<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 21, 1998
REGISTRATION NO. 333-47725
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ANTHRA PHARMACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5122 22-3007972
(STATE OF INCORPORATION) (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
103 CARNEGIE CENTER, SUITE 102
PRINCETON, NEW JERSEY 08540
(609) 514-1060
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MICHAEL C. WALKER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ANTHRA PHARMACEUTICALS, INC.
103 CARNEGIE CENTER, SUITE 102
PRINCETON, NEW JERSEY 08540
(609) 514-1060
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
JOSEPH W. BARTLETT, ESQ. ROBERT H. WERBEL, ESQ.
MORRISON & FOERSTER LLP WERBEL & CARNELUTTI
1290 AVENUE OF THE AMERICAS A PROFESSIONAL CORPORATION
NEW YORK, NEW YORK 10104-0012 711 FIFTH AVENUE
(212) 468-8000 NEW YORK, NEW YORK 10022
(212) 832-8300
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of the Registration Statement.
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE REGISTRATION FEE(3)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value....................... 3,105,000 $11.50 $35,707,500 $10,533.71
==============================================================================================================================
</TABLE>
(1) Includes shares of Common Stock that the Underwriters have the option to
purchase to cover over-allotments, if any.
(2) Calculated pursuant to Rule 457(a) under the Securities Act.
(3) Of such amount, $9,363.30 was paid at the time of the initial filing of the
Registration Statement.
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED MAY 21, 1998
PRELIMINARY PROSPECTUS
2,700,000 SHARES
[ANTHRA PHARMACEUTICALS, INC. LOGO]
COMMON STOCK
------------------------
All of the shares of Common Stock offered hereby are being sold by Anthra
Pharmaceuticals, Inc. (together with its wholly owned subsidiary, "Anthra" or
the "Company"). Prior to this offering (the "Offering"), there has been no
public market for the Common Stock of the Company. It is currently estimated
that the initial public offering price will be between $9.50 and $11.50 per
share. See "Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price. Application has been made to have
the Common Stock approved for quotation on the Nasdaq National Market, which has
reserved the Nasdaq trading symbol "ANTH" to identify the Company.
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=======================================================================================================================
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share................................... $ $ $
- -----------------------------------------------------------------------------------------------------------------------
Total(3).................................... $ $ $
=======================================================================================================================
</TABLE>
(1) The Company has agreed to reimburse the Underwriters for certain expenses
incurred in connection with the Offering and to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of the Offering of $500,000 payable by
the Company, including the reimbursement of expenses of the Underwriters of
up to $150,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 405,000 additional shares of Common Stock on the same terms and
conditions as the securities offered hereby solely to cover over-allotments,
if any. If such option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions, and Proceeds to Company, will be
$ , $ , and $ , respectively. See "Underwriting."
------------------------
The shares are being offered by the Underwriters, subject to prior sale,
when, as and if accepted by them and subject to the right of the Underwriters to
reject any order in whole or in part and certain other conditions. It is
expected that delivery of the certificates for the Common Stock will be made on
or about , 1998, at the offices of Allen & Company
Incorporated, 711 Fifth Avenue, New York, New York 10022.
------------------------
ALLEN & COMPANY GRUNTAL & CO., L.L.C.
INCORPORATED
The date of this Prospectus is , 1998.
<PAGE> 3
[GRAPHIC DEPICTING DEVELOPMENT OF VALSTAR AND BONEFOS(R)]
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT, THE PRICE OF THE COMMON STOCK.
SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES OF COMMON STOCK FOLLOWING
THE PRICING OF THE OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE COMMON
STOCK OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE COMMON STOCK AND THE
IMPOSITION OF PENALTY BIDS.
MOST OF THE COMPANY'S DRUG PRODUCT CANDIDATES ARE CURRENTLY UNDERGOING
CLINICAL TRIALS. TO DATE, THE COMPANY HAS NOT COMPLETED THE DEVELOPMENT, OR
GENERATED REVENUES FROM SALES, OF ANY PRODUCTS, AND UNITED STATES FOOD AND DRUG
ADMINISTRATION AND OTHER REGULATORY APPROVALS WILL BE REQUIRED BEFORE SUCH
PRODUCTS CAN BECOME COMMERCIALLY AVAILABLE.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus, including "Risk Factors" and
the Consolidated Financial Statements and Notes thereto. Unless otherwise
indicated, all information in this Prospectus assumes (i) no exercise of the
Underwriters' over-allotment option or currently outstanding stock options
granted by the Company, and (ii) the conversion of an aggregate of 3,789,683
shares of the Company's Series A, B, C and D Convertible Preferred Stock (the
"Preferred Stock") into an aggregate of 3,789,683 shares of Common Stock
effective upon the closing of the Offering (the "Preferred Stock Conversion").
All references to the "Company" or "Anthra" herein include Anthra
Pharmaceuticals, Inc. and its wholly owned United Kingdom subsidiary, Anthra
Pharmaceuticals Ltd., unless the context otherwise requires. Unless otherwise
indicated, all references to years refer to the fiscal years of the Company
ending June 30.
THE COMPANY
Anthra Pharmaceuticals, Inc. is a specialized pharmaceutical company
engaged in clinical development and obtaining regulatory approval of New Drug
Applications ("NDAs") and supplemental NDAs ("sNDAs") for a portfolio of its
proprietary cancer drugs. The Company's current drug candidates are for the
treatment of patients with superficial cancer of the bladder, ovarian and
prostatic cancer, and complications from metastatic cancer (hypercalcemia and
lytic bone disease). The Company's strategy is to develop only late stage drug
candidates, thereby improving the likelihood of successfully obtaining NDA/sNDA
and equivalent foreign approvals. The Company directs its search for oncology
drug candidates toward selected large pharmaceutical companies, because of the
difficulty many of these companies have experienced in managing oncology
projects, and at biotechnology and early stage discovery companies that lack
clinical and regulatory proficiency. To maximize the return on its investment in
each drug, Anthra seeks approvals for multiple disease indications for each
product and directly manages both its United States and foreign clinical
programs and regulatory submissions.
In December 1997, Anthra filed an NDA for its first product, Valstar
(valrubicin, AD 32), for treatment of patients with superficial bladder cancer
whose principal current alternative is the surgical removal of their urinary
bladder. In January 1998, Anthra received priority designation from the United
States Food and Drug Administration (the "FDA") for the review of this NDA, and
the Oncology Drug Advisory Committee ("ODAC") is expected to provide its
recommendations to the FDA regarding this NDA at the ODAC meeting scheduled for
June 1, 1998. The Company anticipates that this NDA for Valstar will be
approvable by the FDA during 1998.
Valstar is an anthracycline with multiple cytotoxic mechanisms that was
discovered at the Dana-Farber Cancer Institute, Harvard University Medical
School ("Dana-Farber"). Valstar has been shown to have significant activity
against a variety of tumor cell lines and is not associated with significant
contact toxicity, thereby making it an ideal choice for regional chemotherapy.
The Company's pivotal clinical studies have demonstrated a complete response
rate of 22% in a group of 90 patients with bladder cancer who had not responded
satisfactorily to extensive pre-treatment with Bacillus Calmette Guerin ("BCG"),
the accepted first line treatment for superficial bladder cancer. There are
currently no drugs approved in the United States or Europe for second-line
treatment of bladder cancer following BCG therapy. For these patients, surgical
removal of the bladder is the only approved definitive form of therapy.
Importantly, 45% of the patients in the Company's pivotal clinical studies
retained their bladder 30 months following study entry. Anthra, consistent with
its multiple disease indication strategy, is developing Valstar for three
additional indications. One Phase III program is directed at patients with
papillary superficial bladder cancer, for whom approximately 180,000
transurethral resection procedures are being performed annually in the United
States. In another Phase III program involving patients with ovarian cancer,
Valstar is being administered directly into the peritoneal cavity, where the
cancer is confined. In addition, Anthra plans to commence a Phase I program to
obtain approval for use of Valstar in treating prostate cancer. The Company has
researched the historical incidence of each of these diseases based on publicly
available information and reports prepared for the Company by MedProbe, Inc.
("MedProbe"), including a report summarizing the results of a survey of 1.5%
(124) of office and hospital based urologists reported to be members of the
American Medical Association ("AMA"). Although precise patient data is not
published and can vary significantly from year to year, based
3
<PAGE> 5
on the foregoing research and certain assumptions made by the Company, including
the estimated cost of treating each of the estimated number of patients with
Valstar, the Company estimates that the potential market for Valstar in the
United States could approximate nearly $600 million per annum, see "Business --
Products and Markets -- Valstar: Market," and that foreign markets will provide
a significant additional opportunity for sales of Valstar. No assurance can be
given by the Company that this estimated market for Valstar will be achieved.
A United States subsidiary of Medeva plc (collectively with Medeva plc,
"Medeva") has committed up to $26.2 million (of which $8 million has been paid
to date) and the payment of future royalties for the right to market and sell
Valstar in the United States. Anthra currently has similar arrangements for
Valstar with Nycomed Pharma AS ("Nycomed"), and Almirall Prodesfarma, S.A.
("Almirall"), with respect to marketing and sales rights in Europe. In total,
Anthra has entered into agreements for Valstar providing potential equity
investment, licensing and development fees and milestone payments of up to $42.9
million (of which $22.3 million has been paid to date), plus additional royalty
and supply payments.
In accord with the Company's corporate development strategy, Anthra
identified Bonefos(R), a product for the treatment of hypercalcemia and lytic
bone disease associated with breast and lung cancer and owned by Schering AG,
Germany, the Company's largest pharmaceutical shareholder. Anthra negotiated and
signed a term sheet (the "Bonefos Agreement in Principle") with Schering AG,
Germany's affiliates, Berlex Laboratories, Inc. ("Berlex") and Leiras Oy, to
acquire the exclusive United States development and marketing rights to
Bonefos(R) for the hypercalcemia and lytic bone disease indications, for
payments aggregating $3.75 million. Bonefos(R) has been on the market in Europe
and the rest of the world since 1985, with worldwide sales of approximately $150
million in 1997. The Company plans to conduct Phase III trials in the United
States for Bonefos(R) for the hypercalcemia and lytic bone disease indications
upon execution of definitive documentation memorializing the Bonefos Agreement
in Principle. The Bonefos Agreement in Principle contemplates that, upon FDA
approval of an NDA for Bonefos(R), Berlex will have the option to acquire from
the Company the exclusive right to market Bonefos(R) in the United States for
the hypercalcemia and lytic bone disease indications for payments of up to $21
million, plus future royalties. The Company has researched the historical
incidence of hypercalcemia and the types of lytic bone disease that Bonefos(R)
treats based on publicly available information. Although precise patient data is
not published and can vary significantly from year to year, based on the
foregoing research and certain assumptions made by the Company, including the
estimated costs of utilizing Bonefos(R) for the treatment of these maladies
using each of the estimated number of patients, the Company estimates that the
potential market for Bonefos(R) in the United States could approximate nearly
$900 million per annum. See "Business -- Products and Markets -- Bonefos(R):
Market." No assurance can be given by the Company that this estimated market for
Bonefos(R) will be achieved.
Anthra believes that its strategy and accomplishments have positioned it to
become a recognized platform for the clinical substantiation and regulatory
approval of cancer drugs capable of treating multiple disease indications. The
Company is currently assessing and evaluating additional cancer-related late
stage candidates for acquisition, although no definitive agreements have been
executed. Management believes that focused, cost effective development increases
the likelihood of successful clinical development and regulatory approval.
Indicative of this strategy has been the Company's success in filing an NDA for
Valstar at a total cost of less than $20 million. According to Parexel's
Pharmaceutical Statistical Sourcebook (1997) ("PPSS"), in the United States, the
cost of developing an approved new drug has been estimated to be between $304
million and $608 million.
The Company currently manages its clinical development program for the
United States from Princeton, New Jersey, and its program for Europe from
Princes Risborough, England through Anthra Pharmaceuticals Ltd., its wholly
owned United Kingdom subsidiary ("Anthra UK"). The Company further anticipates
that it may manage the manufacturing, supply, development and distribution of
Valstar and Bonefos(R) from Switzerland through one or more wholly owned Swiss
subsidiaries, which would hold substantially all of the Company's rights to
Valstar and Bonefos(R).
The Company was incorporated in Delaware on June 25, 1985. The Company's
principal executive offices are located at 103 Carnegie Center, Suite 102,
Princeton, New Jersey 08540 and its telephone number is (609) 514-1060.
4
<PAGE> 6
THE OFFERING
Common Stock offered by the
Company......................... 2,700,000 shares
Common Stock to be outstanding
after the Offering.............. 7,555,183 shares(1)
Use of proceeds................. Progress payments for the acquisition of
Bonefos(R), for development of products, and
for general corporate purposes, including
potential additional product acquisitions and
purchases of product inventory. See "Use of
Proceeds."
Reserved Nasdaq National Market
symbol........................ ANTH
Risk Factors.................... This Offering involves a high degree of risk.
See "Risk Factors."
- ---------------
(1) Based on shares of Common Stock outstanding at March 31, 1998. Does not
include (a) 1,088,987 shares of Common Stock issuable upon exercise of stock
options outstanding at March 31, 1998, with a weighted average exercise
price of $0.96 per share, of which options to purchase 500,357 shares of
Common Stock were then exercisable (see "Capitalization" and "Management"),
(b) options to purchase 271,500 and 175,000 shares of Common Stock at
exercise prices of $8.00 per share and at a price per share equal to the
fair market value on the date of the occurrence of certain future events,
respectively, granted after March 31, 1998, and (c) certain stock options to
purchase Common Stock or Series D Convertible Preferred Stock which may be
granted to Nycomed pursuant to the Nycomed Agreement (see
"Business -- Products and Market -- Valstar: Licensing Agreements").
5
<PAGE> 7
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED JUNE 30, MARCH 31,
------------------------------------------------------- -------------------------
1993 1994 1995 1996 1997 1997 1998
----------- ----------- ------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue................... $ -- $ -- $ -- $ 2,171 $ 1,688 $ 1,488 $ --
Total operating
expenses................ 1,370 2,489 2,712 4,172 7,292 4,635 7,422
Other income (expense).... 33 37 94 111 139 120 290
------- ------- ------- ------- ------- ------- -------
Net loss.................. $(1,337) $(2,452) $(2,618) $(1,890) $(5,465) $(3,027) $(7,132)
======= ======= ======= ======= ======= ======= =======
Net loss allocable to
common stockholders..... $(1,536) $(2,874) $(3,271) $(2,543) $(6,118) $(3,517) $(7,621)
======= ======= ======= ======= ======= ======= =======
Basic and diluted net loss
per share allocable to
common
stockholders(1)......... $ (2.15) $ (4.02) $ (4.24) $ (3.01) $ (5.79) $ (3.34) $ (7.15)
Shares used in computing
basic and diluted net
loss per share allocable
to common
stockholders(1)......... 716 716 771 844 1,057 1,055 1,066
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------------------------
(UNAUDITED)
PRO FORMA AS
ACTUAL PRO FORMA(2) ADJUSTED(2)(3)
CONSOLIDATED BALANCE SHEET DATA: -------- ------------ --------------
<S> <C> <C> <C>
Cash and cash equivalents............................ $ 5,681 $ 5,681 $ 31,743
Working capital...................................... 4,891 4,891 31,104
Total assets......................................... 6,203 6,203 31,918
Contingent stock obligation(4)....................... 8,000 8,000 8,000
Mandatorily redeemable convertible preferred stock... 11,460 -- --
Convertible preferred stock.......................... 6 -- --
Deficit accumulated during the development stage..... (22,001) (22,001) (22,001)
Total stockholders' equity (deficit)................. (14,132) (2,672) 23,193
</TABLE>
- ---------------
(1) See Note 2 of Notes to Consolidated Financial Statements.
(2) Gives effect to the conversion of all issued and outstanding shares of
Preferred Stock into 3,789,683 shares of Common Stock.
(3) As adjusted to give effect to the sale of the 2,700,000 shares of Common
Stock by the Company offered hereby at an assumed initial public offering
price of $10.50 per share, less underwriting discounts and commissions and
estimated offering expenses, and the anticipated application of the
estimated net proceeds therefrom. See "Use of Proceeds" and
"Capitalization."
(4) See Note 5 of Notes to Consolidated Financial Statements.
6
<PAGE> 8
RISK FACTORS
In addition to the other information in this Prospectus, investors should
carefully consider the following risk factors when evaluating an investment in
the Common Stock offered hereby. The Company cautions prospective investors that
the following list of risk factors may not be exhaustive.
Certain statements contained in "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business," including statements regarding the anticipated
development and expansion of the Company's business, the products which the
Company expects to offer, anticipated research and development expenditures and
regulatory reform, the intent, belief or current expectations of the Company,
its Directors or its officers, primarily with respect to the future operating
performance of the Company, other statements contained herein regarding
performance of the Company, and other statements contained herein regarding
matters that are not historical facts, are forward-looking statements. Because
such statements include risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward-looking statements.
These statements appear in a number of places in this Prospectus and include
statements regarding the intent, belief or current expectations of the Company,
its Directors or its officers with respect to, among other things: (i) whether
the Company will receive, and the timing of, regulatory approvals or clearances
to market Valstar and Bonefos(R) and any other potential products; (ii) the
results of current and future clinical trials; and (iii) the time and expenses
associated with the regulatory approval process for products. The success of the
Company's business operations is in turn dependent on factors such as the
receipt and timing of regulatory approvals or clearances for potential products,
the effectiveness of the Company's marketing strategies to market its current
and any future products, the Company's ability to enter into agreements for the
manufacture of its products on a commercial scale, the appeal of the Company's
mix of products, the Company's success at entering into and collaborating with
others to conduct effective strategic alliances and joint ventures, general
competitive conditions within the biotechnology and pharmaceutical industry, and
general economic conditions. Factors that could cause actual results to differ
materially from those expressed or implied by such forward-looking statements
include, but are not limited to, the factors set forth in "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business."
History of Losses; Accumulated Deficit and Anticipated Future Losses. To
date, the Company has been engaged primarily in clinical research and
development activities and has generated revenues only recently. At March 31,
1998, the Company has an accumulated deficit of $22.0 million since inception
and losses are expected to continue through 1999. The Company will be required
to conduct substantial clinical research and development for all of its current
and proposed products, which activities are expected to result in operating
losses for the foreseeable future. In addition, to the extent the Company relies
upon others for commercialization activities, the Company's ability to achieve
profitability will be dependent upon the success of such third parties. The
extent and duration of future losses is highly uncertain, and there can be no
assurance that the Company will be able to achieve profitability on a sustained
basis, if at all.
Limited History of Product Development. The Company has no products
approved for sale. The Company has filed an NDA with the FDA for Valstar for
treatment of refractory carcinoma in-situ of the bladder, and has clinical
trials in progress or planned for three other disease indications for Valstar.
However, there can be no assurance that the FDA will grant the Company approval
with respect to such NDA, or that any of the clinical trials in progress will
either have successful results or lead to approved sNDAs. Failure to obtain such
approvals would have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company has entered into the Bonefos Agreement in Principle to obtain
development and marketing rights for the United States market for a second
product, Bonefos(R), for the hypercalcemia and lytic bone disease indications.
The Bonefos Agreement in Principle is subject to the execution of mutually
acceptable definitive documentation, and there can be no assurance that such
documentation will be agreed to or that the Company will acquire the rights to
Bonefos(R) described above. Bonefos(R) is the subject of an ongoing clinical
trial with respect to one indication. The Company plans to commence clinical
trials for a second indication for Bonefos(R) upon execution of definitive
documentation relating to the transactions contemplated by the Bonefos
7
<PAGE> 9
Agreement in Principle. However, there can be no assurance that either of the
clinical trials will be completed with successful results or that such results
will lead to the successful filing and approval of this product for any
indication.
Before obtaining regulatory approval for commercial sale, a product
candidate must be shown through preclinical and clinical trials that it is safe
and effective for use in each target indication. The results from preclinical
and early clinical trials may not be predictive of results that will be obtained
in large-scale clinical trials. There can be no assurance that clinical trials
of the Company's product candidates will demonstrate sufficient safety and
efficacy to obtain the requisite regulatory approvals or will result in
marketable products.
While the Company has submitted an NDA to the FDA with respect to Valstar
for the treatment of refractory carcinoma in-situ of the bladder, results
obtained with respect to the clinical trials for this indication for Valstar may
not be representative of results of clinical trials for other indications. The
pivotal Phase III studies of Valstar for other indications seek efficacy data,
as well as additional safety data, and will require substantial time and
significant funding. There can be no assurance that clinical studies for
additional indications for Valstar currently under development will be completed
successfully within any specified time period, if at all. Further, there can
also be no assurance that such testing will show Valstar to be safe or effective
for these indications. There can be no assurance that the Company will not
encounter problems in clinical trials that will cause the Company to delay or
suspend clinical trials. If the Company's product candidates are not shown to be
safe and effective in clinical trials, there would be a material adverse effect
on the Company's business, financial condition and results of operations. See
"Business -- Products and Markets."
Short-Term Dependence on Valstar. The Company filed an NDA for approval to
market Valstar for the treatment of patients with carcinoma in-situ of the
bladder, whose principal current alternative is surgical removal of their
urinary bladder. Two additional indications are being investigated in two Phase
III trials, and the Company anticipates that it will investigate a fourth
indication in a Phase I trial. Valstar has not been approved for marketing by
the FDA or any foreign regulatory agency for any indication, and trials to date
have involved a limited number of patients. There can be no assurance that
marketing approval for Valstar for any indication will be obtained. If Valstar
is approved for marketing, there can be no assurance that it will gain market
acceptance or that the marketing efforts necessary to gain any such acceptance
will prove effective or not cost more than the benefit gained thereby. In
addition, competition to Valstar may develop from other new and existing
products. The failure of Valstar to be approved for marketing or to gain market
acceptance would have a material adverse effect on the Company's business,
financial condition and results of operations. While the Company has executed
the Bonefos Agreement in Principle regarding the acquisition of development and
marketing rights for the United States market for Bonefos(R) for the
hypercalcemia and lytic bone disease indications, there can be no assurance that
this transaction will be consummated, that regulatory approval will be obtained
for Bonefos(R) for such indications in the United States, or that Bonefos(R) can
be successfully commercialized for such indications in the United States.
The number of patients in the United States with refractory carcinoma
in-situ of the bladder is limited and may be as few as 5,000 patients per annum.
In order to increase the number of indications for which Valstar may be used,
the Company must (i) successfully complete large clinical trials demonstrating
that drug activity is sufficient in each indication, (ii) file sNDAs for and
obtain marketing clearance from the FDA for each additional indication,
following approval of the NDA, (iii) make similar filings with and obtain
similar approvals from foreign regulatory agencies, and (iv) provide support for
the successful market launch and penetration of the product. There can be no
assurance that the Company will successfully complete the required clinical
trials and receive approvals for the additional indications on a timely basis,
if at all, or successfully market the product. Such an inability would have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Government Regulation."
Uncertainties Related to Clinical Trials. The Company has limited
experience in conducting multiple clinical trials. Before obtaining regulatory
approval for the commercial sale of its products and their respective
indications, the Company is required to demonstrate through preclinical studies
and clinical trials that the products are safe and effective for use in each
target indication. The results from preclinical studies and early
8
<PAGE> 10
clinical trials may not predict the results that will be obtained in large-scale
testing, and there can be no assurance that the clinical trials conducted by the
Company or its partners will demonstrate sufficient safety and efficacy to
obtain required regulatory approvals or will result in marketable products. In
addition, clinical trials are often conducted with patients having the most
advanced stage of disease. During the course of treatment, these patients may
die or suffer other adverse medical effects for reasons that are not related to
the pharmaceutical agent being tested, but which can nevertheless affect
clinical trial results. A number of companies in the pharmaceutical and
biotechnology industries have suffered significant setbacks in advanced clinical
trials, even after achieving promising results in earlier trials.
The completion of clinical trials of the Company's product candidates could
be delayed or terminated by many factors and there can be no assurance that such
delays or terminations will not occur. One such factor is the rate of enrollment
of patients, which generally varies throughout the course of a clinical trial
and which depends upon the size of the patient population, the number of
clinical trial sites, the proximity of patients to clinical trial sites, the
eligibility criteria for the clinical trial, and the existence of competitive
clinical trials. The Company cannot control the rate at which patients present
themselves for enrollment, and there can be no assurance that the rate of
patient enrollment will be consistent with the Company's expectations or be
sufficient to enable clinical trials of the Company's product candidates to be
completed in a timely manner. Any delays in, or termination of, the clinical
trials of any of the Company's product candidates could have a material adverse
effect on the Company's business, financial condition and results of operations.
