the Option Agreement
as follows:
1. The following shall be inserted in Sentence 1 of Section 2(a) and
Section 3(a) between "in the Collaboration Agreement" and "; provided, that the
parties acknowledge":
", as amended from time to time, including without limitation, by
Amendment No 1. dated February 5, 1998"
2. Except as expressly modified herein, the Option Agreement shall
remain in full force and effect in accordance with its terms.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to be executed by its duly authorized officer as of the date first written
above.
Agreed to and accepted by: Agreed to and accepted by:
CORIXA CORPORATION SMITHKLINE BEECHAM
BIOLOGICALS
MANUFACTURING S.A.
/s/ Mark McDade /s/Jean Stephenne
By:________________________________ By:____________________________
Mark McDade Jean Stephenne
Chief Operating Officer Senior Vice-President
General Manager
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 8,281,670
<SECURITIES> 49,461,555
<RECEIVABLES> 570,952
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 59,588,475
<PP&E> 6,370,542
<DEPRECIATION> 2,281,339
<TOTAL-ASSETS> 63,860,311
<CURRENT-LIABILITIES> 4,021,263
<BONDS> 10,808,250
0
0
<COMMON> 11,783
<OTHER-SE> 49,030,798
<TOTAL-LIABILITY-AND-EQUITY> 63,860,331
<SALES> 0
<TOTAL-REVENUES> 2,796,480
<CGS> 0
<TOTAL-COSTS> 6,439,678
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 828,495
<INCOME-PRETAX> (2,837,023)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,837,023)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,837,023)
<EPS-PRIMARY> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