There is also the possibility that unacceptable side effects will be
discovered during preclinical or clinical testing of the Company's products.
Even after approval for marketing, a product may later be shown to be
ineffective or to have unacceptable side effects not discovered during testing,
requiring limitations on its use or withdrawal from the market.
Dependence on Licensees and Other Third Parties. The Company does not
intend to market any of its product candidates directly in the foreseeable
future. The Company has granted the right to commercialization and marketing
activities relating to Valstar to various licensees with respect to certain
territories. See "Business -- Products and Markets -- Valstar: Licensing
Agreements." Pursuant to the Company's agreement with Medeva covering the United
States, the Company received an initial non-refundable payment of $8 million,
but will not receive the additional payments aggregating up to $18.2 million
unless certain milestones are achieved. Under the Company's agreement with
Nycomed covering, among other territories, certain parts of Western and Eastern
Europe and Russia, Nycomed made a $4.5 million equity investment in the Company,
but is only obligated to make certain additional payments, aggregating up to $2
million, upon the attainment by Anthra of certain milestones. The Company will
also be obligated to issue certain options to purchase additional equity in the
Company upon the achievement of certain milestones. Pursuant to the Company's
agreement with Almirall covering Spain and Portugal, Anthra received an initial
licensing payment of $200,000 and an equity investment of approximately
$750,000, and may receive additional payments aggregating up to $400,000 if
certain milestones are achieved. The Company is also entitled to royalty and/or
supply payments under the Medeva, Nycomed and Almirall agreements and, although
each of such agreements has a minimum term of 10 years, the commencement date
for such payments under each agreement will remain undetermined until Valstar is
approved for sale in the relevant jurisdiction. Accordingly, the Company is
substantially dependent on these licensees for the funding necessary to support,
and the commercial success of, this product candidate. In the event that any of
the licensees subsequently terminates its agreement with the Company or
otherwise fails to conduct its collaborative activities successfully and in a
timely manner, the commercialization of the licensed Valstar product candidate
could be delayed. Any such delay could have a material adverse effect on the
Company's business, financial condition and results of operations. Furthermore,
if the transactions contemplated by the Bonefos Agreement in Principle with
respect to Bonefos(R) are consummated on substantially the terms set forth in
the Bonefos Agreement in Principle, and Berlex should exercise its option to
acquire the United States marketing rights for Bonefos(R) for the hypercalcemia
and lytic bone disease indications, the Company would be dependent upon the
marketing efforts of Berlex with respect thereto.
The Company has no experience in sales, marketing or distribution and is
relying on its licensing arrangements pursuant to which third parties will sell,
market and distribute its products. The Company is
9
<PAGE> 11
currently dependent to a significant extent on corporate partners, licensees and
other entities for manufacturing and marketing of its products. If the Company
engages directly in manufacturing or marketing, the Company will require
substantial additional funds and personnel and will be required to comply with
extensive regulations applicable to such activities. There can be no assurance
that the Company will be able to develop or contract for these capacities when
required in connection with the Company's business. Any revenues received by the
Company will depend upon the efforts of third parties, and there can be no
assurance that such efforts will be successful. See "Business -- Products and
Markets."
The Company intends to enter into additional corporate alliances to develop
and commercialize products. The Company may grant to its collaborative partners
rights to commercialize any products developed under or covered by these
collaborative agreements. The amount and timing of resources devoted to these
activities generally will be controlled by each such individual partner. There
can be no assurance that such corporate partners will successfully commercialize
any such products or will not pursue alternative technologies or develop
competitive products for the treatment of the diseases targeted by the Company's
programs.
There can be no assurance that the Company will be successful in
establishing any additional collaborative arrangements, that products will be
successfully commercialized under any collaborative arrangement or that the
Company will derive any revenues from such arrangements. In addition, the
Company's strategy involves entering into multiple, concurrent strategic
alliances to pursue commercialization of its products. There can be no assurance
that the Company will be able to manage simultaneous alliances successfully.
With respect to existing and potential future strategic alliances and
collaborative arrangements, the Company will be dependent upon the expertise and
dedication of sufficient resources by these outside parties to manufacture
and/or market products. Should a strategic alliance partner or collaborative
partner fail to commercialize a product to which it has rights, the Company's
business, financial condition and results of operations could be materially and
adversely affected.
Future Capital Needs and Commitments; Uncertainty of Additional
Funding. The Company anticipates that its existing resources, including the net
proceeds of the Offering and contingent funding from Medeva, Berlex (assuming
the consummation of certain transactions contemplated by the Bonefos Agreement
in Principle), Nycomed and Almirall (collectively, the "Collaborative
Partners"), will be sufficient to fund the Company's operating expenses and
capital requirements through the year 2000. There can be no assurance, however,
that the results of research and development activities, potential relationships
with strategic partners, changes in the focus and direction of the Company's
research and development programs, competitive and technological advances, the
regulatory approval process, and other factors, will not result in the
exhaustion of the Company's resources before such time. The Company will require
substantial funds in addition to the proceeds of the Offering to conduct
research and development activities, clinical trials, and apply for regulatory
approvals for any potential products in addition to Valstar and Bonefos(R). If
the Company engages directly in such activities or in the event scheduled
payments are not made by Collaborative Partners or any related agreements are
terminated, such events could materially and adversely affect the Company's
business, financial condition and results of operations.
The Company may seek additional funding through collaborative arrangements
and public or private financings, including equity financings. There can be no
assurance that such collaborative arrangements or additional financing will be
available on acceptable terms, if at all. If additional funds are raised by
issuing equity securities, further dilution to stockholders may result. If
adequate funds are not available, the Company may be required: (i) to delay,
reduce the scope of or eliminate one or more of its development programs or
forfeit its rights to licensed products or technologies; (ii) to obtain funds
through arrangements with collaborative partners or others that may require the
Company to relinquish rights to certain of its technologies, product candidates
or products that the Company would otherwise seek to develop or commercialize
itself; or (iii) to license the rights to such products on terms that are less
favorable to the Company than might otherwise be available. Any of the foregoing
developments could have a material adverse effect upon the Company's business,
financial condition and results of operations. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
10
<PAGE> 12
Uncertainty of Government Regulatory Requirements; Lengthy Approval
Process. The research, development, preclinical and clinical trials,
manufacturing, labeling, and marketing related to the Company's products are
subject to an extensive regulatory approval process by the FDA and other
regulatory agencies in the United States and abroad. The process of obtaining
FDA and other required regulatory approvals for drug and biologic products,
including required preclinical and clinical testing, is lengthy, expensive and
uncertain. There can be no assurance that, even after such time and
expenditures, the Company will be able to obtain necessary regulatory approvals
for clinical testing or for the manufacturing or marketing of any products or
that the approved labeling will be sufficient for favorable marketing and
promotional activities. The Company may encounter significant delays or
excessive costs in its efforts to secure necessary approvals or licenses. Even
if regulatory clearance is obtained, a marketed product is subject to continual
review, and later discovery of previously unknown defects or failure to comply
with the applicable regulatory requirements may result in restrictions on a
product's marketing or withdrawal of the product from the market as well as
possible civil or criminal sanctions.
Satisfying regulatory requirements, which includes demonstrating to the
satisfaction of appropriate regulatory authorities, such as the FDA, that the
relevant product is both safe and effective, typically takes several years or
more depending upon the type, complexity and novelty of the product and requires
the expenditure of substantial resources. There can be no assurance that the
Company will not encounter problems in clinical trials which would cause the
Company or the FDA or other regulatory body to delay or suspend clinical trials.
Any such delay or suspension could have a material adverse effect on the
Company's business, financial condition and results of operations. Even after
approval, marketed products are subject to continuing FDA review, and they can
be withdrawn from the market, or new limitations placed on their labeling,
marketing, distribution, manufacture, or use, if new side effects are discovered
or if the products are shown to be less effective than previously believed. See
"Business -- Products and Markets" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
As with all specialized pharmaceutical companies, biotechnology companies,
large pharmaceutical companies and drug delivery companies, there can be no
assurance that FDA or other regulatory approvals for any of Anthra's
pharmaceutical products will be granted on a timely basis, if at all. The FDA
and comparable agencies in foreign countries impose substantial requirements on
the introduction of new pharmaceutical products through lengthy and detailed
preclinical and clinical testing procedures, sample testing and other costly and
time-consuming compliance procedures. For example, clinical trials subject to
FDA review are rigorously regulated and must meet requirements for FDA review
and oversight, and requirements under Good Clinical Practice guidelines. A new
drug may not be marketed in the United States until it has been approved by the
FDA, or marketed in foreign countries until it has been approved by the
appropriate regulatory authorities for such countries. There can be no assurance
that the Company will not encounter delays or rejections or that the FDA or
other applicable regulatory agency will not make policy changes during the
period of product development and regulatory review of each submitted NDA or
sNDA, or other appropriate documentation. A delay in obtaining or failure to
obtain such approvals would have a material adverse effect on the Company's
business, financial condition and results of operations. Even if regulatory
approval is obtained, the labeling would be limited as to the indicated uses for
which the product may be promoted or marketed. A marketed product, its
manufacturer and the facilities in which it is manufactured are subject to
continual review and periodic inspections. If marketing approval is granted, the
Company would be required to comply with FDA or other applicable regulatory
agency requirements for manufacturing (including compliance with current Good
Manufacturing Practice ("cGMP") requirements), labeling, advertising, record
keeping and reporting of adverse experiences, and other information. In
addition, the Company would be required to comply with Federal and state
anti-kickback and other health care fraud and abuse laws, and their foreign law
equivalents, that pertain to the marketing of pharmaceuticals. Failure to comply
with regulatory requirements and other factors could subject Anthra to
regulatory or judicial enforcement actions, including, but not limited to,
product recalls or seizures, injunctions, withdrawals of product from the
market, civil penalties, criminal prosecution, and withdrawals of existing
approvals, as well as enhanced product liability exposure, any of which could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business -- Government Regulation."
11
<PAGE> 13
The Company has obtained from the FDA a designation for Valstar as an
"orphan drug" ("Orphan Drug"), under the provisions of the Orphan Drug Act of
1983, as amended (the "Orphan Drug Act"), for the treatment of carcinoma in-situ
of the bladder. Although Orphan Drug status may provide an applicant exclusive
marketing rights in the United States for a drug for a designated indication for
seven years following marketing approval, in order to obtain such benefits, the
applicant must be the sponsor of the first NDA approved for that drug and
indication. In addition, Orphan Drug exclusivity does not prohibit the FDA from
approving the same drug manufactured by another sponsor if it is labeled for a
different indication (even if it can be used for the same indication) or if it
is clinically superior to the Orphan Drug in any respect. Moreover, amendment of
the Orphan Drug Act by the United States Congress and reinterpretation by the
FDA are frequently discussed. Therefore, there can be no assurance as to the
precise scope of protection that may be afforded by Orphan Drug status in the
future, or that the current level of exclusivity will remain. See
"Business -- Government Regulation."
Competition. The pharmaceutical and biopharmaceutical industries are
intensely competitive and competition from other pharmaceutical companies,
biotechnology companies and other research and academic institutions is expected
to increase. Many of these companies have substantially greater financial and
other resources and research and development capabilities than the Company and
have substantially greater experience in undertaking preclinical and clinical
testing of products, obtaining regulatory approvals and manufacturing and
marketing pharmaceutical products. The Company is aware of other companies
engaged in the development of anthracycline drugs as chemotherapeutic agents for
various disease indications, including Pharmacia-Upjohn, Aronex, Sequus, Nexstar
and Liposome Company, and a number of other companies and academic institutions
are pursuing anthracycline drug research and are testing other anthracycline
drugs. Valstar may compete for certain uses with numerous other anthracycline
drug products in development by others. In addition to these companies and
institutions involved in the development of anthraycycline drugs, many other
companies have developed products which may compete with Valstar. These
companies include Zeneca, Bristol-Myers Squibb, American Home Products,
SmithKline Beecham, Eli Lilly, Roche, Schering Plough, Bioniche Inc., Mentor and
Takeida-Abbott, all of which develop or commercialize anti-cancer therapies.
With respect to the treatment of prostate cancer, Anthra also faces competition
from companies developing radioactive seed implantation therapies, including
Amersham/Mediphysics, North American Scientific, Theragenics, Imagyn Medical
Technologies and International Isotopes. Furthermore, companies also exist that
compete with Bonefos(R) by developing other bisphosphonates for the treatment of
hypercalcemia and lytic bone disease. These companies include Proctor & Gamble,
Sanofi, Novartis, Merck and MGI Pharmaceutical. There can be no assurance that
the Company will develop products that are as effective as or achieve greater
market acceptance than competitive products, or that the Company's competitors
will not succeed in developing products and technologies either that are as
effective as those being developed by the Company or that would render the
Company's products and technologies less competitive or obsolete.
Dependence on Patents and Other Proprietary Rights, Uncertainty of Patent
Position and Proprietary Rights. Valstar is no longer protected by the rights
afforded to the Company by patent protection as a new molecular entity ("NME").
The FDA has designated Valstar as an Orphan Drug for carcinoma in-situ, and the
Company expects to apply for Orphan Drug designation for Valstar in other
disease indications. Orphan Drug designation grants a company market exclusivity
in the indication for a period of seven years after FDA approval if it receives
the first approval of the Orphan Drug for that indication. If another sponsor
receives the first approval, this would prevent the Company from receiving
approval for seven years. There can be no assurance the Company will be granted
Orphan Drug status for any additional product or indication or that such status
will not be challenged, invalidated or circumvented, or that the rights granted
thereunder will provide proprietary protection to the Company or that another
sponsor will not receive Orphan Drug exclusivity first that would block the
Company's ability to obtain its own approval. See "Business -- Government
Regulation."
Bonefos(R) is the subject of several United States patents and patent
applications with expiration dates commencing in 2010 and ending in 2014. The
FDA has designated Bonefos(R) as an Orphan Drug for the treatment of osteolysis
(hypercalcemia). There can be no assurance that Bonefos(R) will be granted
Orphan
12
<PAGE> 14
Drug status for the treatment of lytic bone disease or that such status will not
be challenged, invalidated or circumvented, or that the rights granted
thereunder will provide proprietary protection to the Company.
Furthermore, the enactment of the legislation implementing the General
Agreement on Trade and Tariffs resulted in certain changes to United States
patent laws effective June 8, 1995. More notably, the term of patent protection
for patent applications filed on or after June 7, 1995 is no longer a period of
17 years from the date of grant, but will commence on the date of issuance and
terminate 20 years from the earlier effective filing date of the application.
Because the time from filing to issuance of an NME patent application is often
more than three years, a 20 year term from the effective date of filing may
result in a substantially shortened term of patent protection, which may
adversely impact the Company's patent position. If this change results in a
shorter period of patent coverage for future products, the Company's business,
financial condition and results of operations could be adversely affected to the
extent that the duration and level of the royalties it is entitled to receive
from a collaborative partner is based on the existence of a valid patent.
The Company's potential products may infringe on patents that have been or
may be granted to competitors, universities or others. The Company is aware of
third party United States patents that contain issued claims that may cover the
proposed formulation for Bonefos(R) and the sale of Bonefos(R) for the treatment
of osteolysis or the modulation of hypercalcemia due to malignancy. If any
technologies, applications, patents or proprietary rights of others conflict
with the Company's activities or patents, the Company may be required to curtail
certain of its operations or seek to license disputed rights from others,
including the right to manufacture and sell Bonefos(R). There can be no
assurance that any such license will be available to the Company on commercially
reasonable terms, if at all. Any such conflict involving the Company, Berlex,
Leiras Oy or their respective affiliates may involve proceedings with patent
regulators or litigation seeking monetary damages and seeking to enjoin the
Company's commercial activities. The Company could incur substantial costs and
diversion of management resources in defending patent infringement claims,
obtaining patent licenses, engaging in interference proceedings or other
challenges to the related patent rights or intellectual property rights made by
others, or in bringing such proceedings or enforcing any patent rights against
others. Some of the Company's competitors have, or are affiliated with companies
having, substantially greater resources than the Company, and such competitors
may be able to sustain the costs of complex patent litigation to a greater
degree and for longer periods of time than the Company. Uncertainties resulting
from the initiation and continuation of any patent or related litigation could
have a material adverse effect on the Company's ability to compete in the
marketplace pending resolution of the disputed matters. The Company's inability
to obtain necessary licenses or its involvement in disputes or proceedings
concerning patent rights could have a material adverse effect on the business,
financial condition and results of operations of the Company.
As the biotechnology industry expands and more patents are issued, the risk
increases that the Company's potential products may give rise to claims that
they infringe the patents of others. Such other persons or entities could bring
legal actions against the Company claiming damages and seeking to enjoin
clinical testing, manufacturing and marketing of the affected products. Any such
litigation could result in substantial cost to the Company and a diversion of
effort by the Company's management and technical personnel. If any such actions
are successful, in addition to any potential liability for damages, the Company
could be required to obtain a license in order to continue to manufacture or
market the affected products. There can be no assurance that the Company would
prevail in any such action or that any license required under any such patent
would be made available on acceptable terms, if at all. Failure to obtain needed
patents, licenses or proprietary information held by others may have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, if the Company becomes involved in litigation, it could
consume a substantial portion of the Company's time and resources.
The Company also relies on trade secret protection for its confidential and
proprietary information. However, trade secrets are difficult to protect and
there can be no assurance that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to the Company's trade secrets or disclose such technology or that
the Company can meaningfully protect its rights to unpatented trade secrets. The
Company requires its consultants and advisors to execute a confidentiality
agreement upon the commencement of a consulting relationship with the Company,
and requires each of its
13
<PAGE> 15
key employees to enter into a similar confidentiality agreement. Such agreements
generally provide that all trade secrets and inventions conceived by the
individual and all confidential information developed or made known to the
individual during the term of the relationship shall be the exclusive property
of the Company and shall be kept confidential and not disclosed to third parties
except in specified circumstances. There can be no assurance, however, that
these agreements will provide meaningful protection for the Company's
proprietary information in the event of unauthorized use or disclosure of such
information.
To the extent that consultants, key employees or other third parties apply
technological information independently developed by them or by others to the
Company's proposed projects, disputes may arise as to the proprietary rights to
such information which may not be resolved in favor of the Company. Certain of
the Company's consultants are employed by or have consulting agreements with
third parties and any inventions discovered by any such individual generally
will not become property of the Company. The occurrence of one or more of the
foregoing events may have a material adverse effect on the Company's business,
financial condition and results of operations.
Dependence on Key Personnel and Consultants. The Company is dependent on
certain of its executive officers. Mr. Michael C. Walker, the Company's
co-founder, President and Chief Executive Officer, and Dr. Joseph V. Gulfo, the
Company's Executive Vice President and Chief Operating Officer, share management
responsibility for corporate operations, business and market development,
direction of clinical programs and contract negotiation. In addition, the
Company is highly dependent on the principal members of its scientific and
management staff, and the loss of any of their services might significantly
delay or prevent the achievement of research, development, or business
objectives. The Company does not maintain key-man life insurance with respect to
any of its employees, although it intends to secure such insurance for Mr.
Walker and Dr. Gulfo, if such insurance can be obtained on reasonable terms. The
Company does not have an employment agreement with Dr. Joseph V. Gulfo, or any
other member of management other than Michael C. Walker. See
"Management -- Employment Agreements." The loss of the services of any of these
key personnel or other key employees of the Company could have a material
adverse effect on the Company. Competition for qualified employees among
pharmaceutical and biotechnology companies is intense, and the loss of certain
of such persons, or an inability to attract, retain and motivate additional
highly skilled employees, could materially and adversely affect the Company's
business, financial condition and results of operations. There can be no
assurance that the Company will be able to retain its existing personnel or
attract and retain additional qualified employees. In addition, the Company may
experience increased compensation costs in order to compete for skilled
employees. See "Management."
The Company is also dependent, in part, upon the continued contributions of
the lead investigators of the Company's sponsored research programs. The Company
also relies on consultants and advisors, including the members of its Scientific
Advisory Board, to assist the Company in formulating its research and
development strategy. Retaining and attracting qualified personnel, consultants
and advisors is critical to the Company's success. In addition, the Company's
scientific consultants and collaborators may have commitments to or consulting
or advisory agreements with other entities that may affect their ability to
contribute to the Company or may be competitive with the Company. See
"Management."
In order to pursue its product development and marketing and sales plans,
the Company will be required to hire additional qualified scientific personnel
to perform research and development, as well as personnel with expertise in
clinical testing, government regulation, manufacturing, and marketing and sales.
The Company faces competition for qualified individuals from numerous
pharmaceutical and biotechnology companies, universities and other research
institutions. There can be no assurance that the Company will be able to attract
and retain such individuals on acceptable terms, if at all, and the failure to
do so could have a material adverse effect on the Company's business, financial
condition and results of operations.
Risk of Product Liability; Availability of Insurance. The use of the
Company's potential products in clinical trials and the marketing of any
pharmaceutical products may expose the Company to product liability claims. The
Company has obtained a level of liability insurance coverage that it deems
appropriate for its current stage of development. However, there can be no
assurance that the Company's present insurance coverage is adequate. Such
existing coverage will not be adequate as the Company further develops products,
14
<PAGE> 16
and no assurance can be given that in the future adequate insurance coverage
will be available in sufficient amounts or at a reasonable cost. A successful
product liability claim could have a material adverse effect on the business and
financial condition of the Company.
Uncertainty Related to Health Care Reimbursement and Reform Measures. In
both United States and foreign markets, sales of the Company's proposed products
and the Company's success will depend in part on the availability of
reimbursement from third-party payors such as government health administration
authorities, private health insurers and other organizations. The levels of
revenues and profitability of pharmaceutical companies may be affected by the
continuing efforts of governmental and third-party payors to contain or reduce
the costs of health care. Over the past decade, the cost of health care has
risen significantly, and there have been numerous proposals by legislators,
regulators and third-party health care payors to curb these costs. Some of these
proposals have involved limitations on the amount of reimbursement for certain
products. There can be no assurance that similar Federal or state, or foreign,
health care legislation will not be adopted in the future, that any products
sought to be commercialized by the Company or its collaborators will be
considered cost-effective, or that adequate third-party insurance coverage will
be available for the Company to establish and maintain price levels sufficient
for realization of an appropriate return on its investment in product
development. Moreover, the existence or threat of cost control measures could
have an adverse effect on the willingness or ability of licensees to pursue
research and development programs related to the Company's product candidates.
The Company cannot predict the effect that private sector or governmental health
care reforms may have on its business, and there can be no assurance that any
such reforms will not have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, in both the United
States and elsewhere, sales of prescription drugs are dependent in part on the
availability of reimbursement to the consumer from third-party payors, such as
government and private insurance plans. Third-party payors are increasingly
challenging the price and cost-effectiveness of medical products and services.
Significant uncertainty exists as to the reimbursement status of newly approved
health care products. There can be no assurance that the Company's proposed
products will be considered cost-effective or that adequate third-party
reimbursement will be available to enable the Company to maintain price levels
sufficient to realize an appropriate return on its investment in product
development. Legislation and regulations affecting the pricing of
pharmaceuticals may change before any of the Company's proposed products are
approved for marketing. Adoption of such legislation could further limit
reimbursement for medical products and services. As a result, the Company may
elect not to market future products in certain markets.
Lack of Manufacturing Experience; Reliance on Contract Manufacturers and
Suppliers. The Company does not have facilities to manufacture and produce its
compounds for preclinical, clinical or commercial purposes. Valstar has never
been manufactured for commercial purposes, and there can be no assurance that
Valstar can be manufactured at a cost or in quantities necessary to make it
commercially viable. The Company has put in place arrangements with contract
manufacturers to produce Valstar. If the contract manufacturers are unable to
manufacture Valstar on acceptable terms, or encounter delays or difficulties,
the Company's preclinical and human clinical testing schedule would be delayed,
resulting in delay of the market introduction and subsequent sales of Valstar.
This would have a material adverse effect on the Company's business, financial
condition and results of operations. Furthermore, Anthra's contract
manufacturers must supply all necessary documentation in support of the
Company's NDA, and any sNDAs, on a timely basis and must adhere to, among other
requirements, cGMP enforced by the FDA through its facilities inspection
program, and such other requirements imposed by other regulatory authorities. If
these facilities cannot pass a pre-approval plant inspection, the FDA approval
of Valstar will not be granted, and such failure to obtain approval would have a
material adverse effect on the Company's business, financial condition and
results of operations.
Valstar is manufactured in bulk powder form ("Valstar Drug Substance") for
the Company by Sicor S.p.A., a subsidiary of Gensia Sicor Inc., in Rho (Milan),
Italy and by Omnichem S.A. ("Omnichem"), which is also owned by a larger parent
company, in Louvain-la-Neuve, Belgium. Both of these companies are independent
of one another. The Company has in place a long-term supply agreement with
Genchem Pharma Ltd., a subsidiary of Gensia Sicor Inc., which agreement is
guaranteed by Gensia Sicor Inc. (together with
15
<PAGE> 17
Sicor S.p.A. and Genchem Pharma Ltd., "Gensia Sicor"). Valstar is manufactured
in finished dosage form in vials ("Valstar Drug Product") by Ben Venue
Laboratories, Inc. ("Ben Venue"). Ben Venue is owned by Boeheringer Ingelheim of
Germany. The Company has no written supply agreement with Ben Venue, although
the terms and conditions of such an agreement are being negotiated. There can be
no assurance that any of these suppliers can be compelled to make Valstar as a
Valstar Drug Substance or a Valstar Drug Product available to the Company in the
required quantities. There can be no assurance that the Company will be able to
identify and contract with alternative contract manufacturers for its Valstar
Drug Substance or Valstar Drug Product requirements in the event that these
suppliers are unable or unwilling to manufacture sufficient quantities of
Valstar. The Company would incur significant costs and delays to qualify an
alternative manufacturer, which could have a material adverse effect on the
Company's business, financial condition and results of operations. In addition,
the Company's failure to meet its supply requirements pursuant to certain of its
licensing agreements could result in significant monetary penalties being
imposed on the Company. The availability and price of Valstar may be subject to
curtailment or change due to limitations that may be imposed under governmental
regulations, suppliers' allocations to meet demand of other purchasers,
interruptions in production by suppliers and market and other events and
conditions, which could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business --
Products and Markets."
Bonefos(R) is manufactured by Leiras Oy of Helsinki, Finland, an affiliate
of Schering AG, Germany, for distribution in 56 countries outside of the United
States. Bonefos(R) has never been manufactured for commercial purposes for the
United States market, and there can be no assurance that Bonefos(R) can be
manufactured for sale and use in the United States at a cost or in quantities
necessary to make it commercially viable. If its proposed arrangement with
Anthra for the development and marketing rights to Bonefos(R) in the United
States for the hypercalcemia and lytic bone disease indications pursuant to the
Bonefos Agreement in Principle is consummated, Leiras Oy will undertake to
supply the Company with Bonefos(R) for sale in the United States, subject to
certain conditions including the failure of Berlex to exercise its option to
acquire such rights. Although the Company has entered into the Bonefos Agreement
in principle with Leiras Oy, the Company and Leiras Oy have not yet entered into
a definitive agreement. If such arrangement is consummated and Leiras Oy is
unable to manufacture Bonefos(R) on acceptable terms or encounters delays or
difficulties, the Company's human clinical testing schedule would be delayed,
resulting in delay of the market introduction and subsequent loss of sales
revenue (or, in the event Berlex exercises its acquisition option, royalty
revenue) for Anthra. This could have a material adverse effect on the Company's
business, financial condition and results of operations. Furthermore, if such
arrangement is consummated, Leiras Oy must supply all necessary documentation in
support of the Company's Bonefos(R) NDA and sNDAs on a timely basis and must
adhere to cGMP regulations enforced by the FDA through its facilities inspection
program. If these facilities cannot pass a pre-approval inspection, the FDA
approval of Bonefos(R) will not be granted. Such failure could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Hazardous Materials. The Company's research and development involves the
controlled use of hazardous, controlled and radioactive materials by certain of
its contractors. In addition, the Company's product Valstar in its final form is
a hazardous and a controlled substance with risks of contamination and injury
unless utilized in the prescribed method. The Company and its contractors are
subject to Federal, state, local and foreign laws and regulations governing the
use, manufacture, storage, handling and disposal of such materials and certain
waste products therefrom. Although the Company believes that the safety
procedures of the Company and its contractors for handling and disposing of such
materials comply with the standards prescribed by such laws and regulations, the
risk of accidental contamination or injury from these materials cannot be
completely eliminated. In the event of such an accident, the Company could be
held liable for any damages that result and any such liability could have a
material adverse effect on the Company.
Risks Associated with International Operations and Foreign Currency
Fluctuations. The Company's international operations are anticipated to
comprise a substantial percentage of the Company's net revenue in the future
and, accordingly, the Company is subject to risks associated with international
operations. Such risks include managing a multinational organization,
fluctuations in currency exchange rates, the burden of
16
<PAGE> 18
complying with international laws and other regulatory and product certification
requirements and changes in such laws and requirements, tariffs and other trade
barriers, import and export controls, restrictions on the repatriation of funds,
inflationary conditions, staffing, employment and severance issues, political
and economic instability and longer payment cycles in certain countries. The
inability to effectively manage these and other risks could adversely affect the
Company's business, financial condition and results of operations.
The Company has a clinical development facility in the United Kingdom
operated by Anthra UK, the operating expenses of which are also subject to the
effects of fluctuations in currency exchange rates. The Company generally does
not engage in hedging transactions which could partially offset the effects of
fluctuations in currency exchange rates. Additional financial exposure may
result due to the timing of transactions and movement of exchange rates. See
"Business -- Products and Markets."
Management of Growth. The Company has recently experienced, and expects to
continue to experience, significant growth in the number of its employees and
the scope of its operations. This growth has placed, and may continue to place,
a significant strain on the Company's management and operations. Should the
Company acquire one to two additional products by the end of 1998, as it
anticipates, the Company will experience a large and immediate growth in its
employees and operations. The Company's ability to manage effectively such
growth will depend upon its ability to broaden its management team and its
ability to attract, hire and retain skilled employees. The Company's success
will also depend on the ability of its officers and key employees to continue to
implement and improve its operational, management information and financial
control systems and to expand, train and manage its employee base. These demands
are expected to require the addition of new management personnel and development
of additional expertise to existing management personnel. In addition, if Anthra
reaches the point where its activities require additional expertise in clinical
testing, in obtaining regulatory approvals, and in production and marketing,
there will be increased demands on Anthra's resources and infrastructure. There
can be no assurance that the Company will be able to effectively manage the
expansion of its operations or that its systems, procedures or controls will be
adequate to support the Company's products or proprietary technology. There can
be no assurance that the Company will be successful in adding technical
personnel as needed to meet the staffing requirements of the Company's current
strategic collaborations or any additional collaborative relationships into
which the Company may enter. Any such inability to manage growth could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Risks Associated With Potential Acquisitions. The Company may acquire or
make substantial investments in complementary businesses, technologies or
products in the future. Any such acquisition or investment would entail various
risks, including the difficulty of assimilating the technologies, operations and
personnel of the acquired business, technology or product, the potential
disruption of the Company's ongoing business and, generally, the potential
inability of the Company to obtain the desired financial and strategic benefits
from the acquisition or investment. These factors could have a material adverse
effect on the Company's business, financial condition and results of operations.
Future acquisitions and investments by the Company could also result in
substantial cash expenditures, potentially dilutive issuances of equity
securities, the incurrence of additional debt and contingent liabilities, and
amortization expenses related to goodwill and other intangible assets, which
could adversely affect the Company's business, financial condition and results
of operations.
Potential Adverse Market Impact of Shares Eligible for Future Sale;
Registration Rights. Sales of a substantial number of shares of Common Stock in
the public market following the Offering could have an adverse effect on the
price of the Common Stock. Upon completion of the Offering, the Company will
have 7,555,183 shares of Common Stock outstanding (7,960,183 if the
Underwriters' over-allotment option is exercised in full). Of these shares, the
2,700,000 shares sold in the Offering will be freely tradable without
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"). The remaining 4,855,183 shares of Common Stock are
"restricted securities" as that term is defined under Rule 144 under the
Securities Act, and were issued and sold by the Company in reliance on
exemptions from registration under the Securities Act. These restricted shares
may not be sold in the public market unless they are registered under the
Securities Act or are sold pursuant to an exemption from registration, such as
Rule 144, 144(k) or 701. Beginning 90 days after the date of this Prospectus,
approximately 4,555,183
17
<PAGE> 19
restricted securities will become eligible for sale in the public market
pursuant to Rule 144 and Rule 701 under the Securities Act.
The Underwriters have requested that all officers, Directors, and
stockholders owning more than 1% of the Company's Common Stock agree, pursuant
to certain lock-up agreements, that they will not offer, sell, contract to sell,
grant any option to purchase or otherwise dispose of their shares for a period
of 180 days from the date of this Prospectus without the prior written consent
of the Representatives.
Upon completion of the Offering, holders of 4,554,683 shares of the
Company's Common Stock will be entitled to certain rights with respect to
registration of such shares for offer or sale to the public. In addition, the
Company intends to register 1,700,000 shares of Common Stock reserved for
issuance under its 1990 Stock Plan as amended, following the date of this
Prospectus. See "Management -- Summary of Executive Compensation," "Principal
Stockholders" and "Shares Eligible for Future Sale."
Lack of Current Specific Plans for Unallocated Offering Proceeds. The
principal purposes of the Offering are to increase the Company's capitalization
and financial flexibility and to expand the Company's current corporate
facilities and infrastructure. The Company currently does not have specific
plans for all of the net proceeds from the Offering. The Company expects to use
such proceeds for general corporate purposes, including working capital, product
development, capital expenditures and possible acquisitions. The amounts
expended for each purpose and the timing of such expenditures may vary depending
upon numerous factors. Consequently, the Company will have broad discretion in
determining the amount and timing of expenditures and in using the unallocated
proceeds of the Offering, and there can be no assurance that the Company will
use such discretion effectively or in a manner that will not result in a
material adverse effect on the Company's business, financial condition and
results of operation. See "Use of Proceeds."
Absence of Prior Trading Market; Possible Volatility of Stock Price and
Substantial Dilution. Prior to the Offering, there has been no public market
for the Common Stock and there is no assurance that an active market will
develop or be sustained after the Offering. The initial public offering price
will be determined through negotiations among the Company and the Underwriters
and may bear no relationship to the price at which the Common Stock will trade
upon completion of the Offering. See "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price. It is
likely that the market price of the Common Stock, like that of the capital stock
of many other pharmaceutical companies at a similar stage of development, will
be highly volatile. Factors such as the results of preclinical studies and
clinical trials by the Company or its competitors, announcements of
technological innovations or new commercial therapeutic products by the Company
or its competitors, governmental regulation, changes in reimbursement policies,
healthcare legislation, developments in patent or other proprietary rights,
developments in the Company's relationships with future collaborative partners,
if any, public concern as to the safety and efficacy of drugs developed by the
Company, fluctuations in the Company's operating results, and general market
conditions may have a significant impact on the market price of the Common
Stock.
All of the currently outstanding shares of Common Stock were issued at
prices substantially lower than the price of the shares of Common Stock offered
hereby. Purchasers of shares of Common Stock offered hereby will experience
immediate and substantial dilution in net tangible book value with respect to
their shares of Common Stock and may incur additional dilution upon the exercise
of outstanding stock options. See "Dilution."
Pursuant to the terms of the Company's Development Agreement with Medeva
(the "Medeva Agreement"), in the event that neither of two NDA approvals for
Valstar has been obtained by the Company by December 31, 2002, Medeva has the
right to require the Company to issue such number of shares of Common Stock
equal to 20% of the issued and outstanding voting equity securities of the
Company outstanding at the time of the exercise of such right. See
"Business -- Products and Markets."
Control by Existing Stockholders; Anti-Takeover Provisions. Upon the
closing of the Offering, the Company's Directors and executive officers will, in
the aggregate, beneficially own approximately 14.1% of Anthra's outstanding
shares of Common Stock (approximately 13.5% if the Underwriters' over-allotment
option is exercised in full). See "Principal Stockholders." Accordingly, these
stockholders, acting together,
18
<PAGE> 20
will be able to control many matters requiring approval by the stockholders of
the Company, including the election of Directors. Moreover, the Company
anticipates that its Amended and Restated Certificate of Incorporation, as
amended, and as in effect on the consummation of the Offering (the "Amended
Certificate of Incorporation"), will not provide for cumulative voting with
respect to the election of Directors. Consequently, the present Directors and
executive officers would be able to exercise substantial influence over the
election of the members of the Board of Directors. Such concentration of
ownership could have an adverse effect on the price of the Common Stock or have
the effect of delaying or preventing a change in control of the Company. In
addition, certain provisions of Delaware law and the Amended Certificate of
Incorporation could have the effect of making it more difficult for a third
party to acquire, or of discouraging a third party from attempting to acquire,
control of Anthra. Such provisions could limit the price that certain investors
might be willing to pay in the future for shares of the Company's Common Stock.
These provisions of Delaware law and the Amended Certificate of Incorporation
may also have the effect of discouraging or preventing certain types of
transactions involving an actual or threatened change of control of the Company
(including unsolicited takeover attempts), even though such transactions may
offer the Company's stockholders the opportunity to sell their stock at a price
above the prevailing market price. One of the provisions in the Amended
Certificate of Incorporation allows the Company to issue preferred stock without
any vote or further action by the stockholders. These provisions may make it
more difficult for stockholders to take certain corporate actions and could have
the effect of delaying or preventing a change in control of the Company. See
"Business," "Management," "Principal Stockholders," and "Description of Capital
Stock -- Preferred Stock" and "-- Anti-Takeover Law."
Year 2000 Issues. In the Year 2000, many existing computer programs that
use only two digits (rather than four) to identify a year in the date field
could fail or create erroneous results if not corrected. This computer program
flaw is expected to affect virtually all companies and organizations. The
Company does not anticipate that the effect of this computer program flaw on the
operations of the Company will be significant. However, the Company may be
required to spend time and monetary resources addressing any necessary computer
program changes, the costs of which are not expected to be material to the
Company's business, financial position or results of operations.
19
<PAGE> 21
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,700,000 shares of
Common Stock offered hereby, after deducting underwriting discounts and
commissions and estimated offering expenses, are estimated to be approximately
$25.9 million ($29.8 million if the Underwriters' over-allotment option is
exercised in full) based upon an assumed initial public offering price of $10.50
per share. The Company anticipates that such net proceeds, together with its
other available cash and cash equivalents, will be used as follows: (i)
approximately $3.5 million for payments for rights to Bonefos(R); and (ii) the
balance for development of its products (including obtaining regulatory
approvals for Valstar and Bonefos(R)), potential additional product acquisitions
and general corporate purposes. While the Company engages from time to time in
discussions with respect to potential acquisitions, the Company has no current
plans, commitments or agreements with respect to any such acquisitions as of the
date of this Prospectus. Pending such uses, the Company intends to invest the
net proceeds from the Offering in United States government securities and
investment-grade, interest-bearing instruments.
The foregoing represents the Company's present intentions with respect to
the allocation of proceeds of the Offering based upon its present plans and
business conditions. The occurrence of certain unforeseen events or changed
business conditions, however, could result in the application of the proceeds of
the Offering in a manner other than as described in this Prospectus. See "Risk
Factors -- Lack of Current Specific Plans for Unallocated Offering Proceeds."
DIVIDEND POLICY
The Company has never paid any cash dividends on its Common Stock. The
Company currently intends to retain all future earnings, if any, to finance the
operations and expansion of the Company's business and therefore does not
anticipate paying cash dividends in the foreseeable future.
20
<PAGE> 22
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1998, (i) on an actual basis, (ii) on a pro forma basis to reflect the
Preferred Stock Conversion and (iii) on a pro forma as adjusted basis to give
effect to the Preferred Stock Conversion and the sale by the Company of the
2,700,000 shares of Common Stock offered hereby, at an assumed initial public
offering price of $10.50 per share, less underwriting discounts and commissions
and estimated offering expenses payable by the Company, and the application of
the estimated net proceeds therefrom as set forth under "Use of Proceeds." This
table should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Consolidated Financial
Statements and Notes thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
------------------------------------
(UNAUDITED)
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Contingent stock obligation(1)............................. $ 8,000 $ 8,000 $ 8,000
-------- -------- --------
Mandatorily redeemable convertible preferred stock (Series
A, B and C Convertible Preferred Stock) at redemption
value (which includes accreted dividends of $3,259,793);
$0.01 par value: 3,150,588 shares authorized, issued and
outstanding, actual (none issued and outstanding on a pro
forma and pro forma as adjusted basis)................... 11,460 -- --
-------- -------- --------
Stockholders' equity (deficit):
Convertible preferred stock (Series D Convertible
Preferred Stock); $0.01 par value: 639,095 shares
authorized, issued and outstanding, actual (none
issued and outstanding on a pro forma and pro forma as
adjusted basis)....................................... 6 -- --
Common stock, $0.01 par value: 6,700,000 shares
authorized (15,000,000 shares authorized(2) on a pro
forma as adjusted basis); 1,065,500, 4,855,183 and
7,555,183 shares issued and outstanding on an actual,
pro forma and pro forma as adjusted basis,
respectively)(3)...................................... 11 49 76
Additional paid-in capital................................. 8,838 20,266 46,104
Deferred compensation...................................... (986) (986) (986)
Deficit accumulated during the development stage........... (22,001) (22,001) (22,001)
-------- -------- --------
Total stockholders' equity (deficit)....................... (14,132) (2,672) 23,193
-------- -------- --------
Total capitalization....................................... $ 5,328 $ 5,328 $ 31,193
======== ======== ========
</TABLE>
- ---------------
(1) See Note 5 of Notes to Consolidated Financial Statements.
(2) Increase to 15,000,000 shares of Common Stock was authorized by the Company
in May 1998.
(3) Does not include (a) 1,088,987 shares of Common Stock issuable upon exercise
of stock options outstanding at March 31, 1998, with a weighted average
exercise price of $0.96 per share, of which options to purchase 500,357
shares of Common Stock were then exercisable (see "Management"), (b) options
to purchase 271,500 and 175,000 shares of Common Stock at exercise prices of
$8.00 per share and at a price per share equal to the fair market value on
the date of the occurrence of certain future events, respectively, granted
after March 31, 1998, and (c) certain stock options to purchase Common Stock
or Series D Convertible Preferred Stock which may be granted to Nycomed
pursuant to the Nycomed Agreement (see "Business -- Products and
Market -- Valstar: Licensing Agreements").
21
<PAGE> 23
DILUTION
The pro forma net deficit in tangible book value of the Company as of March
31, 1998, was $(3,019,000), or $(0.62) per share of Common Stock. Pro forma net
deficit in tangible book value per share represents the Company's total tangible
assets less total liabilities, divided by 4,855,183 shares of Common Stock
outstanding (after reflecting the Preferred Stock Conversion). After reflecting
the Preferred Stock Conversion and the sale by the Company of 2,700,000 shares
of Common Stock in this Offering (at the initial offering price and after
deducting the underwriting discounts and commissions and estimated offering
expenses) and the application of the estimated proceeds thereof, the pro forma
net tangible book value of the Company as of March 31, 1998 would have been
$23,193,000, or $3.07 per share. This amount represents an immediate increase in
pro forma net tangible book value of $3.69 per share to existing stockholders
and the immediate dilution in net tangible book value of $7.43 per share to new
investors purchasing Common Stock in the Offering. Dilution per share to new
investors represents the difference between the pro forma net tangible book
value per share of Common Stock immediately after completion of the Offering and
the amount per share paid by purchasers of Common Stock of the Company in the
Offering. The following table illustrates the per share dilution:
<TABLE>
<S> <C> <C>
Initial public offering price per share..................... $10.50
Pro forma net deficit in tangible book value per share at
March 31, 1998......................................... $(0.62)
Increase per share attributable to new investors.......... 3.69
------
Pro forma net tangible book value per share after the
Offering.................................................. 3.07
------
Dilution per share to new investors......................... $ 7.43
======
</TABLE>
The following table summarizes, on a pro forma basis as of March 31, 1998,
the differences between the existing stockholders (after reflecting the
Preferred Stock Conversion) and new investors with respect to the number of
shares of Common Stock purchased from the Company, the total consideration paid
to the Company and the average price per share paid, at the assumed initial
public offering price of $10.50 per share, before deducting the underwriting
discounts and commissions and estimated offering expenses payable by the
Company.
<TABLE>
<CAPTION>
TOTAL
SHARES PURCHASED CONSIDERATION PAID
-------------------- ---------------------- AVERAGE
NUMBER PERCENT AMOUNT PERCENT PRICE PER SHARE
--------- ------- ----------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Existing stockholders..... 4,855,183 64% $18,852,750 40% $ 3.88
New investors............. 2,700,000 36% $28,350,000 60% $10.50
--------- --- ----------- ---
Total..................... 7,555,183 100% $47,202,750 100%
========= === =========== ===
</TABLE>
The foregoing computations do not include (a) 1,088,987 shares of Common
Stock issuable upon exercise of stock options outstanding at March 31, 1998,
with a weighted average exercise price of $0.96 per share, of which options to
purchase 500,357 shares of Common Stock were then exercisable (see
"Capitalization" and "Management"), (b) options to purchase 271,500 and 175,000
shares of Common Stock at exercise prices of $8.00 per share and at a price per
share equal to the fair market value on the date of the occurrence of certain
future events, respectively, granted after March 31, 1998, (c) certain stock
options to purchase Common Stock or Series D Convertible Preferred Stock which
may be granted to Nycomed pursuant to the Nycomed Agreement (see
"Business -- Products and Market -- Valstar: Licensing Agreements"), and (d)
Common Stock which may be issuable to Medeva for 20% of the then issued and
outstanding voting equity securities if neither of two certain regulatory
approvals is received by December 31, 2002, pursuant to the Medeva Agreement
(see "Business Products and Market -- Valstar: Licensing Agreements").
22
<PAGE> 24
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected financial data for each of the years in the three year period
ended June 30, 1997 and as of June 30, 1996 and 1997 have been derived from
financial statements of the Company which have been audited by KPMG Peat Marwick
LLP, independent certified public accountants. The selected financial data for
the years ended June 30, 1993 and 1994, and as of June 30, 1993, 1994 and 1995
have been derived from unaudited (except as of June 30, 1995, which has been
audited) financial statements of the Company which are not included in this
Prospectus. The selected financial data for the nine months ended March 31, 1997
and 1998 and as of March 31, 1998, are derived from the unaudited financial
statements of the Company included elsewhere in this Prospectus. Such unaudited
financial statements include all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the information set forth
herein. Operating results for the nine months ended March 31, 1998 are not
necessarily indicative of the results to be expected for the year ending June
30, 1998. The selected consolidated financial data set forth below are qualified
in their entirety by, and should be read in conjunction with, "Management's
Discussion and Analysis of Financial Condition and Results of Operations," the
Consolidated Financial Statements and Notes thereto and the other financial
information included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED JUNE 30, MARCH 31,
--------------------------------------------------------- -------------------------
1993 1994 1995 1996 1997 1997 1998
----------- ----------- ------- ------- --------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue................... $ -- $ -- $ -- $ 2,171 $ 1,688 $ 1,488 $ --
Operating Expenses:
Research and
development........... 1,294 2,418 2,591 3,649 6,610 4,206 5,930
General and
administrative........ 76 71 121 523 682 429 1,492
------- ------- ------- ------- --------- --------- ---------
Total operating
expenses................ 1,370 2,489 2,712 4,172 7,292 4,635 7,422
Other income (expense).... 33 37 94 111 139 120 290
------- ------- ------- ------- --------- --------- ---------
Net loss.................. $(1,337) $(2,452) $(2,618) $(1,890) $ (5,465) $ (3,027) $ (7,132)
======= ======= ======= ======= ========= ========= =========
Net loss allocable to
common stockholders..... $(1,536) $(2,874) $(3,271) $(2,543) $ (6,118) $ (3,517) $ (7,621)
======= ======= ======= ======= ========= ========= =========
Basic and diluted net loss
per share allocable to
common
stockholders(1)......... $ (2.15) $ (4.02) $ (4.24) $ (3.01) $ (5.79) $ (3.34) $ (7.15)
Shares used in computing
basic and diluted net
loss per share allocable
to common
stockholders(1)......... 716 716 771 844 1,057 1,055 1,066
<CAPTION>
FOR THE PERIOD FROM
JUNE 25, 1985
(INCEPTION) TO
MARCH 31, 1998
-------------------
(UNAUDITED)
<S> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue................... $ 3,858
Operating Expenses:
Research and
development........... 23,541
General and
administrative........ 3,103
--------
Total operating
expenses................ 26,644
Other income (expense).... 785
--------
Net loss.................. $(22,001)
========
Net loss allocable to
common stockholders..... $(25,260)
========
Basic and diluted net loss
per share allocable to
common
stockholders(1).........
Shares used in computing
basic and diluted net
loss per share allocable
to common
stockholders(1).........
</TABLE>
<TABLE>
<CAPTION>
AS OF
AS OF JUNE 30, MARCH 31,
------------------------------------------------------------ -----------
1993 1994 1995 1996 1997 1998
----------- ----------- ------- ------- -------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents ..................... $ 936 $ 3,391 $ 1,273 $ 1,713 $ 795 $ 5,681
Working capital (deficit)...................... 871 3,420 827 1,908 (598) 4,891
Total assets................................... 1,060 3,580 1,322 2,732 915 6,203
Contingent stock obligation.................... -- -- -- -- -- 8,000
Mandatorily redeemable convertible preferred
stock........................................ 3,589 9,011 9,664 10,317 10,970 11,460
Convertible preferred stock.................... -- -- -- 3 3 6
Deficit accumulated during the developmental
stage........................................ (2,445) (4,897) (7,515) (9,404) (14,869) (22,001)
Total stockholders' deficit.................... (2,684) (5,558) (8,795) (8,330) (11,486) (14,132)
</TABLE>
- ---------------
(1) See Note 2 of Notes to Consolidated Financial Statements.
23
<PAGE> 25
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of
operations of the Company should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto appearing elsewhere in this
Prospectus. This Prospectus, including the following discussion, contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results may differ significantly from the results discussed in such
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in "Risk Factors,"
immediately below and elsewhere in this Prospectus.
OVERVIEW
Anthra is a specialized pharmaceutical company engaged in clinical
development and obtaining approval of NDAs and sNDAs for a portfolio of its
proprietary cancer drugs. The Company's current drug candidates are for the
treatment of patients with superficial cancer of the bladder, ovarian and
prostatic cancer, and complications from metastatic cancer (hypercalcemia and
lytic bone disease). The Company's strategy is to develop only late stage drug
candidates, thereby improving the likelihood of successfully obtaining NDA/sNDA
and equivalent foreign approvals. The Company directs its search for oncology
drug candidates toward selected large pharmaceutical companies, because of the
difficulty many of these companies have experienced in managing oncology
projects, and at biotechnology and early stage discovery companies that lack
clinical and regulatory proficiency. To maximize the return on its investment in
each drug, Anthra seeks approvals for multiple disease indications for each
product and directly manages both its United States and foreign clinical
programs and regulatory submissions.
To date, the Company has not received any revenue from the sale of
products, and no product candidate of the Company has been approved, although
the Company has received a non-refundable $8 million payment pursuant to the
Medeva Agreement, which has been recorded as a contingent stock obligation, and
a $200,000 license fee from Almirall pursuant to the Exclusive License
Agreement, dated as of April 17, 1997, between Anthra and Almirall (f/k/a
Prodesfarma, S.A.) (the "Almirall Agreement"). While the Company believes that
Valstar will be approved for marketing for the refractory carcinoma in-situ
indication by the end of calendar 1998, to date the Company's primary source of
capital has been the sale of Preferred Stock, the payment from Medeva, license
fees, and research and development funding from its Collaborative Partners in
connection with joint development and licensing agreements with the Company,
including the aforementioned payments. As of March 31, 1998, the Company's
accumulated deficit was $22.0 million and its cash and cash equivalents on hand
was $5.7 million. There can be no assurance that the Company's products will be
approved for marketing, that the Company will attain profitability or, if
profitability is achieved, that the Company will remain profitable on a
quarterly or annual basis in the future.
RESULTS OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED)
The Company recognized revenue of $1.5 million for the nine months ended
March 31, 1997, $1.3 million of which was in connection with the conversion of
the Development and License Agreement with Schering AG, Germany (f/k/a Schering
AG) (the "Development Agreement") into the Termination, Settlement and
Investment Agreement with Schering AG, Germany in July 1996 (the "Support
Agreement"). No such revenue was recognized in the nine months ended March 31,
1998. The Development Agreement was converted into the Support Agreement based
on the mutual agreement between the companies as to how best to proceed with the
development of Valstar. The impact of this conversion was that Schering AG,
Germany was no longer obligated to (i) reimburse the Company for future research
and development, (ii) make potential license payments of up to $3 million and
(iii) pay potential future royalties. The Company is also obligated to make
potential royalty payments to Schering AG, Germany on Valstar sales.
24
<PAGE> 26
Research and development expenses increased 41% from $4.2 million for the
nine months ended March 31, 1997, to $5.9 million for the nine months ended
March 31, 1998. This was largely due to increased levels of activity with
respect to the continued development of Valstar and the filing of the NDA.
General and administrative expenses increased from $429,000 for the nine
months ended March 31, 1997, to $1,492,000 for the nine months ended March 31,
1998. This was primarily due to increased business development expenses related
to worldwide licensing agreements and new product negotiations.
Other income (expense) increased from $120,000 for the nine months ended
March 31, 1997, to $290,000 for the nine months ended March 31, 1998. This
reflects a significantly higher cash and cash equivalents balance resulting from
three transactions: the purchase by Nycomed, in October 1997, of 300,000 shares
of Series D Convertible Preferred Stock for $4.5 million; the purchase by
Almirall, in April 1997, of 67,819 shares of Series D Convertible Preferred
Stock for $750,000 and the $8.0 million payment from Medeva in July 1997.
Net loss increased from $3.0 million for the nine months ended March 31,
1997 to $7.1 million for the nine months ended March 31, 1998 due to the
increase in research and development spending and due to the discontinuation of
development revenue following the conversion of the Development Agreement to the
Support Agreement.
TWELVE MONTHS ENDED JUNE 30, 1997 AND 1996
The Company recognized $2.2 million and $1.7 million in revenue for the
years ended June 30, 1996 and 1997, respectively, of which $2.2 million and
$200,000 related to research and development performed under the Development
Agreement, which was converted to the Support Agreement in July 1996.
Additionally, the Company recognized $1.3 million in connection with the Support
Agreement and a $200,000 fee in connection with the Almirall Agreement in 1997.
Research and development expenses increased 83% from $3.6 million in 1996
to $6.6 million in 1997. This increase was due primarily to increased activity
and costs associated with the pharmaceutical and clinical development of
Valstar, including manufacturing, validation and preparation for filing the NDA
in the United States and a similar application in Europe.
General and administrative expenses increased from $523,000 in 1996 to
$682,000 in 1997, primarily due to increased business development activities.
Other income (expense) increased from $111,000 in 1996 to $139,000 in 1997
due to higher cash and cash equivalent balances resulting from the conversion of
the Development Agreement to the Support Agreement.
Net loss increased from $1.9 million in 1996 to $5.5 million in 1997 due to
the increase in research and development spending and due to the discontinuation
of development revenue following the conversion of the Development Agreement to
the Support Agreement in July 1996.
TWELVE MONTHS ENDED JUNE 30, 1996 AND 1995
The Company recognized $0 and $2.2 million in research revenue for the
years ended June 30, 1995 and 1996, respectively, under the Development
Agreement which was signed in September 1995.
Research and development expenses increased 38% from $2.6 million in 1995
to $3.6 million in 1996 due primarily to increased activity and costs associated
with the pharmaceutical and clinical development of Valstar.
General and administrative expenses increased from $121,000 in 1995 to
$523,000 in 1996, primarily due to increased business development activities
related to the Development Agreement.
Other income (expense) increased from $94,000 in 1995 to $111,000 in 1996
due to higher cash and cash equivalent balances resulting from an equity
investment in Anthra by Schering Berlin Venture Corporation, an affiliate of
Schering AG, Germany.
Net loss decreased from $2.6 million in 1995 to $1.9 million in 1996.
Though operating expenses of $4.2 million in 1996 were higher than the $2.7
million in 1995, net loss was lower in 1996 as a result of
25
<PAGE> 27
research revenue of $2.2 million received from Schering AG, Germany in the
twelve months ended June 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
From inception through March 31, 1998, the Company has not generated
positive cash from operations and, accordingly, has financed its operations
primarily with the net proceeds received from private placements of Preferred
Stock, and research, development and licensing agreements. Such proceeds have
totaled approximately $30.6 million, and are comprised of the following: equity
investments of approximately $18.7 million; revenue from research arrangements
with Schering AG, Germany of approximately $3.7 million; and payments received
under licensing and development agreements of approximately $8.2 million
(approximately $8.0 million pursuant to the Medeva Agreement and $200,000 from
Almirall).
Net cash used in operating activities was $2.1 million, $2.5 million and
$3.9 million in 1995, 1996 and 1997, respectively. In the nine month period
ended March 31, 1998, net cash used in operating activities was $7.2 million,
compared to net cash used in the same period for 1997 of $2.4 million, primarily
due to the continued development of Valstar as well as the filing of the NDA.
Cash and cash equivalents on hand on March 31, 1998, totaled $5.7 million,
compared with $795,000 as of June 30, 1997, primarily as the result of funds
received pursuant to the Medeva Agreement, and from an equity investment by
Nycomed in Anthra.
The Company anticipates that annual expenditures for clinical trials,
product development, preclinical studies, and general and administrative expense
will increase significantly in future years. In anticipation of the possible FDA
approval for marketing of Valstar, the Company expects to begin preparing for
the commercialization of the Company's first product during 1998 and to
accelerate such preparation in 1999, adding substantial additional expense.
However, there can be no assurance that the Company will be able to successfully
complete the clinical development of Valstar for bladder cancer or any other
indication, that the FDA will grant approval within the time frame expected, if
at all, that the other developments or expansions in the Company's programs of
research, development and commercialization will not require additional funding
or encounter delays, or that, in light of these or other circumstances, the
Company will be able to achieve its planned levels of revenue, expense and cash
flow.
In July 1997, the Company executed a sublease for approximately 5,560
square feet located in the Carnegie Center in Princeton, New Jersey. The monthly
rent is $9,359, and the lease expires on November 30, 1999. The Company also
leases approximately 1,635 square feet of office space at The Malt House,
Princes Risborough, England for its Anthra UK offices. The quarterly rent is
L5,535 ($9,188 using a conversion factor of 1.66 dollars for 1 British pound),
and the lease expires in 2001.
The Company expects to finance its continued growth and development
principally through this equity financing and arrangements with strategic
partners. The Company believes the net proceeds from this Offering, together
with current cash and cash equivalent balances, the interest on combined cash
balances, and contingent funding (including royalties) from its Collaborative
Partners, will provide the Company with sufficient working capital to sustain
operations through approximately 2000, although there can be no assurance that
the Company will not require additional funding prior to that time. The Company
anticipates that if there are delays in its current programs, if its current
programs of research and development yield expansion opportunities, or if there
are changes in competitive and technological advances, the regulatory approval
process or other factors, the Company would seek additional financing, whether
through public or private equity or debt financings, corporate alliances, or
combinations thereof. In addition, the Company may require additional financing
in connection with its potential future product acquisition activities.
There can be no assurance that additional equity or debt capital will, if
needed, be available on terms acceptable to the Company, if at all. Any
additional equity financing could be dilutive to stockholders. Debt financing,
if available, may include restrictive covenants. If additional funds should be
needed but are not available, the Company may be required to curtail its
operations significantly or to obtain funds by entering into collaborative
arrangements or other arrangements on unfavorable terms. The failure by the
Company to raise capital on acceptable terms if and when needed would have a
material adverse effect on the Company's business, financial condition and
results of operations.
26
<PAGE> 28
The Company anticipates that the annual expenditures for research support
for Bonefos(R) to increase significantly during 1998 and 1999, and to continue
until at least 2002. In addition, the Bonefos Agreement in Principle
contemplates future payments from the Company of $1 million upon the execution
of definitive documentation, and $2.5 million upon the completion of a
satisfactory pre-NDA meeting with the FDA with respect to Bonefos(R). There can
be no assurance that the Company will be able to successfully complete the
clinical development of Bonefos(R) for the treatment of hypercalcemia and lytic
bone disease, or that the FDA will grant the required approvals within the time
frame anticipated by the Company, if at all.
INFLATION
The Company does not believe that inflation has had any significant impact
on the Company's business to date.
INCOME TAXES
As of June 30, 1997, the Company had approximately $13.5 million and $13.4
million of net operating loss carryforwards ("NOLs") for income tax purposes
available to offset future Federal and state income tax, respectively. The NOLs
are subject to examination by the Federal and state tax authorities and expire
in 2012 and 2004, respectively. The Tax Reform Act of 1986, as amended, contains
provisions that may limit the NOLs available to be used in any given year upon
the occurrence of certain events, including significant changes in ownership
interest. A change in greater than 50% of the ownership of a company within a
three year period results in an annual limitation on the Company's ability to
utilize its NOLs from tax periods prior to the ownership change. The Company
expects that upon closing of the Offering, such limitation will be triggered.
However, the Company does not expect such limitation to have a significant
impact on its results of operations.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 130, "Comprehensive Income"
(SFAS 130), was issued in June 1997. SFAS 130 becomes effective for the
Company's fiscal year 1999 and requires reclassification of earlier financial
statements for comparative purposes. SFAS 130 requires that all items defined as
comprehensive income, including changes in the amounts of certain items, foreign
currency translation adjustments and gains and losses on certain securities, be
shown in a financial statement. SFAS 130 does not require a specific format for
the financial statement in which comprehensive income is reported, but does
require that an amount representing total comprehensive income be reported in
that statement. The Company believes that the adoption of SFAS 130 will not have
a material effect on the consolidated financial statements.
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS 131"), was issued in
June 1997. SFAS 131 becomes effective for the Company's fiscal year 1999 and
requires restatement of disclosures for earlier periods presented for
comparative purposes. This new standard requires companies to disclose segment
data based on how management makes decisions about allocating resources to
segments and how it measures segment performance. SFAS 131 requires companies to
disclose a measure of segment profit or loss, segment assets, and
reconciliations to consolidated totals. It also requires entity-wide disclosures
about a company's products and services, its major customers and the material
countries in which it holds assets and reports revenues. The Company believes
that the adoption of SFAS 131 will not have a material effect on the
consolidated financial statements.
Statement of Financial Accounting Standards No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits" ("SFAS 132"), was
issued in February 1998. SFAS 132 becomes effective for the Company's fiscal
year 1999 and requires restatement of disclosures for earlier periods presented
for comparative purposes. SFAS 132 revises employers' disclosure about pension
and other postretirement benefit plans. It does not change the measurement or
recognition of those plans but rather standardizes the disclosure requirements
for pensions and other postretirement benefits to the extent practicable,
requires additional information on changes in the benefit obligations and fair
values of plan assets that will facilitate analysis, and eliminates certain
disclosures that are no longer useful. The Company believes that the adoption of
SFAS 132 will not have a material effect on the consolidated financial
statements.
27
<PAGE> 29
BUSINESS
GENERAL
Anthra is a specialized pharmaceutical company engaged in clinical
development and obtaining regulatory approval of NDAs and sNDAs for a portfolio
of its proprietary cancer drugs. The Company's current drug candidates are for
the treatment of patients with superficial cancer of the bladder, ovarian and
prostatic cancer, and complications from metastatic cancer (hypercalcemia and
lytic bone disease). The Company's strategy is to develop only late stage drug
candidates, thereby improving the likelihood of successfully obtaining NDA/sNDA
and equivalent foreign approvals. The Company directs its search for oncology
drug candidates toward selected large pharmaceutical companies, because of the
difficulty many of these companies have experienced in managing oncology
projects, and at biotechnology and early stage discovery companies that lack
clinical and regulatory proficiency. To maximize the return on its investment in
each drug, Anthra seeks approvals for multiple disease indications for each
product and directly manages both its United States and foreign clinical
programs and regulatory submissions.
In December 1997, Anthra filed an NDA for its first product, Valstar, for
treatment of patients with superficial bladder cancer whose principal current
alternative is the surgical removal of their urinary bladder. In January 1998,
Anthra received priority designation from the FDA for the review of this NDA,
and ODAC is expected to provide its recommendations to the FDA regarding this
NDA at the ODAC meeting scheduled for June 1, 1998. The Company anticipates that
this NDA for Valstar will be approvable by the FDA during 1998. See
"-- Government Regulation."
Valstar is an anthracycline with multiple cytotoxic mechanisms that was
discovered at Dana-Farber. Valstar has been shown to have significant activity
against a variety of tumor cell lines and is not associated with significant
contact toxicity, thereby making it an ideal choice for regional chemotherapy.
The Company's pivotal clinical studies have demonstrated a complete response
rate of 22% in a group of 90 patients with bladder cancer who had not responded
satisfactorily to extensive pre-treatment with BCG, the accepted first line
treatment for superficial bladder cancer. There are currently no drugs approved
in the United States or Europe for second-line treatment of bladder cancer
following BCG therapy. For these patients, surgical removal of the bladder is
the only approved definitive form of therapy. Importantly, 45% of the patients
in the Company's pivotal clinical studies retained their bladder 30 months
following study entry. Anthra, consistent with its multiple disease indication
strategy, is developing Valstar for three additional indications. One Phase III
program is directed at patients with papillary superficial bladder cancer, for
whom approximately 180,000 transurethral resection procedures are being
performed annually in the United States. In another Phase III program involving
patients with ovarian cancer, Valstar is being administered directly into the
peritoneal cavity, where the cancer is confined. In addition, Anthra plans to
commence a Phase I program to obtain approval for use of Valstar in treating
prostate cancer. The Company has researched the historical incidence of each of
these diseases based on publicly available information and reports prepared for
the Company by MedProbe, including a report summarizing the results of a survey
of 1.5% (124) of office and hospital based urologists reported to be members of
the AMA. Although precise patient data is not published and can vary
significantly from year to year, based on the foregoing research and certain
assumptions made by the Company, including the estimated cost of treating each
of the estimated number of patients with Valstar, the Company estimates that the
potential market for Valstar in the United States could approximate nearly $600
million per annum, and that foreign markets will provide a significant
additional opportunity for sales of Valstar. See "-- Products and Markets." No
assurance can be given by the Company that this estimated market for Valstar
will be achieved.
Medeva has committed up to $26.2 million (of which $8 million has been paid
to date) and the payment of future royalties for the right to market and sell
Valstar in the United States. Anthra currently has similar arrangements for
Valstar with Nycomed, and Almirall, with respect to marketing and sales rights
in Europe. In total, Anthra has entered into agreements for Valstar providing
potential equity investment, licensing and development fees and milestone
payments of up to $42.9 million (of which $22.3 million has been paid to date),
plus additional royalty and supply payments. See "-- Products and Markets."
28
<PAGE> 30
In accord with the Company's corporate development strategy, Anthra
identified Bonefos(R), a product for the treatment of hypercalcemia and lytic
bone disease associated with breast and lung cancer and owned by Schering AG,
Germany, the Company's largest pharmaceutical shareholder. Anthra negotiated and
signed the Bonefos Agreement in Principle to acquire the exclusive United States
development and marketing rights to Bonefos(R) for the hypercalcemia and lytic
bone disease indications, for payments aggregating $3.75 million. See
"-- Products and Markets -- Bonefos(R): Bonefos Agreement in Principle."
Bonefos(R) has been on the market in Europe and the rest of the world since
1985, with worldwide sales of approximately $150 million in 1997. The Company
plans to conduct Phase III trials in the United States for Bonefos(R) for the
hypercalcemia and lytic bone disease indications upon execution of definitive
documentation memorializing the Bonefos Agreement in Principle. The Bonefos
Agreement in Principle contemplates that, upon FDA approval of an NDA for
Bonefos(R), Berlex will have the option to acquire from the Company the
exclusive right to market Bonefos(R) in the United States for the hypercalcemia
and lytic bone disease indications for payments of up to $21 million, plus
future royalties. The Company has researched the historical incidence of
hypercalcemia and the types of lytic bone disease that Bonefos(R) treats based
on publicly available information. Although precise patient data is not
published and can vary significantly from year to year, based on the foregoing
research and certain assumptions made by the Company, including the estimated
costs of utilizing Bonefos(R) for the treatment of these maladies using each of
the estimated number of patients, the Company estimates that the potential
market for Bonefos(R) in the United States could approximate nearly $900 million
per annum. See "--Products and Markets." No assurance can be given by the
Company that this estimated market for Bonefos(R) will be achieved.
Anthra believes that its strategy and accomplishments have positioned it to
become a recognized platform for the clinical substantiation and regulatory
approval of cancer drugs capable of treating multiple disease indications. The
Company is currently assessing and evaluating additional cancer-related late
stage candidates for acquisition, although no definitive agreements have been
executed. Management believes that focused, cost effective development increases
the likelihood of successful clinical development and regulatory approval.
Indicative of this strategy has been the Company's success in filing an NDA for
Valstar at a total research and development cost of less than $20 million.
According to PPSS, in the United States, the cost of developing an approved new
drug has been estimated to be between $304 million and $608 million.
The Company currently has one wholly-owned subsidiary, Anthra UK, through
which it manages its program for Europe. In addition, in order to centralize the
testing, manufacturing and storage of Valstar and Bonefos(R) in close proximity
to the intended suppliers of starting materials, manufacturers and warehousers
of Valstar and Bonefos(R), which are located either in Switzerland or elsewhere
in Europe, the Company may form one or more wholly owned Swiss subsidiaries,
which would hold substantially all the Company's rights to Valstar and
Bonefos(R). In this manner, the Company believes it would be better able to
control and oversee the manufacturing supply, development and distribution of
Valstar and Bonefos(R) in the amounts required.
INDUSTRY OVERVIEW
As pharmaceutical product development has become progressively more costly
and complex, maintaining the pace of innovation in the pharmaceutical industry
has been difficult. According to PPSS, in the United States, the cost of
developing a new drug has been estimated to be between $304 million and $608
million. According to the Tufts Center for the Study of Drug Development, it
takes 15 years, on average, for an experimental drug to travel from the clinical
laboratory to use in treatment of United States patients. The average clinical
development time for drugs approved in 1994 and 1995 by the FDA was seven years,
compared to six years for drugs approved from 1990 to 1993. Only five in 5,000
compounds that enter pre-clinical testing make it to human trials; and only one
of those five is approved by the FDA. According to the Pharmaceutical Research
and Manufacturers Association, investment in research and development by
research-based pharmaceutical companies has increased dramatically since 1980.
In fact, over the past ten years, research and development investment has more
than tripled from $6.5 billion in 1988 to a projected $20.6 billion in 1998.
Over the next decade, most large and medium-sized pharmaceutical companies will
grapple with the fact that many of their most profitable products are nearing
the end of patent protection and
29
<PAGE> 31
their research and development efforts are not producing replacements to
continue to justify the significant investments which such companies have made
in their sales and marketing infrastructure. Thus, there is significant and
growing demand for drugs that have a high probability of reaching the market in
the near term.
The shortage of effective drugs is particularly acute in the oncology
market. Cancer already is responsible for nearly 25% of the deaths in the United
States and, if mortality rates for other leading causes of death, such as heart
disease and stroke, continue their declining trends, cancer will become the
leading cause of death among Americans in the early 21()st century. According to
Healthcare Forecasting Incorporated Reports, the oncology drug market in 1996
was estimated to be $3.1 billion. Oncology is currently one of the five largest
therapeutic markets in the United States and Europe, but few major
pharmaceutical companies participate in this market on a worldwide level.
Moreover, most of the most active and widely used chemotherapeutic drugs have
been on the market for a decade or more, and are thus at or nearing the end of
their patent protection period.
Despite this shortage of new drugs entering the market, as a direct result
of the Prescription Drug User Fee Act of 1992, as amended, the FDA has devoted
more resources to the review of NDAs, including NDAs for new molecular entities
("NMEs"), and to the review of supplemental applications for expanded claims.
The process has taken less time than it did previously, and an increased number
of products are receiving approval. In 1996, 53 NME's (up from 26 in 1995) and
nine biological products (up from two in 1995) were approved. Of those approved
in 1996, five were oncology drugs: docetaxol, gemcitabine, irinotecan,
nilutamide, and topotecan. The 17 drugs designated for "priority review" in 1996
were approved in an average time of 13.7 months. In 1997, 39 NMEs and 10
biological products were approved. A significant trend towards shorter approval
times has been observed for NMEs (9% decrease to 16.2 months from the previous
year). In 1997, nine NMEs and three biological products received priority
review -- four of the nine priority NMEs and all of the priority biological
products were approved within six months of filing acceptance. Of the 1997
approvals, six were oncology products: intrapleural talc, samarium sm 153 EDTMP,
letrozole, toremifene, oprelvekin and rituximab. Interferon alfa-2b, previously
approved for use in hairy cell leukemia and hepatitis, received approval of a
supplemental application for an additional oncology claim. The mean approval
time of the last six priority oncology drug products (NMEs) granted priority
review was 12 months. With the Food and Drug Administration Modernization Act of
1997, as amended (the "FDAMA"), user fees have been extended for five years and
a variety of measures designed to expedite review of drugs and biological
products have been enacted. Whether they will have any effect in general or with
respect to any drugs that the Company is or will be developing, and the
magnitude of any such effect, cannot be known.
The foregoing trends have created an opportunity that is being exploited by
the numerous smaller specialized pharmaceutical companies that have emerged over
the past decade. For example, hundreds of drug discovery and research based
companies have been formed around scientific advances in the understanding of
cancer. Despite the promise of these advances, however, few products have
emerged, in part because these companies lack the expertise in clinical
development needed to ensure the development and commercialization process is
completed in a timely and cost effective manner. Many larger companies also lack
experience in clinical development of oncology products because they focus on
large single disease markets, whereas cancer is a heterogeneous set of diseases.
Anthra had positioned itself as a specialized pharmaceutical company, dedicated
to the clinical and commercial development of cancer drugs. Anthra's record of
performance with the development of and filing of an NDA for Valstar supports
this positioning in that the clinical development time for such NDA was 5.5
years and the total cost to file the NDA was under $20 million.
BUSINESS STRATEGY
The availability of a large number of novel compounds with therapeutic
potential, combined with the pressing demand by major pharmaceutical companies
for approved products, has created a significant opportunity for organizations
with expertise in the transformation of promising lead compounds into safe and
effective drugs. Furthermore, Anthra believes that the clinical development of
cancer drugs can be less costly and presents a lower risk than drug development
for other major diseases because of the FDA's policy with
30
<PAGE> 32
respect to drugs for life-threatening diseases, such as cancer. Anthra intends
to exploit these opportunities by implementing a strategy based on the following
key elements:
- CONCENTRATE ON THE CLINICAL AND COMMERCIAL DEVELOPMENT OF DRUGS WITH
DEMONSTRATED ACTIVITY IN THE TREATMENT OF SPECIFIC TYPES OF CANCER. The
Company draws upon the expertise of its management team and its Scientific
Advisory Board, as well as established relationships with pharmaceutical
companies and research organizations, to identify and procure rights to
oncology compounds which have exhibited a potential for late-stage
development. The Company believes that this focus will enable it to build
a strong product portfolio without extensive investment in the
infrastructure required to support drug discovery efforts and pre-clinical
research.
- MINIMIZE THE TIME AND COST OF DRUG DEVELOPMENT BY THE PRUDENT SELECTION
OF PRODUCT CANDIDATES AND DISEASE INDICATIONS AND THROUGH THE RIGOROUS
DESIGN AND IMPLEMENTATION OF CLINICAL TESTING PROGRAMS. The Company has a
detailed checklist of requirements that any potential drug candidate must
satisfy. The drug candidate must be a novel, proprietary compound for use
in treatment and/or management of cancer or complications from cancer. The
drug candidate must have a pre-clinical and manufacturing dossier that
will support an investigational new drug application (an "IND") with the
FDA. Except in exceptional circumstances, the drug candidate should have
undergone early clinical testing that demonstrated safety and activity in
humans. The drug candidate should have broad enough activity to support
claims for multiple disease indications. Recognizing that the scrupulous
direction and management of the clinical trials process is absolutely
crucial to rapid and cost effective drug development, Anthra fully
supports the studies it sponsors, maintaining direct contact with all
participating clinical investigators and sites. For its Valstar program,
for example, clinical studies were conducted at more than 100 sites in the
United States and Europe.
- STAGE DEVELOPMENT OF DRUG CANDIDATES TO REDUCE RISKS INHERENT IN CLINICAL
STUDIES. Anthra's initial stage of clinical development focuses on a
specific disease indication where safety and efficacy can be easily and
reliably demonstrated to support filing for regulatory approval and rapid
market penetration. Because regulatory authorities recognize the need for
new drugs to treat the many cancer indications for which there are neither
definitive treatments nor approved products, the clinical trials and
regulatory approvals process is more expeditious than for other disease
states. The later phases of clinical development target broader
indications and support supplemental regulatory filings that lead to
expanded markets for the product.
- ADDRESS THE SIGNIFICANT AND GROWING DEMAND OF LARGE AND MEDIUM-SIZED
PHARMACEUTICAL COMPANIES FOR NEW ONCOLOGIC PRODUCTS. A recent Arthur
Andersen survey reported that the development pipelines of large drug
companies are producing only 10% of the new products needed to sustain
their current economic returns. With many of their profitable drugs slated
to lose patent protection over the next five to seven years, these
companies are actively seeking marketing and development rights for new
products at or near the stage of filing for regulatory approvals.
- FORM STRATEGIC COLLABORATIONS WITH SELECTED CORPORATE PARTNERS. Anthra
has established and will continue to pursue arrangements with
pharmaceutical companies to provide the Company with access to promising
compounds, and marketing and distribution capability for approved
products. These arrangements should allow Anthra to concentrate on its
strength in clinical development, while providing Anthra with financing
for growth and the acquisition of additional compounds.
- CAPITALIZE ON THE SIGNIFICANT INVESTMENT IN CANCER DRUG DISCOVERY AT
ACADEMIC INSTITUTIONS AND SPECIALIST R&D COMPANIES. Because many of these
institutions and companies lack the experience and resources to transform
promising new compounds into marketable products, Anthra is advantageously
positioned to negotiate licensing agreements for clinical and commercial
development of these drugs.
Anthra has demonstrated with Valstar that it can implement the foregoing
strategy successfully. Anthra has completed the initial phase of its Valstar
program and filed an NDA in December 1997 based on clinical trials of Valstar
for treatment of refractory bladder cancer, less than five years after the
Company established
31
<PAGE> 33
the drug's activity and launched pivotal clinical studies for this indication.
With the arrangements it has established, including those with Medeva, Nycomed
and Almirall, the Company may receive up to a total of $42.9 million (of which
$22.3 million has been paid to date) in licensing and development fees,
milestone payments and equity investments, plus additional royalty and supply
payments.
PRODUCTS AND MARKETS
Many specialized pharmaceutical companies are built on a technology
platform that generates many lead compounds, only a small fraction of which can
be developed into products. In contrast, Anthra specializes in developing late
stage drug candidates into marketable products. Anthra has invested and intends
to continue to invest its resources only in drug candidates that have both
evidence of safety and activity in humans, and the potential to treat both
narrow and broad disease indications.
VALSTAR: A NOVEL ANTHRACYCLINE FOR REGIONAL CHEMOTHERAPY
Valstar is an anthracycline with multiple cytotoxic mechanisms that was
discovered at Dana-Farber. Anthracyclines such as doxorubicin and daunorubicin
are among the most active and widely used anti-tumor agents in the current
pharmacopoeia. Pre-clinical studies and early institutional clinical trials at
Dana-Farber indicated that the pharmacologic profile of Valstar makes it
particularly attractive as an agent for regional chemotherapy, i.e., the direct
administration of a concentrated drug solution to a body cavity or organ.
Regional chemotherapy is designed to maximize treatment of locally confined
tumors by delivering very high doses of the therapeutic agent to the afflicted
organ or region while reducing systemic exposure to such agent and the
consequent side effects. As a lipophilic molecule, Valstar penetrates cell
membranes rapidly. Valstar has been shown to have significant activity against a
variety of tumor cell lines and is not associated with significant contact
toxicity, thereby making it an ideal choice for regional chemotherapy. Finally,
no cumulative cardiotoxicity has been observed with Valstar as opposed to other
anthracyclines.
Anthra's clinical development program for Valstar has focused on two
primary routes of administration: intravesical ("IVe") (instillation of the drug
solution in the bladder) and intraperitoneal ("IP") (introduction of the drug
solution into the peritoneal cavity). The Company is sponsoring clinical studies
of Valstar to support applications to market the drug in these and other
regions. In addition, Anthra has sponsored pre-clinical studies to test the
feasibility of administering Valstar directly into the prostate gland via direct
injection. Table I is an overview of Anthra's Valstar clinical development
program. There can be no assurance, however, that Anthra will receive approval
to market Valstar for the claims listed in Table I. See "Risk
Factors -- Uncertainties Related to Clinical Trials; Uncertainty of Government
Regulatory Requirements; Lengthy Approval Process."
32
<PAGE> 34
TABLE I. SUMMARY OF VALSTAR CLINICAL DEVELOPMENT PROGRAM
<TABLE>
<CAPTION>
INDICATION/
TREATMENT TYPE RATIONALE STATUS OF DEVELOPMENT
- ------------------------------ ------------------------------ ------------------------------
<S> <C> <C>
Refractory Superficial Bladder - No agents approved for - United States NDA filed;
Cancer/Intravesical (IVe) refractory indication Orphan Drug designation
- High dose intensity; - European EMEA application
prevent/delay cystectomy filed
- ----------------------------------------------------------------------------------------------
Papillary Bladder Cancer/ - No agents approved for claim - United States Phase III
IVe Immediately Following in United States study ongoing
TURB - High dose intensity; - European Phase III study to
prevent/delay disease be launched in 1998
recurrence and/or
progression
- Low incremental cost to
healthcare system
- ----------------------------------------------------------------------------------------------
Advanced Refractory Ovarian - IP administration of - United States and Canada
Cancer/Intraperitoneal (IP) cytotoxic agents has been Phase III study ongoing
shown to be of clinical - European Phase III protocol
value compared to proposed
intravenous administration
- No agents approved for IP
administration
- High dose intensity;
maximize pharmacologic
advantage of IP therapy
- ----------------------------------------------------------------------------------------------
Locally Confined Prostate - No effective chemotherapy - United States Phase I
Cancer/Intraprostatic (local or systemic) protocol accepted by FDA;
Injection - Excellent pre-clinical activation planned for 1998
safety profile
- Regional treatment to
prevent/delay prostatectomy
- ----------------------------------------------------------------------------------------------
</TABLE>
BLADDER CANCER -- OVERVIEW AND MANAGEMENT
In the United States, bladder cancer affects 54,000 new patients annually
and there are over 500,000 patients living in the United States who have been
diagnosed with the disease. It is approximately three to four times more common
in men than women and the disease most frequently occurs in the sixth and
seventh decades of life. Figure 1 depicts the management of patients with
bladder cancer. The two principal forms of the disease are invasive (occurring
in approximately 10% to 15% of patients) and superficial (occurring in the
remainder). The majority of patients diagnosed with bladder cancer have
superficial transitional cell carcinoma. Patients diagnosed with invasive
disease typically undergo surgical removal of the bladder (cystectomy) and often
require systemic chemotherapy, while patients with superficial disease are
managed much more conservatively.
There are two principal types of superficial bladder cancer: carcinoma
in-situ and papillary tumors. Most commonly, papillary tumors are characterized
as having a low to intermediate potential for invasion and are managed by
transurethral resection of the bladder ("TURB") and surveillance cystoscopy with
repeat TURB upon documented recurrence. However, some patients are considered to
have aggressive disease with a high risk of developing invasion, thereby
requiring IVe (in the bladder) administration of BCG therapy. Patients with
carcinoma in-situ are considered to be at high risk of developing invasive
disease and require IVe administration of BCG therapy.
33
<PAGE> 35
FIGURE 1. BLADDER CANCER MANAGEMENT
[BLADDER CANCER MANAGEMENT CHART]
34
<PAGE> 36
VALSTAR IN PATIENTS WITH BCG-REFRACTORY SUPERFICIAL BLADDER CANCER
Prior to the introduction of BCG, patients with carcinoma in-situ and high
risk papillary tumors underwent cystectomy due to the aggressive nature of the
disease. With BCG, the need to use cystectomy in patients with superficial
bladder cancer has been markedly reduced. Complete response rates with BCG
treatment are in the 70% range. When patients are shown to have had an
inadequate response to BCG, that is, are not rendered disease-free or recur
following recommended BCG treatment regimens, they are considered refractory,
and surgical removal of the bladder is the principal treatment. Due to the
significant alteration in life style, near term and long-term complications, and
compromise of quality of life, patients and physicians desire greatly to salvage
bladders. However, there are currently no drugs approved in the United States or
Europe for second-line treatment of bladder cancer following BCG therapy.
Anthra has targeted the first use of Valstar for patients with refractory
superficial bladder cancer. In 1993, the Company began pivotal clinical studies
after discussing the requirements for approval of Valstar for this claim with
the FDA. Anthra applied for and received Orphan Drug designation for Valstar,
which would confer seven years of market exclusivity upon NDA approval, for the
treatment of patients with this condition. Accrual and follow-up in the pivotal
studies for the NDA for this claim concluded in April 1997 and such NDA was
submitted to the FDA in December 1997. The studies included 90 patients with
BCG-refractory disease; 58% of whom received at least three prior courses of IVe
therapy. Life table analyses revealed that the probability of obtaining a
complete response (no evidence of disease documented by cystoscopic inspection
with biopsy and cytology) to Valstar treatment was 22%. Importantly, 45% of the
patients (based on Kaplan Meier life-table estimates with 30 month follow up)
enrolled in the studies did not undergo cystectomy. Thus, Valstar provided many
patients with the opportunity for meaningful bladder salvage.
The FDA has begun its evaluation of the aforementioned NDA and has given
the application "priority review" status. Such status is no assurance that the
NDA will be approved or that, if approved, the approval will be granted within
any particular period of time. In the course of reviewing NDAs, the FDA often
finds it necessary to call upon the knowledge of experts in clinical research
and the treatment of patients. The FDA has instituted an advisory committee
system to assist in the establishment of guidelines with respect to the clinical
development of new drugs for a variety of diseases and to help the FDA in the
evaluation of specific NDAs. If the FDA's review of Valstar proceeds as the
Company anticipates, Valstar should be the subject of an ODAC meeting scheduled
for June 1, 1998. Assuming a positive review by and favorable recommendation
from the ODAC panel, the Company anticipates that the NDA for Valstar will be
approvable by the FDA during 1998. There can be no assurance, however, of a
favorable ODAC recommendation or of approval by the FDA in 1998 or thereafter.
If this NDA is approved, Valstar will be marketed for IVe administration to the
approximately 6,000 urologists in the United States by Medeva. See
"-- Valstar -- Licensing Agreements." The Company has also agreed to provide
Valstar to the Eastern Cooperative Oncology Group ("ECOG") for a study that the
Company expects to commence in June of 1998 involving patients with all forms of
superficial bladder cancer who have proven refractory to BCG treatment.
In May 1998 the Company filed with the European Agency for the Evaluation
of Medicinal Products ("EMEA") an application for approval of a similar claim in
Europe based upon the results of a pivotal study that it performed at five study
centers in three European countries and the results of the pivotal studies
conducted in the United States. The European study evaluated Valstar in the
treatment of 45 patients with high risk superficial bladder cancer who were
refractory to multiple TURB procedures and IVe courses of treatment with BCG and
mitomycin. Complete responses confirmed by cystoscopic evaluation with biopsy
and cytology were documented in approximately 50% of patients with residual
papillary tumors at the time of treatment with Valstar. No drugs are approved in
Europe for the treatment of patients with refractory high-risk superficial
bladder cancer. The EMEA has accepted Valstar for the centralized review
procedure. Drugs accepted for review under the centralized procedure are given
ten year marketing exclusivity from the date of approval in all European Union
("EU") countries. The Company plans to seek approval for Valstar in other
European countries, as well. If approved, Nycomed and Almirall will market
Valstar to urologists throughout Europe.
35
<PAGE> 37
VALSTAR IN PATIENTS WITH LOW TO INTERMEDIATE RISK PAPILLARY SUPERFICIAL
BLADDER CANCER
Papillary tumors are the most common form of superficial bladder cancer and
patients with a low to intermediate risk of developing invasive disease far out
number those with aggressive forms of the disease. The principal form of
treatment of patients with papillary tumors is TURB. Patients with papillary
tumors typically have recurrence necessitating repeat TURB procedures.
Recurrence rates depend upon the number, stage and grade of the tumors. Most of
the 180,000 TURBs performed annually in the United States are undertaken
involving patients with recurrent superficial bladder cancer. As illustrated in
Figure 2, during the TURB procedure, a rigid cystoscope is inserted into the
bladder via the urethra and overt tumors are resected and biopsies are taken
from areas suspicious for tumor involvement. Normal appearing areas of the
bladder mucosa are frequently sampled in an effort to diagnose carcinoma
in-situ, which is not often visible. There are several theories regarding the
biology of recurrence, including regrowth of excised tumors, development of new
tumors due to genetic and environmental factors, and implantation of tumor cells
at the time of TURBs in areas denuded during the procedures. Implantation of
stray "floating" tumor cells in areas in which the urothelium has been disrupted
may be followed by the growth of the implanted cells to form a new tumor. This
is especially so after the affected area has healed (re-epithelialization). The
best opportunity to interfere with the pathophysiology of implantation-mediated
recurrence is prior to the re-epithelialization of the sites denuded during the
TURB, that is, as soon as possible following the procedure. The administration
of an IVe agent shortly after the TURB has been shown to reduce recurrence
rates, presumably by destroying residual floating tumor cells before they can
implant or prior to re-epithelialization of areas in which tumor cells have
landed.
FIGURE 2. ADJUNCTIVE TREATMENT WITH VALSTAR
[TURB PROCEDURES GRAPHIC]
There are no drugs in the United States approved for IVe administration
shortly after TURB. In fact, BCG, the most widely used IVe agent, is
contraindicated for patients with any signs of compromised bladder integrity
because sytemetization of the tubercle bacillus has led to severe adverse
reactions. Anthra has conducted a Phase I/II study of Valstar administered
immediately following TURB in 22 patients. This study documented the safety of
adjunctive administration of Valstar and served as the basis for discussions
with the FDA regarding the development of Valstar for approval in this setting.
Anthra has commenced a Phase III randomized pivotal study of adjunctive Valstar.
The results of this study, if positive, will serve as the basis for FDA approval
of Valstar for single-dose adjunctive therapy in conjunction with TURB
procedures. If approved, Valstar will be marketed for IVe administration to the
6,000 urologists in the United States by Medeva. See "-- Valstar -- Licensing
Agreements." The Company will also seek European approval of adjunctive therapy
for low to intermediate risk papillary tumors. If approved, Nycomed and Almirall
will market Valstar to urologists throughout Europe.
36
<PAGE> 38
VALSTAR IN PATIENTS WITH OVARIAN CANCER
Ovarian cancer affects 25,400 new patients annually in the United States,
and there are approximately 60,000 patients in the United States that have been
diagnosed with the disease. With an estimated 14,500 deaths in 1996, ovarian
cancer caused more deaths in the United States than any other cancer of the
female reproductive system. Ovarian cancer is often "silent", showing no signs
or symptoms until late in its development, and only 23% of all cases are
detected at a localized stage. Figure 3 illustrates the management of ovarian
cancer. Aggressive surgery, that is, removal of all sites of tumor involvement
as well as the ovaries, fallopian tubes, and uterus, is typically performed.
Front-line systemic chemotherapy is then typically administered. Although the
regimens employed in up-front treatment continue to be optimized, in the United
States the use of intravenously administered platinum and paclitaxel is the
standard. In a large study performed by the Southwest Oncology Group ("SWOG"),
the Gynecologic Oncology Group ("GOG"), and ECOG (each of which is a government
sponsored cancer research network associated with the National Cancer Institute
of the National Institute of Health), involving patients with small volume
disease following surgery, IP administration of cisplatin has been shown to be
superior to intravenously administered cisplatin. However, cisplatin is not
approved for IP use. The high dose intensity achieved via IP administration and
the direct contact of drug with tumor cells and small volume tumor nodules is
believed to account for the effectiveness of this route. Following front-line
therapy, patients are monitored closely using physical examination, examination
of serum levels of CA-125, CT scans of the abdomen and pelvis, and often with
repeat surgical or laparoscopic exploration. Unfortunately, most patients with
advanced ovarian cancer are not cured with front-line treatment and the
development of platinum resistant recurrent disease within the peritoneal cavity
is common.
FIGURE 3. OVARIAN CANCER MANAGEMENT
[OVARIAN CANCER MANAGEMENT CHART]
When patients are shown to have recurrent disease, second-line therapies
are typically administered. Although IP administration of several agents has
been evaluated, there are no drugs approved in the United States for use in this
manner. As mentioned above, IP cisplatin has been shown to be quite effective as
front-line therapy involving patients with small volume disease. Doxorubicin, an
anthracycline known to be effective in the treatment of patients with ovarian
cancer when administered intravenously, was evaluated for IP administration;
however, due to this contact toxicity of this compound and the complications
that were observed, the drug is considered to be inappropriate for IP use.
Valstar is also an anthracycline which, in comparison to doxorubicin, is
associated with considerably less contact toxicity. Anthra's Phase I/II study of
IP Valstar use demonstrated that the drug is safe and well tolerated at high
dose levels, and produced preliminary evidence of drug activity in a heavily
pre-treated group
37
<PAGE> 39
of patients. Anthra is sponsoring a Phase III clinical trial in the United
States and Canada involving patients with small volume disease following
treatment with platinum and paclitaxel. The Company plans to launch a European
Phase III study of IP Valstar in 1998. Data from these studies is expected to
support supplementary regulatory filings for this claim by 2000. If IP Valstar
is approved by the FDA, Valstar can then be marketed to the approximately 300
gynecological oncologists in the United States and to a similar target audience
in Europe. See "-- Valstar: Licensing Agreements."
VALSTAR IN PATIENTS WITH PROSTATE CANCER
In the United States, over 184,500 new cases of prostate cancer are
diagnosed each year and an estimated 39,200 deaths occurred from the disease in
1996. The risk of being diagnosed with prostate cancer increases with age and
the disease accounts for over 80% of the cancers diagnosed in men over the age
of 65. As a result of early detection screening procedures, including the use of
serum PSA (Prostate Specific Antigen) levels, approximately 60% of patients are
diagnosed when the disease is localized, that is, confined within the prostate
gland. Surgical prostatectomy (complete surgical removal of the prostate) was
traditionally considered by many experts to be the definitive treatment for
localized disease. However, due to the variable natural history of localized
prostate cancer and questions regarding the long-term efficacy of surgical
therapy, over the past five years, a strategy of "watchful waiting" has been
advocated by some experts. This approach entails careful observation of patients
with pathologically proven prostate cancer followed by definitive therapy when
the patient is considered to be at high risk of having progressive disease. As
depicted in Figure 4, a significant controversy regarding the optimal therapy
for localized prostate cancer has emerged, and the contrast of the foregoing
approaches has led a number of physicians and patients to seek alternative
therapies including external beam radiation therapy, brachytherapy (implantation
of radioactive seeds within the prostate gland), and cryotherapy (freezing of
the gland). Patients and physicians have found themselves at a crossroads having
to choose between either no treatment or a variety of forms of therapy
associated with significant side effects and compromised quality of life.
FIGURE 4. PROSTATE CANCER TREATMENT DILEMMA
[PROSTATE CANCER TREATMENT CHART]
Anthra and others have viewed this treatment dilemma as a possible
opportunity for treatment by way of a direct injection of therapeutic agents
within the prostate gland. In-vitro sensitivity studies have demonstrated the
activity of Valstar against prostate cancer and studies of direct intraprostatic
injection of Valstar in dogs
38
<PAGE> 40
has established the feasibility of this approach. Anthra is working with its
investigators to finalize the protocol and begin patient enrollment in a Phase I
study of intraprostatic Valstar in 1998. Subsequent studies may be initiated
pending the results of this Phase I study.
VALSTAR: MARKET
The Company has researched the historical incidence of the diseases for
which the Company is currently conducting trials for Valstar based on publicly
available information and reports prepared for the Company by MedProbe,
including a report summarizing the results of a survey of 1.5% (124) of office
and hospital based urologists reported to be members of the AMA. Although
precise patient data is not published and can vary significantly from year to
year, based on the foregoing research and certain assumptions made by the
Company, including the estimated cost of treating each of the estimated number
of patients with Valstar, the Company estimates that the potential market for
Valstar in the United States could approximate nearly $600 million per annum.
This estimate is based on the following historical data, assumptions and
estimates: an average of approximately 5,000 to 9,000 patients per year are
estimated as having been diagnosed with carcinoma in-situ that is refractory to
BCG therapy, and the Company's estimate of the cost of treatment of this type of
cancer utilizing Valstar is $7,200 per patient; an average of approximately
180,000 patients per year are estimated as having had a TURB procedure
performed, and the Company estimates that an adjunctive treatment utilizing
Valstar would cost $1,200 per patient; an average of approximately 10,000
patients per year are estimated as having been diagnosed with small volume
ovarian carcinoma refractory to front-line treatment, and the Company's estimate
of the cost of treatment of this type of cancer utilizing Valstar is $9,000 per
patient; an average of approximately 184,500 patients per year historically have
been diagnosed with organ-confined prostatic carcinoma, and the Company's
estimate of the cost of treatment of this type of cancer utilizing Valstar is
$1,200 per patient; and the estimated potential market for Valstar of
approximately nearly $600 million per annum assumes 100% of these patients
utilizes Valstar with the foregoing costs of treatment. No assurance can be
given by the Company that this estimated market for Valstar will be achieved.
VALSTAR: DRUG MANUFACTURING AND FINISHING
Valstar is manufactured in bulk powder form for the Company by Gensia Sicor
in Rho (Milan), Italy, and by Omnichem in Louvain-la-Neuve, Belgium. Anthra has
contract manufacturing agreements for conversion of starting material to Valstar
Drug Substance with Omnichem and Gensia Sicor.
In June 1991, the Company entered into an Exclusive Supply Agreement with
Omnichem for the manufacture of Valstar Drug Substance, part of which terminated
according to its terms in 1994. Following such termination, Anthra had the right
to contract for the manufacture of Valstar Drug Substance with any party of its
choice. However, for a period of 10 years from the date of such termination,
Omnichem has a right of last refusal to supply Valstar Drug Substance on the
same terms, including price, as those offered by a third party supplier.
In September 1997, the Company entered into a Supply Agreement with Gensia
Sicor for the manufacture of Valstar Drug Substance (the "Gensia Sicor
Agreement"). In accordance with the terms of the Gensia Sicor Agreement, Gensia
Sicor supplied to Anthra in 1997 certain validation batches of Valstar Drug
Substance in return for payments aggregating $570,000, for purposes of
facilitating Anthra's United States and European regulatory approval processes
for Valstar. Following the attainment of regulatory approval for Valstar for
commercial sale, Gensia Sicor is obligated to manufacture and supply Valstar
Drug Substance for Anthra in accordance with the terms and conditions of the
Gensia Sicor Agreement. Anthra's price for Valstar Drug Substance shall be as
set forth in the Gensia Sicor Agreement. In addition, Anthra has the obligation
to make certain payments to Gensia Sicor upon the attainment of certain
milestones in connection with the regulatory approval process for Valstar.
Subject to certain limitations, the term of the Gensia Sicor Agreement expires
10 years from the date of the first regulatory approval for Valstar.
Gensia Sicor has submitted to the FDA, and will submit to the appropriate
regulatory authorities in Europe, its Drug Master File with respect to Valstar,
which includes, among other information, the Drug
39
<PAGE> 41
Establishment Registration Number, address of manufacturer, information
regarding the characterization of the drug substance, analytical specifications,
manufacturing flow sheet, production and process controls, evidence of chemical
structure, and characterization of reference standards and stability data.
Omnichem has submitted to the Company, which has in turn submitted to the FDA,
information similar to that which Gensia Sicor submitted to the FDA.
Release testing and stability testing of Valstar Drug Substance produced by
Omnichem is performed under contract to Anthra by Ben Venue, while release
testing and stability testing of Valstar Drug Substance produced by Gensia Sicor
is performed by the manufacturer.
Valstar Drug Product is purchased from Ben Venue, and the Company is
currently negotiating the terms and conditions of a written supply agreement
with Ben Venue. Under the terms of its agreements with Medeva, Nycomed, and
Almirall, Anthra will be the exclusive provider of Valstar Drug Product for
post-approval marketing. See "-- Valstar: Licensing Agreements."
VALSTAR: COMPETITION
Anthra has designed its clinical and commercial development programs to
maximize the market competitiveness of Valstar. At present, two therapeutic
agents are registered for IVe administration in the United States: the
chemotherapeutic drug thiotepa and the immunotherapeutic biological BCG.
Thiotepa is an older drug that is considered to have limited efficacy in
treatment of refractory bladder cancer. BCG is the definitive agent for
treatment of carcinoma in-situ, and is used for prophylactic IVe therapy to
supplement surgical resection of papillary tumors involving patients with
aggressive forms of the disease. Two other chemotherapeutic drugs marketed in
the United States, doxorubicin and mitomycin, are considered to be active when
administered by the IVe route, but neither is approved for IVe use by the FDA.
Clinical studies of immunotherapy with interferon administered intravesically,
Photofrin for use with photodynamic therapy, and the experimental oral agent
bropirimine, have demonstrated only limited utility for these agents in the
treatment of bladder cancer. Keyhole limpet hemocyanin is a developmental agent
that is being tested for activity against superficial bladder cancer as a
replacement for BCG.
Anthra's pivotal clinical studies in the United States were conducted using
patients who had failed to respond to or recurred following treatment with BCG.
At present, the majority of refractory patients are treated with surgical
cystectomy, although many patients refuse to undergo the procedure. For lack of
an appropriate alternate therapy, some urologists recommend bladder salvage IVe
therapy with non-approved agents. The FDA has designated Valstar an Orphan Drug
for treatment of refractory carcinoma in-situ. Thus, if approved, Valstar will
have protection from competition in this market for seven years from the date of
approval.
If the results of Anthra's ongoing Phase III study of IVe Valstar
administered immediately following transurethral resection of the bladder are
positive, the data could provide the basis for a supplemental claim covering a
novel therapeutic approach. Although European studies have shown that mitomycin
is active in this clinical setting, this drug is not approved for IVe
administration in the United States. BCG is not a potential competitor for
peri-surgical therapy because administration of a live bacterial culture
immediately following surgery poses unacceptable risks.
The competitive environment for IVe Valstar in Europe is more complicated
because, in addition to BCG and thiotepa, mitomycin, epirubicin, and doxorubicin
are approved for IVe administration. None of these drugs, however, has been
rigorously evaluated in clinical studies for treatment of refractory superficial
bladder cancer and no agent has been registered based on a claim of activity in
a refractory patient population. Because the data from Anthra's pivotal clinical
trials involving patients with refractory disease in the United States and
Europe (which formed the basis for the Company's filing with the EMEA for
approval to market Valstar in Europe), comprise one of the largest studies of a
well-characterized refractory population, Anthra believes Valstar will be
competitive in the European market if approved.
Although several studies have shown that chemotherapeutic agents such as
cisplatin are active when administered intraperitoneally, no agent is approved
in either Europe or the United States for IP administra-
40
<PAGE> 42
tion. Anthra views this as an opportunity for Valstar. Several agents have been
approved for treatment of refractory ovarian cancer via systemic administration,
including paclitaxel (Taxol(R)), which was originally registered for second line
therapy but is used increasingly in first line combination therapy with platinum
agents, topotecan and tamoxifen. Taxol(R) is being evaluated in GOG trials for
IP administration. Altretamine, which is taken orally, is marketed in the United
States for treatment involving patients with refractory ovarian carcinoma.
Anthra's Phase III study is comparing the activity of IP Valstar and oral
altretamine involving patients who have failed to respond following therapy with
platinum compounds and paclitaxel.
VALSTAR: PROPRIETARY POSITION
Patent protection for Valstar as a NME expired in 1994. Anthra's management
believes it can maintain a strong proprietary position for the drug based on
three platforms. First, it will seek Orphan Drug status for Valstar in specific
disease indications; FDA designated Valstar an Orphan Drug for treatment of
refractory carcinoma in-situ in 1994 and Anthra will apply for designation in
other appropriate indications. Second, Anthra has proprietary know-how in the
manufacture and formulation of the drug. Finally, Valstar will receive
protection from generic competition for five years following approval under
provisions of The Drug Price Competition and Patent Term Restoration Act of 1984
as amended (the "Waxman-Hatch Act"). This protection does not, however, apply to
full NDAs. Moreover, Congress may consider amendments to the Waxman-Hatch Act
that could affect the requirements for and timing of generic drug approvals. In
Europe, drugs approved via the centralized procedure, that is, through the EMEA,
are granted protection from generic competition for a ten year period from the
date of approval.
Pursuant to an Agreement with Dana-Farber, dated November 6, 1990 (the
"Dana-Farber Agreement"), Anthra acquired exclusive licensing rights to Valstar
for both in and outside of the United States. Upon the termination of such
exclusive licensing rights in the United States under the Dana-Farber Agreement,
Dana-Farber would grant the Company non-exclusive licensing rights for the
remaining term of the agreement. Under the Dana-Farber Agreement, Anthra was
given the right to file an NDA or IND for Valstar and has the obligation to use
best efforts to commercially develop Valstar. The Company is liable to
Dana-Farber for annual royalty fees based on net sales, if any, as defined in
the Dana-Farber Agreement. The Company agreed to pay Dana-Farber a minimum
royalty of $15,000 for each 12-month period commencing on the anniversary of an
NDA approval in the United States of Valstar. The obligation to pay minimum
royalties shall cease upon the termination of the Dana-Farber Agreement. Absent
any default, the Dana-Farber Agreement terminates in July 1999 or upon 90 days
notice by Anthra.
VALSTAR: LICENSING AGREEMENTS
Nycomed
In October 1997, the Company entered into an Exclusive License, Sale and
Distribution Agreement with Nycomed for the sale and distribution of Valstar for
three indications in Europe generally, excluding Spain and Portugal, but
including the Commonwealth of Independent States, Russia, parts of Eastern
Europe and, subject to certain conditions, an option with respect to China (the
"Nycomed Agreement"). At that time, Nycomed also purchased 300,000 shares of the
Company's Series D Convertible Preferred Stock for $4.5 million. The Nycomed
Agreement provides, subject to certain restrictions and limitations, for future
payments by Nycomed to Anthra aggregating up to $2 million based on the
achievement of certain milestones. In connection with these payments, Nycomed
will receive an option to purchase up to an aggregate of 66,666 shares, subject
to certain conditions, of either the Company's Series D Convertible Preferred
Stock or Common Stock at a price of $15 per share, which options will expire in
accordance with the Nycomed Agreement. Upon making a certain payment under the
Nycomed Agreement, subject to certain conditions, Nycomed will receive an
additional option to purchase that number of shares of either Anthra's Common
Stock or Series D Convertible Preferred Stock that can be purchased for $1
million at the price per share as determined by a formula based on the market
price of the shares at the time of exercise, which options will expire in
accordance with the Nycomed Agreement. Subject to certain conditions, the
Nycomed Agreement requires that Anthra prepare and file applications for
regulatory approval for Valstar for the three indications in the countries
within the Nycomed territory. Subject to certain conditions, the Nycomed
Agreement also
41
<PAGE> 43
provides for Anthra to supply Valstar Drug Product to Nycomed at a price
specified in the Nycomed Agreement. Unless earlier terminated pursuant to its
provisions, the Nycomed Agreement has an initial term of 10 years from the date
in which the first major European Union member (other than Spain and Portugal)
grants the technical approvals for any indication for Valstar.
Medeva
In July 1997, the Company entered into the Medeva Agreement for the sale
and distribution of Valstar in the United States territory for two indications.
The Medeva Agreement provides for an initial non-refundable payment of $8
million to Anthra which was paid on signing, and, subject to certain
restrictions and limitations, potential future milestone payments aggregating up
to approximately $15.1 million, and potential future license fee payments
aggregating up to approximately $3 million (subject to certain offsets by Medeva
for funds Medeva may advance to Anthra for the continued development of Valstar,
costs incurred by Medeva to bring certain actions for infringement, and certain
losses suffered by Medeva in third-party actions in connection with the sale of
Valstar), each based upon the achievement of certain milestones. In
consideration of, among other things, the aforementioned payments, Anthra has
granted to Medeva a nominal ownership interest in the proprietary rights to
Valstar as exploited in the United States and certain of the proceeds to the
Company resulting therefrom.
The Medeva Agreement also provides for the payment of royalties to the
Company based on the net sales of Valstar sold by Medeva. In addition, the
Company will supply Valstar Drug Product to Medeva at a price specified in the
Medeva Agreement.
The Medeva Agreement specifies that in the event the Company is unable to
complete the development of Valstar for certain indications due to lack of
funds, Medeva has the right to advance the necessary funds to the Company, which
advances may be set off by Medeva at a specified rate against its payments under
the Medeva Agreement, which would reduce payments to the Company thereunder. If
Anthra is unable to supply Valstar to Medeva on a timely basis as provided in
the Medeva Agreement, Anthra shall be obligated, subject to certain restrictions
and limitations, to pay liquidated damages to Medeva based on the number of days
that such supply is delayed. In the event that Anthra becomes obligated to pay
Medeva liquidated damages in a certain amount as specified in the Medeva
Agreement, or is the subject of a bankruptcy or similar proceeding, then Medeva
shall have the right to manufacture Valstar for the term of the Medeva
Agreement. Subject to certain exceptions as set forth in the Medeva Agreement,
Medeva shall be limited to the foregoing rights in the event Anthra is unable to
supply Valstar on a timely basis.
The Company may be entitled to receive additional payments for the ovarian
cancer indication, dependent upon the outcome of negotiations, which are
scheduled to be undertaken in 1998.
In the event that the Company has not obtained approval to market Valstar
in the United States for either the refractory carcinoma in-situ indication or
the papillary tumor indication by December 31, 2002, Medeva has the right to
require the Company to issue to it such number of shares of Common Stock equal
to 20% of the outstanding voting equity securities of the Company at the time of
its exercise of such right.
Subject to certain conditions, the Medeva Agreement requires Anthra to
prepare and file an NDA and sNDA for Valstar for two indications, and subject to
agreement with Medeva, a third indication.
Unless earlier terminated pursuant to its provisions, the Medeva Agreement
has a term of not less than 12 years from the date of the first commercial sale
of Valstar in the United States territory.
Almirall
In April 1997, the Company entered into the Almirall Agreement for the sale
and distribution of Valstar for all indications in Spain and Portugal. At that
time, Almirall also purchased 67,819 shares of Anthra's Series D Convertible
Preferred Stock for $750,000. The Almirall Agreement provides for an initial
licensing payment by Almirall of $200,000 which was paid on signing, and future
payments aggregating up to $400,000 upon the achievement of certain milestones.
The Almirall Agreement also provides for Anthra to supply Valstar Drug Product
to Almirall at a price specified in the Almirall Agreement. The Almirall
Agreement
42
<PAGE> 44
requires Anthra to conduct all clinical trials required for the submission of
applications for regulatory approval for Valstar for at least two indications,
and to file the registrations in Spain and Portugal. Unless earlier terminated
pursuant to its provisions, the Almirall Agreement has an initial term of 10
years from the date of the first commercial sale of Valstar in Spain.
Schering AG, Germany
In July 1996, the Company converted the Development Agreement into the
Support Agreement. The Support Agreement provides for a payment by Schering AG,
Germany to Anthra of $3.5 million in consideration of such conversion of the
Development Agreement and the issuance by Anthra to Schering AG, Germany of
200,000 shares of Anthra's Series D Convertible Preferred Stock, which was
subsequently converted by Schering AG, Germany into Common Stock. Such payment
was received by the Company and recorded as $2.2 million toward the purchase of
the 200,000 shares of Series D Convertible Preferred Stock and the remaining
$1.3 million of the payment as other revenue upon conversion to the Support
Agreement. The Support Agreement provides for royalties to be paid by Anthra to
Schering AG, Germany based on the net sales of Valstar. Unless earlier
terminated pursuant to its provisions, the Support Agreement will expire seven
years after the date of the commercial launch of Valstar in the United States,
Germany or the United Kingdom.
BONEFOS(R): AN ORAL AGENT FOR OSTEOLYTIC COMPLICATIONS OF METASTATIC CANCER
Lytic bone disease is a medical condition that results from the
establishment and growth of metastases emanating from a variety of cancers,
including breast, lung, and multiple myeloma. The pathophysiologic basis of the
condition is the stimulation of a population of normal bone cells (osteoclasts)
relative to another population of bone cells (osteoblasts). Normal functioning
of bone depends on osteoclasts and osteoblasts acting in concert. Osteoclasts
mediate destruction of bone and osteoblasts are responsible for bone growth and
mineral production. The interplay between destruction and formation is integral
to bone re-modeling and various metabolic functions including calcium
regulation. When cancer metastasizes to bone, preferential stimulation of
osteoclasts leads to bone resorption and breakdown. As depicted in Figure 5,
lytic bone metastases are responsible for a clinical spectrum of diseases,
including establishment and progression of metastases leading to complications
including pain, pathological fracture and, in the terminal stages, hypercalcemia
(elevated blood calcium levels).
43
<PAGE> 45
FIGURE 5. BONEFOS(R) IN THE MANAGEMENT OF LYTIC BONE DISEASE
[OSTEOLYTIC BONE METASTASES GRAPH]
Bonefos(R) (clodronate) is an orally active bisphosphonate compound that
blocks bone resorption through osteoclast inhibition. High doses of
bisphosphonates are required to control lytic bone metastases resulting from
cancer. Due to significant gastrointestinal toxicity, most bisphosphonates
cannot be administered orally at high doses, so the products currently marketed
in the United States for the management of lytic bone metastases must be
administered intravenously. In contrast, clinical studies and more than 12 years
of marketed use in Europe have shown that Bonefos(R) is effective and well
tolerated when administered orally. Bonefos(R) is currently approved in 56
countries for the treatment of hypercalcemia and complications from lytic bone
disease.
Anthra has entered into the Bonefos Agreement in Principle for acquisition
of development and marketing rights for Bonefos(R) for the hypercalcemia and
lytic bone disease indications in the United States. See "-- Bonefos(R):
Proprietary Position; -- Bonefos Agreement in Principle." Bonefos(R) has been on
the market in Europe and the rest of the world since 1985, with worldwide sales
of approximately $150 million in 1997. Assuming the transaction contemplated by
the Bonefos Agreement in Principle is consummated, Anthra's development program
for Bonefos(R) will target two potential claims for the drug: maintenance of
normal blood calcium in hypercalcemic patients; and treatment of lytic bone
disease. Table II summarizes this proposed program.
44
<PAGE> 46
TABLE II. SUMMARY OF PROPOSED BONEFOS(R) CLINICAL DEVELOPMENT PROGRAM
<TABLE>
<CAPTION>
INDICATION/TREATMENT TYPE RATIONALE STATUS
------------------------- ----------------------------------- -----------------------
<S> <C> <C>
Hypercalcemia/Oral - Approved in 56 countries for - United States Phase
treatment of hypercalcemia III study ongoing;
- Large safety and efficacy dossier Orphan Drug
designation
---------------------------------------------------------------------------------------
Lytic bone disease/Oral - Approved in 56 countries for - United States Phase
treatment of lytic bone disease III study proposed
- Large safety and efficacy dossier
---------------------------------------------------------------------------------------
</TABLE>
Assuming the transaction contemplated by the Bonefos Agreement in Principle
is consummated, Anthra will implement a Phase III randomized clinical trial to
evaluate the efficacy of Bonefos(R) taken daily orally for maintenance of normal
blood calcium levels in patients who have received acute treatment with
intravenous drugs for hypercalcemic complications of metastatic disease. The
Company believes that about 50% of patients who respond to acute treatment
relapse with hypercalcemia and require acute treatment again. A subsequent Phase
III randomized study will compare the activity of monthly treatment with
pamidronate (Aredia(R)) administered as an intravenous infusion and daily
treatment with Bonefos(R) taken orally for controlling lytic bone disease in
patients with metastatic lung or breast cancer. Intravenous treatment with
Aredia(R) has been shown to reduce the incidence of skeletal complications
(fractures, surgery, radiotherapy and pain), and the Company's management views
the availability of an effective oral agent as a significant opportunity.
Assuming the transaction contemplated by the Bonefos Agreement in Principle is
consummated, Anthra expects to launch these studies in 1998.
BONEFOS(R): MARKET
The oncology market for bone resorption inhibitors is young and growing
rapidly. For example, United States sales of Aredia(R) nearly doubled to $200
million in 1997 following its approval for the wider claim of management of
lytic bone disease. Bonefos(R) is both less costly and more convenient to
administer than Aredia(R), which must be given as a three-hour or 24-hour
infusion in a supervised setting and costs, according to Company estimates,
approximately $1,500 per monthly treatment. In comparison, Bonefos(R), an orally
administered drug, is currently priced at $300 per month in Europe. If
Bonefos(R) is approved, it will be marketed to the 9,000 clinical oncologists in
the United States.
The Company has researched the historical incidence of hypercalcemia and
the types of lytic bone disease in which Bonefos(R) is active based on publicly
available information. Although precise patient data is not published and can
vary significantly from year to year, based on the foregoing research and
certain assumptions made by the Company, including the estimated costs of
utilizing Bonefos(R) for the treatment of these maladies using each of the
estimated number of patients, the Company estimates that the potential market
for Bonefos(R) in the United States could approximate nearly $900 million per
annum. This estimate is based on the following historical data, assumptions and
estimates. Between 500,000 to 700,000 people each year are reported to have died
from cancer, and of these people, between two-thirds to three-quarters are
reported to have developed bone metastases during the later stages of this
disease; based on the foregoing, the Company has assumed approximately 450,000
patients per year will develop bone metastases. The Company's estimate of the
cost of treatment of this malady utilizing Bonefos(R) is $1,825 per patient.
Hypercalcemia frequently occurs in the setting of widespread osteolytic bone
lesions, and the Company has thus assumed that an additional 50,000 patients per
year with bone metastases not receiving treatment will develop hypercalcemia.
The Company's estimate of the cost of treatment of this malady utilizing
Bonefos(R) is $900 per patient. The potential market for Bonefos(R) of
approximately nearly $900 million per annum assumes 100% of these patients
utilize Bonefos(R) with the foregoing costs of treatment. No assurance can be
given by the Company that this estimated market for Bonefos(R) will be achieved.
45
<PAGE> 47
BONEFOS(R): COMPETITION
Two bisphosphonate compounds are marketed in the United States for
treatment of osteolytic complications due to malignancies: Aredia(R) is
considered the most active and has captured a significant and increasing share
of this market; and Didronel(R) (etridronate) is used less because it has been
shown to inhibit bone regrowth as well as resorption. Both drugs require
intravenous administration for treatment of conditions associated with
malignancies. Two other bisphosphonates, tiludronate (Skelid(R)) and alendronate
(Fosamax(R)), are marketed in oral formulations for treatment of osteoporosis
and/or Paget's Disease, and several other compounds are in clinical development
for these non-malignant disease indications. If the companies developing and
marketing these drugs pursue additional claims for the hypercalcemia and/or
lytic bone disease indications, these products could be potential competitors to
Bonefos(R).
BONEFOS(R): PROPRIETARY POSITION
Several patents for use and formulation of Bonefos(R) have been granted,
and are due to expire commencing in 2010 and ending in 2014. Bonefos(R) has
received Orphan Drug designation for the treatment of osteolysis (hypercalcemia)
and, therefore, may have market exclusivity for seven years from the date of
approval of the NDA for this indication.
BONEFOS(R): BONEFOS AGREEMENT IN PRINCIPLE
In December 1997, the Company entered into the Bonefos Agreement in
Principle with Berlex and Leiras Oy, affiliates of Schering AG, Germany to
acquire the rights to develop and exclusively market Bonefos(R), on a
royalty-free basis, for the hypercalcemia and lytic bone disease indications in
the United States, and for the related rights to purchase its requirements of
Bonefos(R). Upon execution of the Bonefos Agreement in Principle, the Company
made a payment to Berlex of $250,000 which was recorded as a research and
development expense. The Bonefos Agreement in Principle contemplates future
payments from the Company to Berlex, in consideration of the aforementioned
rights, aggregating $3.5 million.
The Bonefos Agreement in Principle further contemplates that, for a period
after the acceptance for filing of the NDA for the first indication for
Bonefos(R), Berlex will have the option to acquire from the Company the
exclusive right to market Bonefos(R) in the United States for the hypercalcemia
and lytic bone disease indications for (i) a $6 million payment to the Company
upon FDA approval of the NDA for the hypercalcemia indication, (ii) an
obligation to make a $15 million payment to the Company upon FDA approval of the
NDA (or sNDA) for the lytic bone disease indication, and (iii) an obligation to
make royalty payments to the Company. In addition, if Berlex exercises the
option, it may elect to develop Bonefos(R) in the United States for prevention
of lytic bone disease. Upon the approval of an sNDA for such indication, Berlex
will make certain royalty payments to the Company.
In the event Berlex does not exercise the aforementioned option, the
Bonefos Agreement in Principle provides that the Company would maintain the
aforementioned exclusive right to market Bonefos(R) in the United States. In
such event, the Bonefos Agreement in Principle contemplates a supply agreement
for a minimum of fifteen years from the date of definitive documentation with
Leiras Oy, the Schering AG, Germany affiliate that developed Bonefos(R) and
currently manufactures Bonefos(R) for sale in Europe, pursuant to which Leiras
Oy would have the exclusive right and obligation to supply the Company with
Bonefos(R) for sale in the United States at a price specified in the Bonefos
Agreement in Principle.
Under the Bonefos Agreement in Principle, Anthra is required to seek FDA
approval of Bonefos(R) for the hypercalcemia and lytic bone disease indications,
and will lose its license rights if it fails to file an NDA for Bonefos(R) for
at least one indication by February 15, 2002, subject to certain conditions.
The definitive documentation relating to the Bonefos Agreement in Principle
is currently being negotiated, and no assurances can be given that the final
form of such documentation will be similar to that contemplated by the Bonefos
Agreement in Principle. The Bonefos Agreement in Principle contemplates that the
definitive agreements will have 15-year terms.
46
<PAGE> 48
GOVERNMENT REGULATION
The research, testing, manufacturing, labeling, marketing, distribution and
advertising of pharmaceutical products, such as the Company's proposed products
are subject to extensive regulation by governmental regulatory authorities in
the United States and other countries. The drug development and approval process
is generally lengthy, expensive and subject to unanticipated delays. The FDA and
comparable agencies in foreign countries impose substantial requirements on the
introduction of new pharmaceutical products through lengthy and detailed
preclinical and clinical testing requirements, sampling activities and other
costly and time-consuming compliance procedures. A new drug may not be marketed
in the United States until it has undergone rigorous testing and has been
approved by the FDA. The drug may then be marketed only for the specific
indications, uses, formulations, dosage forms and strengths approved by the FDA.
Similar requirements are imposed by foreign regulators upon the marketing of a
new drug in their respective countries. Satisfaction of such regulatory
requirements, which includes demonstrating to the satisfaction of the FDA that
the relevant product is both safe and effective, typically takes several years
or more depending upon the type, complexity and novelty of the product, and
requires the expenditure of substantial resources. Preclinical studies must be
conducted in conformance with the FDA's current Good Laboratory Practice
("cGLP") regulations. The Company's compounds require extensive clinical trials
and FDA review as new drugs. Clinical trials are rigorously regulated and must
meet requirements for FDA review and oversight, and requirements under current
Good Clinical Practice ("cGCP") guidelines. There can be no assurance that the
Company will not encounter problems in clinical trials which would cause the
Company, the FDA or another relevant regulatory body to delay or suspend
clinical trials. Any such delay or suspension could have a material adverse
effect on the Company's business, financial condition and results of operations.
The steps required before a drug may be marketed in the United States
include: (i) preclinical laboratory and animal tests; (ii) submission to the FDA
of an application for an IND exemption, which must become effective before human
clinical trials may commence; (iii) human clinical trials to establish the
safety and efficacy of the drug; (iv) submission of a detailed NDA to the FDA;
and (v) FDA approval of the NDA. In addition to obtaining FDA approval for each
product, each establishment where the drug is to be manufactured must be
registered with the FDA. Manufacturing establishments must comply with current
Good Manufacturing Practice ("cGMP") regulations and are subject to periodic
inspections by the FDA. Foreign manufacturing establishments manufacturing drugs
intended for sale in the United States must comply with the same cGMP
regulations and registration requirements as domestic establishments and are
subject to periodic inspection by the FDA or by local authorities under
agreement with the FDA.
Preclinical tests include laboratory evaluation of product chemistry and
animal studies to assess the metabolic and pharmacologic activity and potential
safety and efficacy of the product, including acute and chronic toxicity studies
and others. Preclinical tests must be conducted by laboratories that comply with
FDA regulations regarding cGLP. The results of preclinical tests are submitted
to the FDA as part of an IND, which must become effective before the sponsor may
conduct clinical trials in human subjects. Unless the FDA objects to an IND, the
IND becomes effective 30 days following its receipt by the FDA. There is no
certainty that submission of an IND will result in FDA authorization of the
commencement of clinical trials. In addition, either before or after approval of
an IND, the FDA can issue a clinical hold requiring that clinical trials be
stopped, either temporarily or permanently.
Clinical trials involve the administration of the investigational drug to
patients. Every clinical trial must be conducted under the review and oversight
of an institutional review board ("IRB") at each institution participating in
the trial. The IRB evaluates, among other things, ethical factors, the safety of
human subjects and the possible liability of the institution. The IRB has
continuing oversight of the protocols. There is no assurance that the IRB will
approve a study or not require protocol changes. Clinical trials are conducted
by qualified investigators (usually physicians within medical institutions)
selected by the sponsor of the trial to supervise the administration of the drug
and ensure that the investigations are conducted in accordance with FDA
regulations, including the general investigational plan and protocols contained
in the IND. The sponsor also has an independent obligation to monitor the trials
and ensure that all applicable legal requirements are satisfied, including
requirements to comply with FDA recordkeeping and safety reporting regulations.
Each protocol must be submitted to the FDA as part of the IND. The FDA's review
of a protocol, however, does
47
<PAGE> 49
not mean that the study will be regarded as showing safety or effectiveness.
Clinical trials typically are conducted in three phases, which generally are
conducted sequentially, but which may overlap. Clinical trials test for efficacy
and safety, side effects, dosage, tolerance, metabolism and clinical
pharmacology. Phase I tests involve the initial introduction of the drug to a
small group of subjects, often healthy volunteers, to test for safety, dosage
tolerance, pharmacology and metabolism. Phase I/II studies are early studies
designed to evaluate safety and preliminary activity of drugs in patients. Phase
II trials involve a larger but still limited patient population to determine the
efficacy of the drug for specific indications, to determine optimal dosage and
to identify possible side effects and safety risks. If a drug appears to be safe
and efficacious in Phase II evaluations, larger-scale Phase III trials are
undertaken to evaluate the safety and effectiveness of the drug, usually, though
not necessarily, in comparison with a placebo or an existing treatment. Certain
provisions of the FDAMA have clarified provisions of prior law governing
clinical testing. For example, data from one well-controlled Phase III clinical
trial, together with confirmatory evidence, may, at the discretion of the FDA,
be deemed to establish effectiveness, but the FDA is not required to depart from
its usual requirement of two Phase III trials in any particular case. Another
provision of the FDAMA establishes requirements regarding when the FDA must
begin action in clinical trial applications. There can be no assurance, however,
that Phase I, Phase II or Phase III testing will be completed successfully
within any specified time period, if at all. Furthermore, the FDA may suspend
clinical trials at any time if it decides that patients are being exposed to a
significant health risk.
The results of the preclinical studies and clinical trials are submitted to
the FDA as part of an NDA for approval of the marketing of a drug for a specific
indication. The NDA also includes information pertaining to the chemistry,
formulation and manufacture of the drug and each component of the final product.
The NDA review process takes from one to two years on average to complete,
although reviews of treatments for cancer and other life-threatening diseases
may be accelerated. However, the process may take substantially longer if the
FDA has questions or concerns about a product. In general, the FDA requires at
least two adequate and well-controlled clinical studies demonstrating efficacy
in order to approve an NDA. The FDA may, however, request additional
information, such as long-term toxicity studies or other studies relating to
product safety or effectiveness. Notwithstanding the submission of such data,
the FDA ultimately may decide that the NDA does not satisfy its regulatory
criteria for approval. Finally, the FDA may require additional clinical tests
following NDA approval. There can be no assurance that the drugs the Company is
seeking to develop will prove to be safe and effective in treating or preventing
cancer. The development of such drugs will require the commitment of substantial
resources to conduct the preclinical studies and clinical trials necessary to
bring such compounds to market. Drug research and development by its nature is
uncertain. There is a risk of delay or failure at any stage, and the time
required and cost involved in successfully accomplishing the Company's
objectives cannot be predicted. Actual drug research and development costs could
exceed budgeted amounts, which could have a material adverse effect on the
Company's business, financial condition and results of operations.
The FDA has issued regulations intended to expedite the development,
evaluation, approval and marketing of new therapeutic products to treat
life-threatening and severely debilitating illnesses for which no satisfactory
alternative therapies exist. These regulations provide for early consultation
between the sponsor and the FDA in the design of both preclinical studies and
clinical trials. There can be no assurance that any products the Company may
develop will be eligible for evaluation by the FDA under these regulations. In
addition, there can be no assurance that any products, if eligible, will be
approved for marketing at all or, if approved for marketing, will be approved
for marketing sooner than would be traditionally expected. Regulatory approval
granted under these regulations may be restricted by the FDA as necessary to
ensure the safe use of the drug. In addition, post-marketing clinical studies
are required, and, if such drugs do not perform satisfactorily in such
post-marketing clinical studies, such drugs would likely be required to be
withdrawn from the market. The FDA also requires prior review of promotional
materials for drugs approved under these provisions. The FDAMA has also provided
a mechanism for identifying breakthrough drugs and for streamlining the
regulatory process. No assurance can be given that any of the Company's products
will qualify for the relevant provisions under the FDAMA with respect to such
mechanism.
48
<PAGE> 50
The Prescription Drug User Fee Act of 1992, as amended, was enacted to
expedite FDA review and approval of new drugs by providing the FDA additional
funds through the imposition of user fees on sponsor companies of prescription
drugs. Such Act imposes three kinds of user fees: (i) a one-time fee for each
single-source prescription drug application submitted on or after September 1,
1992; (ii) an annual fee for each establishment that produces single-source
prescription drugs; and (iii) an annual fee for each single-source prescription
drug product marketed. This program was renewed by the FDAMA.
Anthra cannot predict when, if ever, it might submit for regulatory review
additional compounds currently under development or additional claims for
existing compounds. Once the Company submits its potential products for review,
there can be no assurance that FDA or other regulatory approvals for any
pharmaceutical products developed by Anthra will be granted on a timely basis,
if at all. The FDA and comparable agencies in foreign countries impose
substantial requirements on the introduction of new pharmaceutical products
through lengthy and detailed preclinical and clinical testing procedures, sample
testing and other costly and time-consuming compliance procedures. Clinical
trials are rigorously regulated. A new drug may not be marketed in the United
States until it has been approved by the FDA or marketed in foreign countries
until it has been approved by the appropriate regulatory agencies for such
countries. There can be no assurance that the Company will not encounter delays
or rejections during any approval process, or that the FDA or any other
applicable regulatory agency will not make policy changes during the period of
product development and FDA or other applicable regulatory agency regulatory
review of any submitted NDA or other appropriate documentation. A delay in
obtaining or failure to obtain such approvals would have a material adverse
effect on the Company's business, financial condition and results of operations.
Even if regulatory approval is obtained, the labeling would be limited as to the
indicated uses for which the product may be promoted or marketed. A marketed
product, its manufacturer and the facilities in which it is manufactured are
subject to continual review and periodic inspections. If marketing approval is
granted, the Company would be required to comply with FDA or other applicable
regulatory agency requirements for manufacturing, labeling, advertising, record
keeping and reporting of adverse experiences and other information. Even after
approval, marketed products are subject to continuing FDA review, and they can
be withdrawn from the market, or new limitations placed on their labeling,
marketing, distribution, manufacture, or use, if new side effects are discovered
or if the products are shown to be less effective than previously believed. In
addition, the Company would be required to comply with Federal and state
anti-kickback and other health care fraud and abuse laws, and similar foreign
laws, that pertain to the marketing of pharmaceuticals. Failure to comply with
regulatory requirements and other factors could subject Anthra to regulatory or
judicial enforcement actions, including, but not limited to, product recalls or
seizures, injunctions, withdrawals of product from the market, civil penalties,
criminal prosecution, refusals to approve new products and withdrawals of
existing approvals, as well as enhanced product liability exposure, any of which
could have a material adverse effect on the Company's business, financial
condition and results of operations.
Among the requirements for FDA product approval is that manufacturers
conform to the FDA's cGMP standards, which also must be observed at all times
following approval. An NDA will not be approved until the manufacturing
facilities have been inspected and found to be in compliance with cGMP
standards, and approvals can be withdrawn and other actions taken to prevent
continued manufacturing and distribution if a facility is found to be out of
compliance with cGMP standards or with the manufacturing provisions of the NDA
after approval. Accordingly, manufacturers must continue to expend time, money
and effort in production, record keeping and quality control to ensure
compliance with cGMP standards. Failure to so comply subjects the manufacturer
to possible FDA action, such as the suspension of manufacturing or seizure of
the product. The FDA may also request a voluntary recall of a product. Foreign
regulators also impose restrictions on drug manufacturers.
Pursuant to the Orphan Drug Act, the FDA may designate a drug intended to
treat a "rare disease or condition" as an Orphan Drug. A "rare disease or
condition" is one which affects less than 200,000 people in the United States,
or which affects more than 200,000 people but for which the cost of development
and distribution of a drug for treatment of such disease or condition will not
be recovered from sales of the drug in the United States. Upon approval of an
NDA for an Orphan Drug, such drug may be eligible for exclusive
49
<PAGE> 51
marketing rights in the United States for designated and approved indications
for seven years from the date of approval by the FDA for such indication. Orphan
Drugs may also be eligible for Federal income tax credits for certain clinical
trial expenses.
Orphan Drug status for Valstar for the treatment of carcinoma in-situ of
the bladder and for Bonefos(R) for the treatment of osteolytic bone metastases
has been granted. The Company may receive marketing exclusivity for an Orphan
Drug only if it is the sponsor of the first NDA approved for the drug for an
indication for which the drug was designated as an Orphan Drug prior to the
approval of such NDA. Therefore, unlike patent protection, Orphan Drug status
does not prevent other manufacturers from attempting to develop the drug for the
designated indication or from obtaining NDA approval prior to approval of the
Company's NDA. If another sponsor's NDA for the same drug and the same
indication is approved first, that sponsor is entitled to exclusive marketing
rights if that sponsor has received Orphan Drug designation for the drug. In
that case, the FDA would be prohibited from approving the Company's application
to market the product for the relevant indication for a period of seven years.
If another sponsor's NDA for the same drug and the same indication is approved
first, but that drug has not been designated as an Orphan Drug, the FDA would
still be permitted to approve the Company's NDA without the exclusivity provided
by Orphan Drug status. Even if the Company did receive Orphan Drug exclusivity,
that does not prohibit the FDA from approving the same drug manufactured by
another sponsor if it is labeled for a different indication (even if it can be
used for the same indication) or if it is clinically superior to the Orphan Drug
in any respect. Moreover, amendment of the Orphan Drug Act by the United States
Congress and reinterpretation by the FDA are frequently discussed. Therefore,
there can be no assurance as to the precise scope of protection that may be
afforded by Orphan Drug status in the future, or that the current level of
exclusivity will remain in effect. Failure to receive such exclusivity could
have an adverse effect on the Company's business, financial condition and
results of operations.
In most cases, pharmaceutical companies rely on patents to provide market
exclusivity for the periods covered by the patents. See "Business-Products and
Markets." In the United States, the Waxman-Hatch Act permits an extension of
patents in certain cases to compensate for patent time expended during clinical
development and FDA review of a drug. In addition, the Waxman-Hatch Act
establishes a period of market exclusivity, independent of any patents, during
which the FDA may not accept or approve abbreviated applications for generic
versions of the drug from other sponsors, although the FDA may accept and
approve subsequent full NDAs for the drug. This applicable period of market
exclusivity for a drug containing an active ingredient not previously approved
is five years. There is no assurance that all or any of the Company's products,
if approved, will receive market exclusivity under the Waxman-Hatch Act. Failure
to receive such exclusivity could have an adverse effect on the Company's
business, financial condition and results of operations.
Health care reform legislation, if enacted, could result in significant
changes in the financing and regulation of the health care business. In
addition, legislation affecting coverage and reimbursement under Medicare,
Medicaid and other government medical assistance programs has been enacted from
time to time. The Company is unable to predict whether such legislation will be
enacted in the future or, if enacted, the effect of such legislation on the
future operation of the Company's business. Changes adversely affecting drug
pricing, drug costs reimbursement, and prescription benefits, among other
changes, could have a materially adverse effect on the Company's business,
financial condition and results of operations.
In 1993, legislation was adopted which established a very new and amended
system for the registration of medicinal products in the EU. One purpose of this
system is to provide an alternative to the essentially separate national
approval systems among EU members, a major obstacle to harmonization. One of the
most significant features of this new system is the establishment of EMEA. Under
this new system, an application for marketing authorization, broadly speaking,
may be submitted at either a centralized, a decentralized or a national level.
The centralized procedure is administered by the EMEA; this procedure is
mandatory for the approval of biotechnology products and available at the
applicant's option for other products. The centralized procedure provides for
the first time in the EU the ability to obtain marketing authorization that is
valid in all EU member states ("Member States"). The Company has chosen and has
been accepted for the centralized review procedure for its European regulatory
filings. However, there can be no assurance that this strategy will
50
<PAGE> 52
secure regulatory approvals or the applications submitted by the Company. As of
January 1995, a mutual recognition procedure is available at the request of the
applicant for all medicinal products that are not subject to the centralized
procedure, under the so-called "decentralized procedure." The decentralized
procedure became mandatory on January 1, 1998. The decentralized procedure
creates a new system for mutual recognition of national approvals and
establishes procedures for coordinated EU action on product suspensions and
withdrawals. Under this procedure, the holder of a national marketing
authorization for which mutual recognition is sought may submit an application
to one or more Member States, certifying that identical dossiers are being
submitted to all Member States for which recognition is sought. Within 90 days
of receiving the application, each Member State must decide whether to recognize
the approval. The procedure encourages Member States to work with applicants and
other regulatory authorities to resolve disputes concerning mutual recognition.
If such disputes cannot be resolved within the 90-day period, the application
will be subject to a binding arbitration procedure.
PRODUCT LIABILITY AND INSURANCE
The Company's business involves the risk of product liability claims. The
Company has not experienced any product liability claims to date. Although the
Company maintains general liability insurance, including clinical trials
coverage with coverage limits of $1 million per occurrence, an annual general
aggregate maximum of $1 million, and an annual products aggregate maximum of $3
million, with advertising and personal injury coverage of $1 million, there can
be no assurance that liability claims will not exceed such insurance coverage
limits, which could have a material adverse effect on the Company's business,
financial condition and results of operations, or that such insurance will
continue to be available to the Company on commercially reasonable terms, if at
all.
EMPLOYEES
At May 1, 1998, the Company employed 33 persons, with the majority involved
in clinical research activities. There are 27 employees located at the Company's
Princeton, New Jersey offices, and six in the United Kingdom office.
None of the Company's employees is represented by a labor union, and the
Company considers its relations with its employees to be positive. The Company
has experienced no work stoppages.
Many consultants are used in support of the Company's research and
development efforts.
Competition for technical personnel in the Company's industry is intense.
To date, the Company has been successful in recruiting and retaining qualified
personnel, but there is no assurance that it will continue to be as successful
in the future. The Company's future success depends in part on its continued
ability to hire, assimilate and retain qualified personnel, including through
the issuance of its equity which would be dilutive to the Company's
shareholders.
PROPERTIES
In July 1997, the Company executed a sublease for the Company's principal
administrative and clinical offices of approximately 5,560 square feet located
in the Carnegie Center in Princeton, New Jersey. The monthly rent at the
Carnegie Center is $9,359, and the sublease expires on November 30, 1999. The
Company is currently preparing to relocate its clinical offices in Princeton,
New Jersey, and in the interim may lease some space in addition to its Carnegie
Center location on a temporary basis.
The Company also leases approximately 1,635 square feet of office space for
its Anthra UK clinical offices at The Malt House in Princes Risborough, England.
The quarterly rent at The Malt House is L5,535 ($9,188 using a conversion factor
of 1.66 dollars for 1 British pound), and the lease expires in 2001.
The Company believes that its facilities are adequate for its operations as
currently conducted and should be sufficient for the foreseeable future.
LEGAL PROCEEDINGS
As of the date of this Prospectus, there are no material legal proceedings
to which the Company is a party.
51
<PAGE> 53
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the Company's
current Directors and executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
Mervyn Israel 65 Chairman of the Board and Secretary
Michael C. Walker 49 President, Chief Executive Officer and Director
Chief Operating Officer, Executive Vice President and
Joseph V. Gulfo 35 Director
Pieter J. Schiller(1) 60 Director
Stephen M. Dow(2) 42 Director
Paul G. Gooding(1) 63 Director
William Engbers(2) 55 Director
Karen Krumeich 44 Chief Financial Officer, Vice President - Finance
Robert Lippert 41 Senior Vice President - Marketing
Richard Onyett 50 Senior Vice President - Corporate Development
Allen L. Thunberg 51 Vice President - Pre-Clinical Development
Denise Webber 38 Vice President - Medical Affairs
</TABLE>
- ---------------
(1) Member of the Compensation Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
The business experience of each of the Directors and executive officers of
the Company is set forth below.
Mervyn Israel, Ph.D., Chairman of the Board and Secretary of Anthra since
1985, co-founded Anthra with Mr. Walker and is the inventor of Valstar and
numerous other anticancer drugs. Dr. Israel has spent over 40 years in the area
of cancer pharmacology, experimental therapeutics, and drug development.
Following the award of a Ph.D. degree in 1959 from the University of
Pennsylvania and postdoctoral appointments at the University of Michigan and
Harvard University, he was affiliated for many years with Dana-Farber, rising to
become Associate Chief for Drug Development in the Division of Pharmacology.
Since 1983, Dr. Israel has been associated with the University of Tennessee,
Memphis Health Science Center, where he holds joint appointments as Professor of
Pharmacology in the College of Medicine and Professor of Pharmaceutical Sciences
in the College of Pharmacy. Among other areas, Dr. Israel is an internationally
recognized expert on the chemistry and pharmacology of anthracycline anticancer
drugs.
Michael C. Walker has worked in the pharmaceutical industry for more than
20 years, starting in sales with Eli Lilly & Co. In the mid-1970's, Mr. Walker
joined Merck & Co., first managing two of Merck's primary products, then moving
into Corporate Development and Licensing. In the latter capacity, Mr. Walker was
instrumental in creating Merck's joint venture with Astra Pharmaceuticals. Mr.
Walker left Merck in 1983 to become Chief Executive Officer of Polydex
Pharmaceuticals in Toronto, Ontario, where he had the opportunity to apply his
own market expansion strategies to an existing small business. He also has
worked as a consultant to young pharmaceutical companies, specializing in
developing strategic solutions for the commercialization of both traditional and
biopharmaceutical products. Mr. Walker co-founded Anthra in 1985 and has been
President, Chief Executive Officer and a Director of Anthra since 1985. Mr.
Walker received a M.B.A. from Harvard University in 1973.
Joseph V. Gulfo, M.D. has spent the past nine years in clinical drug
development. As Assistant Medical Director at Oxford Research International from
January 1989 to November 1990, he had responsibility for clinical development
programs for both prescription and over-the-counter drugs. He directed the
successful NDA filing for Actinex (a topical antineoplastic), a successful
Orphan Drug filing, and two prescription to over-the-counter switches. He joined
Cytogen Corp. in 1990 as Director of Clinical Investigations, where his primary
responsibility was management and coordination of all phases of clinical
development of novel in vivo
52
<PAGE> 54
diagnostic and immunotherapeutic products for cancer detection and treatment.
Dr. Gulfo was responsible for the development of ProstaScint(R), an approved in
vivo immunodiagnostic agent for patients with prostate cancer. In mid-1994, Dr.
Gulfo was appointed Vice President -- Clinical Trials at Anthra. In April 1997,
he was appointed Executive Vice President and Chief Operating Officer of Anthra
and in December 1997, he became a Director. Dr. Gulfo shares management
responsibility for corporate operations, business and market development,
direction of clinical programs and contract negotiation with Mr. Walker. Dr.
Gulfo's responsibility for clinical programs includes devising clinical and
regulatory strategies and study design, preparation of regulatory reports and
public presentations of data. Dr. Gulfo received his B.S. and M.B.A. from Seton
Hall University and M.D. from the University of Medicine & Dentistry -- New
Jersey.
Pieter J. Schiller has served as a Director of the Company since 1989. Mr.
Schiller has been a General Partner of Advanced Technology Ventures, a venture
capital firm located in Waltham, Massachusetts, since September 1986, where he
specializes in healthcare investing. Mr. Schiller served Allied Signal and its
predecessor companies from 1961 through 1986 in various capacities, including
Treasurer and Vice President, Planning and Development. From 1983 to 1986, he
served as Executive Vice President of Allied Health and Scientific Products
Company, a multinational manufacturer of biomedical and analytical instruments
and supplies. Mr. Schiller is also a Director of two public companies,
Collagenex Pharmaceuticals, Inc. and Novoste Corporation, and of several private
companies.
Stephen M. Dow has served as a Director of the Company since 1990. Mr. Dow
is a General Partner of Sevin Rosen Funds, a venture capital investment firm,
which he joined in 1983. Mr. Dow is also a Director of ArQule, Inc., Citrix
Systems, Inc., Corsair Communications, Inc., ViroPharma Incorporated, and
several privately-held companies.
Paul G. Gooding, M.B., B.S., a Director of the Company since 1993, works
closely with Anthra's Clinical Development and Regulatory Affairs group, as well
as with the Company's Commercial Development team. Dr. Gooding has more than 30
years experience working in four multinational pharmaceutical companies,
primarily as Director of Clinical Research. From 1988 to 1993, Dr. Gooding was
employed by Sankyo U.S.A. Corporation, a subsidiary of Sankyo Company, Ltd.
(Japan), where he was responsible for the establishment and staffing of the
Medical Department and the supervision of the Medical Affairs, Clinical Research
and Regulatory Affairs Departments. At Sankyo U.S.A. Corporation, Dr. Gooding
held the position of Vice President and Medical Director. Dr. Gooding retired
from Sankyo U.S.A. Corporation in 1993, and since then has served as a
consultant to various companies in the pharmaceutical and scientific arena. In
addition to his considerable experience in developing clinical leads into
approved drugs, he has directed product acquisitions programs and managed in-
and out-licensing arrangements.
William Engbers was elected a Director of Anthra in December 1997. Mr.
Engbers joined Allstate Insurance Company in 1989, where he is currently
Director of Venture Capital in Allstate's private equity group. Before that, he
was Chairman of the Board of Plant Genetics Inc. Mr. Engbers has been a venture
capitalist since 1981 and has served as a Director or Chairman of over two dozen
venture capital sponsored companies. He is currently a Director of LaJolla
Pharmaceuticals Company and DM Management, Inc. (both public companies), and
seven privately-held corporations.
Karen Krumeich, Chief Financial Officer and Vice President -- Finance,
joined Anthra in 1998, and is responsible for all accounting, finance and
treasury functions. Ms. Krumeich has worked in the healthcare industry for over
20 years specializing in finance and administration. Prior to joining Anthra,
she worked for Bristol-Myers Squibb from 1995 to 1998 as Director of Health
Systems Management in the Worldwide Franchise Management division, responsible
for international strategic business planning and managed care marketing. Ms.
Krumeich has an extensive background in the start-up and the development of
financial and cost control systems from her experience as Chief Financial
Officer of a pharmacy benefits management company, Pharmacy Direct Network, from
1994 to 1995, and as Vice President of Finance for the pharmacy division of
GranCare, a national long-term care and home healthcare company, from 1991 to
1994. Ms. Krumeich has a B.S. in Pharmacy from the University of Toledo, with
post graduate studies in accounting and finance.
53
<PAGE> 55
Robert Lippert joined Anthra as Senior Vice President -- Marketing in 1998,
after 23 years of diversified pharmaceutical/healthcare experience. Mr. Lippert
will be responsible for all commercial operations at Anthra including the launch
of Valstar. He was previously employed by Medeva Pharmaceuticals from 1997 to
1998 as Vice President Institutional Business, and from 1993 to 1997 as Senior
Vice President Marketing and Business Development at International Medication
Systems, Limited, a division of Medeva PLC. Prior to Medeva, Mr. Lippert was
employed by Ethex/KV Pharmaceuticals from 1991 to 1993, and by Ohmeda
Pharmaceuticals (Baxter) from 1984 to 1991, where he held numerous senior
positions in Business Development, Marketing, and Finance. Mr. Lippert received
his B.A. in Animal Biology and History from the University of Wisconsin. He also
holds a B.B.A. in Business Administration/Finance from the University of
Wisconsin, Milwaukee, and an M.B.A. in Marketing from Marquette University.
Richard Onyett has worked in the pharmaceutical industry for over 25 years
as a marketing and business development specialist. From 1970 to 1981, he worked
in overseas country management and strategic marketing at ICI Pharmaceuticals,
where he managed several major product ranges. He then worked for SmithKline and
French Laboratories from 1981 to 1990, initially as head of new products and
subsequently in charge of business development. In 1990, he was a founder of The
Kite Organization, a healthcare consultancy. Since 1992, his consultancy firm,
Camas Partners, has provided commercial development services to a number of
medical research institutions and biopharmaceutical companies in the United
States and Europe. All existing contractual obligations of Camas Partners have
now been completed. In 1995, Mr. Onyett founded and became a director of Cambrio
Group plc, and he is a director of Rio Pharmaceuticals Limited. In September
1997, Mr. Onyett joined Anthra as Senior Vice President -- Corporate
Development. Mr. Onyett has a B.Sc. from the University of Nottingham and an
M.Sc. in Virology from the University of Birmingham.
Allen L. Thunberg, Ph.D., Vice President -- Pre-Clinical Development, is
responsible for all aspects of pre-clinical research and development and
manufacturing at Anthra. He joined the Life Sciences Group at Eastman Kodak in
1977, where he worked initially in clinical diagnostics and later in
pharmaceuticals. In 1987 he transferred to Eastman Pharmaceuticals, a newly
formed Division of Eastman Kodak, where he established discovery programs in
immunology and targeted therapy, and negotiated and managed collaborative
research and development programs with several biotechnology companies. In 1988,
following Kodak's acquisition of Sterling Drug, he established and managed a
research and development department with broad-based discovery and development
responsibilities, and continued to serve as technical/business liaison for six
collaborative biotechnology programs. Following the sale of Sterling Drug to
Sanofi in 1994, Dr. Thunberg worked as biopharmaceutical consultant, then joined
Anthra in 1996. Dr. Thunberg received his B.S. from North Dakota State
University and his Ph.D. from The Rockefeller University, and completed
post-doctoral studies at The Johns Hopkins University.
Denise Webber, Vice President -- Medical Affairs, is responsible for the
clinical and technical support of Marketing and Sales for the commercialization
of Anthra's therapeutic products. Ms. Webber was appointed to her current
position in 1998. She was previously the Director of Clinical and Data
Operations of Anthra, responsible for Anthra's clinical studies, from 1994 to
1998. Ms. Webber has seven years experience in the design and management of
clinical trials of oncology products. Prior to joining Anthra in 1994, she was
Manager for Medical Affairs at Cytogen Corp. from 1992 to 1994. Ms. Webber, a
Certified Nuclear Medicine Technologist, has a B.S. from Loras College.
KEY EMPLOYEES
The Company has identified the following additional individuals as key
employees.
Philip Wood, FFPM, Medical Director -- Europe, is responsible for the drug
development program of the Company in Europe. Dr. Wood obtained his medical
degree in Britain and worked in several British hospitals, gaining broad
experience in general medicine and developing his interests in pediatrics and
obstetrics, before entering general medical practice in the south of England. In
1975, he entered the pharmaceutical industry and since then has undertaken posts
of increasing responsibility, including Medical Director for Bristol-Myers
Squibb UK and Medical Director for Wellcome UK. Dr. Wood is a Member of the
Royal College of General
54
<PAGE> 56
Practitioners and a Fellow of the Faculty of Pharmaceutical Medicine. He has
experience in all phases of drug development in many different therapeutic
fields. He joined Anthra in 1996. Dr. Wood has an M.B., B. Ch. from the
University of Wales, and has received several medical and pharmaceutical
graduate degrees.
David L. Hauser, Ph.D., Director -- Clinical and Data Operations, oversees
the day-to-day operations of Anthra's Clinical and Data Management groups for
the Valstar program. He is responsible for the design and analysis of clinical
studies, preparation of necessary FDA documentation, overall coordination of all
Valstar studies in the United States, and the supervision of the Company's data
management and database audit systems (including the DataFax system). Dr. Hauser
has six years of experience in the pharmaceutical industry. He has held Manager
or Director level positions at Ohmeda Pharmaceuticals (1994 to 1996), Takeda
(1996 to 1997), and Regions Limited (a Contract Research Organization) (1997 to
1998). His therapeutic experience includes oncology, critical care, pulmonology,
cardiovascular disease, and metabolic disorders (including diabetes). He joined
Anthra in 1998. Dr. Hauser received his M.A. from the University of Pennsylvania
and his Ph.D. from the University of Wales (Cardiff).
RESEARCH SUPPORT
Because Anthra focuses on clinical and commercial development of drug
candidates discovered and tested by third parties, the Company does not have to
invest heavily in the infrastructure required to support pre-clinical research
and development and manufacturing. Thus, the Company's non-clinical research and
development activities concentrate on supporting regulatory submissions with
data on toxicology, manufacturing, formulation, and stability testing. These
studies are contracted to well established specialist research organizations and
managed by Dr. Thunberg.
Anthra has a long-term relationship with the University of Tennessee
whereby Anthra provides a monthly contribution of $10,100 to support research in
the laboratory of Dr. Mervyn Israel. This support is in the form of an
unrestricted gift from the Company. See "Certain Relationships and Related
Transactions."
SCIENTIFIC ADVISORY BOARD
Anthra's Scientific Advisory Board is comprised of internationally
recognized clinical researchers in urology and oncology. This Board advises
Anthra's management on strategic issues related to the Company's clinical
development programs.
Robert R. Bahnson, M.D. is Louis Levy Professor of Cancer and Director,
Division of Urology at Ohio State University. Prior to moving to Ohio State in
1996, he spent more than 15 years in clinical research in urology and urologic
oncology at the University of Pittsburgh, Washington University (St. Louis,
Missouri) and Northwestern University. He is a member of the Urologic Advisory
Council of the American College of Surgeons and has previously served as a
member of the Genitourinary Steering Committee of ECOG, the Editorial Committee
of the Journal of Urology, and the Research Committee of the American Urological
Association. He was honored with a listing in the 1996-1997 edition of Best
Doctors in America: Northeast Region. Dr. Bahnson has a B.A. from Carleton
College, a B.S. from the University of South Dakota, and an M.D. from Tufts
University.
H. Barton Grossman, M.D. holds the W.A. "Tex" and Deborah Moncrief Chair of
Urology at the University of Texas M.D. Anderson Cancer Center. He previously
had academic and clinical appointments at the University of Michigan Medical
Center, Ann Arbor, and affiliated institutions. He is Chairman of the NIH
Bladder Center Marker Network, the Organ Site Chairman for Local Bladder Cancer
of SWOG, and a member of the American Joint Committee on Cancer's Task Force on
Genitourinary Cancers, and has devoted more than 20 years to research and
treatment of genitourinary cancers. Dr. Grossman has a B.A. from LaSalle College
and an M.D. from Temple University.
Brian Leyland-Jones, M.D. is Professor of Oncology & Medicine and occupies
the Minda de Gunzburg Chair of Oncology at McGill University. Prior to moving to
McGill University in 1990, he was, among other things, Chief of the
Developmental Chemotherapy Section in the Investigational Drug Branch at the
National Cancer Institute and held staff appointments at Cornell University
Medical College, Memorial Sloan-
55
<PAGE> 57
Kettering Cancer Center and the New York Hospital in Pharmacology, Clinical
Pharmacology, Internal Medicine and Oncology. Dr. Leyland-Jones holds degrees
from the University of London and St. Mary's Hospital Medical School of the
University of London.
Peter O'Dwyer, M.D. is Professor of Medicine and Pharmacology at Thomas
Jefferson University. Prior to moving to Thomas Jefferson University in 1996, he
was Director, Developmental Chemotherapy at Fox Chase Cancer Center and
Professor of Medicine, Temple University, and a Senior Investigator in the
Investigational Drug Branch of the Cancer Therapy Evaluation Program at the
National Cancer Institute. He is a member of the ECOG and has more than 17 years
experience in basic and clinical research on drugs for the treatment and
prevention of cancer. Dr. O'Dwyer holds degrees from Trinity College, University
of Dublin, Ireland.
SUMMARY OF EXECUTIVE COMPENSATION
The table below sets forth information concerning the annual and long-term
compensation for services rendered in all capacities to the Company during the
year ended June 30, 1997 for: (i) the Chief Executive Officer of the Company and
(ii) two other executive officers of the Company (collectively, the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
NAME AND -------------------- UNDERLYING
PRINCIPAL POSITION SALARY(1) BONUSES OPTIONS
------------------ --------- ------- ------------
<S> <C> <C> <C>
Michael C. Walker $192,995 $0 0
Chief Executive Officer and President
Joseph V. Gulfo $184,497 $0 25,000
Executive Vice President and Chief Operating Officer
Allen L. Thunberg $137,161 $0 5,000
Vice President -- Pre-Clinical Development
</TABLE>
- ---------------
(1) The cost of certain perquisites and other personal benefits are not included
because they did not exceed the lesser of either $50,000 or 10% of the total
of the annual salary and bonus reported for the Named Executive Officer.
OPTION GRANTS IN FISCAL YEAR ENDED JUNE 30, 1997
The following table sets forth information regarding stock options granted
pursuant to Anthra's 1990 Stock Plan, as amended (the "1990 Plan"), during the
fiscal year ended June 30, 1997 to each of the Named Executive Officers. The
Company has never granted any stock appreciation rights.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL OPTIONS ANNUAL RATES OF
NUMBER OF GRANTED TO STOCK PRICE
SECURITIES EMPLOYEES IN EXERCISE OR MARKET PRICE APPRECIATION FOR
UNDERLYING FISCAL YEAR BASE PER SHARE ON OPTION TERM(3)
OPTIONS ENDED JUNE 30, PRICE PER THE DATE OF EXPIRATION ---------------------
NAME GRANTED(1) 1997(%)(2) SHARE GRANT DATE 5% 10%
---- ---------- -------------- ----------- ------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael C. Walker.... -- -- $ -- $ -- -- $ -- $ --
Joseph V. Gulfo...... 25,000 35.46% .70 .70 2/12/07 11,006 27,890
Allen L. Thunberg.... 5,000 7.09% .70 .70 2/12/07 2,201 5,578
</TABLE>
- ---------------
(1) Such options were granted pursuant to and in accordance with the 1990 Plan.
See "1990 Stock Plan."
(2) Based on an aggregate of 70,500 options granted to employees in the year
ended June 30, 1997, including options granted to Named Executive Officers.
(3) Based on a grant date fair market value of $0.70 per share, gains are
reported net of the option exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation.
Actual gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock and overall stock market conditions, as well
as the option holder's continued employment with the Company throughout the
vesting period. The amounts reflected in this table will not necessarily be
achieved.
56
<PAGE> 58
JUNE 30, 1997 -- FISCAL YEAR END OPTION VALUES
The following table sets forth information concerning the value of
unexercised in-the-money options held by the Named Executive Officers as of June
30, 1997. No Named Executive Officer exercised any options in the fiscal year
ended June 30, 1997.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
-----------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR END FISCAL YEAR END(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael C. Walker............................ 163,000 50,000 $89,650 $ --
Joseph V. Gulfo.............................. 12,000 113,000 4,320 11,880
Allen L. Thunberg............................ 4,000 31,000 -- --
</TABLE>
- ---------------
(1) Assumes a market price for the Common Stock at June 30, 1997, of $.70 per
share.
EMPLOYMENT AGREEMENTS
In December 1990, the Company entered into an employment agreement with
Michael C. Walker pursuant to which Mr. Walker serves as the Company's President
and Chief Executive Officer. Such employment agreement, as currently amended,
provides Mr. Walker with a base salary of $20,833 per month, provided for
certain grants of options to purchase shares of the Company's Common Stock to
Mr. Walker in 1990, and required that Mr. Walker execute and deliver a separate
confidentiality and noncompetition agreement. Mr. Walker's employment agreement
may be terminated by either party with 60 days prior written notice. The Company
does not have written employment agreements with any of its employees other than
Mr. Walker.
The Company has an agreement with each of Mr. Walker, Dr. Joseph V. Gulfo,
its Chief Operating Officer and Executive Vice President, and Allen L. Thunberg,
its Vice President -- Pre-Clinical Development, pursuant to which, in the event
of a sale of 80% or more of the outstanding capital stock of the Company in a
single or integrated transaction or the sale of the Company through a merger or
consolidation where the Company is not the surviving corporation, in each case
where the Company's stockholders prior to the transaction own less than 50% of
the outstanding capital stock of the Company after the transaction, Messrs.
Walker, Gulfo and Thunberg will each receive a payment equal to 12 months of his
base salary as of the date of the transaction so long as such individual agrees
to continue working for the new successor entity in a specified capacity for
three months following the consummation of the transaction, provided, however,
that such transaction must occur within two years of the date of such agreement
and such individual must be employed by the Company.
The Company has a consulting agreement with Dr. Mervyn Israel, the
Company's Chairman of the Board and Secretary, dated as of December 5, 1990,
pursuant to which Dr. Israel provides scientific consulting services to the
Company in consideration of $3,750 per month. Dr. Israel's consulting agreement
does not contain a specified term and may be terminated by either party with 60
days prior written notice.
Anthra does routinely enter into written agreements with consultants
providing clinical, medical writing, regulatory consulting or business
development services, none of which is material to the Company's business. The
Company has executed non-disclosure agreements with each of its current
employees.
1990 STOCK PLAN
By action of the Board of Directors of the Company on December 3, 1990, the
Company adopted the 1990 Plan, which was approved by vote of the stockholders at
the annual meeting of stockholders held on December 3, 1990. The 1990 Plan
authorizes the Company to grant to eligible employees, Directors and consultants
of the Company, as determined by the Board of Directors, options to purchase
shares of the
57
<PAGE> 59
Company's Common Stock. The 1990 Plan also permits the Company to grant to such
individuals certain awards of Common Stock, and certain rights to make direct
purchases of Common Stock.
As of March 31, 1998, the 1990 Plan authorized the Company to issue options
to purchase up to 1,700,000 shares of the Company's Common Stock, and the
Company had outstanding options for a total of 1,088,987 shares of Common Stock,
of which none have been exercised. The 1990 Plan provides for options that
qualify as incentive stock options ("ISOs") under Section 422 of the Internal
Revenue Code of 1986, as amended, as well as non-statutory (or non-qualified)
stock options. The exercise price for any non-qualified options granted pursuant
to the 1990 Plan may not be less than the lesser of the book value per share of
the Common Stock as of the end of the fiscal year immediately preceding the date
of the grant, or 50% of the fair market value of the Common Stock on the date of
the grant. The exercise price for any ISOs granted pursuant to the 1990 Plan may
not be less than 100% of the fair market value of the Common Stock on the date
of grant, and, in the case of an ISO stock option to be granted to an employee
owning more than 10% of all voting power of the Company or any affiliated
company, the exercise price may not be less than 110% of the fair market value
on the date of grant. The 1990 Plan provides that, in the event of a change in
control of the Company pursuant to which either all or substantially all of the
Company's assets are sold, 80% or more of the Company's outstanding capital
stock is sold by tender offer, exchange offer or otherwise, the Company is sold
through a consolidation or merger where the Company is not the surviving
corporation, or the acquisition is a result of a reverse triangular merger and
the previous stockholders own an aggregate of less than 50% of the surviving
corporation after such transaction, then optionees are entitled after any such
event to exercise all outstanding but unvested options, as well as all
outstanding vested options issued to them. In the event of a recapitalization or
reorganization of the Company (other than as described above), pursuant to which
securities of the Company or of another corporation are issued with respect to
the Company's outstanding Common Stock, an optionee, upon exercising an option,
shall be entitled to receive for the purchase price paid, upon such exercise,
the securities he would have received if he had exercised his option prior to
such recapitalization or reorganization.
Subject to certain restrictions and limitations, options granted under the
1990 Plan typically have a term of ten years from the date of grant. ISOs
exercisable upon the date of death or disability of any ISO optionee remain
exercisable until the earlier of the specified expiration date or the date one
year from the date of the optionee's death or disability. If an ISO optionee
ceases to be employed by the Company for any reason other than for death or
disability, no further installments of ISOs shall vest, and ISOs which are
exercisable shall terminate, subject to certain restrictions and limitations,
one year from the date of termination, but in no event later than on their
specified expiration dates. Options granted under the 1990 Plan may not be
transferred or assigned, other than by will or by the laws of descent and
distribution.
The 1990 Plan shall expire on December 2, 2000, except as to options
outstanding as of such date. The Board of Directors of the Company may terminate
or amend the 1990 Plan at any time; provided, however, that certain amendments
shall require stockholder approval, and in no event may the Board of Directors
impair the rights of a grantee under the 1990 Plan with respect to any of rights
previously granted under the 1990 Plan.
401(k) RETIREMENT SAVINGS PLAN
The Company anticipates that by June 1, 1998, it will have put in place a
duly adopted 401(k) retirement savings plan, pursuant to which eligible
employees may direct a percentage of their compensation, as restricted by
statutory limitations, to be withheld by the Company and contributed to their
account. It is anticipated that all 401(k) plan contributions will be placed in
a trust fund to be invested by the 401(k) plan's trustee, except that the 401(k)
plan may permit participants to direct the investment of their account balances
among mutual or investment funds which may be available under the plan. It is
anticipated that the Company may, at management's discretion, make matching
contributions under the 401(k) plan. Amounts contributed to participant accounts
under the 401(k) plan and any earnings or interest accrued on the participant
accounts are generally not subject to Federal income tax until distributed to
the participant and may not be withdrawn until death, retirement, or termination
of employment.
58
<PAGE> 60
COMMITTEES OF THE BOARD OF DIRECTORS
In 1996, the Board of Directors designated a Compensation Committee, which
consists of two of the nonemployee Directors, Paul G. Gooding and Pieter J.
Schiller. The Compensation Committee reviews executive salaries, administers any
bonuses and incentive compensation, and makes recommendations to the Board of
Directors with respect to stock options of the Company issuable to management
employees and Directors of the Company. In addition, the Compensation Committee
consults with management of the Company regarding compensation policies and
practices of the Company. In April 1998, the Board of Directors designated an
Audit Committee, which consists of two of the nonemployee Directors, Stephen M.
Dow and William Engbers. The Audit Committee reviews the professional services
provided by the Company's independent auditors, the annual financial statements
of the Company and the Company's internal financial controls. There have been no
meetings of the Audit Committee.
DIRECTOR COMPENSATION
Fees. None of the Company's Directors receive cash compensation for
attendance at meetings of the Board of Directors or at meetings of committees of
the Board of Directors of which they are members. All Directors receive
reimbursement for reasonable travel expenses incurred in connection with
attendance at each Board of Directors and committee meeting.
Stock Options. To attract and retain independent Directors for the Company
and to compensate Directors who are included as management of the Company, the
Company has issued, and intends to continue to issue, to its Directors, options
to purchase the Company's Common Stock pursuant to the 1990 Plan, in amounts
determined at the discretion of the Board of Directors and exercisable at a
price equal to the fair market value of the Common Stock on the date of grant.
These options typically vest over a three year period. Independent Directors are
typically granted stock options upon their initial appointment, and independent
Directors and stockholder representative Directors may be granted stock options
during their term of service as an incentive for continued service. Employee
Directors are not granted stock options for their services as Directors.
59
<PAGE> 61
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of May 15, 1998, and as adjusted to
reflect the sale by the Company of the shares of Common Stock offered hereby
(assuming no exercise of the Underwriters' over-allotment option), by: (i) each
Director of the Company; (ii) each Named Executive Officer of the Company; (iii)
all Directors and executive officers of the Company as a group; and (iv) each
beneficial owner of more than 5% of the outstanding Common Stock. To the
knowledge of the Company, all persons listed below have sole voting and
investment power with respect to their shares of Common Stock, except to the
extent set forth in the footnotes to the table below or that authority is shared
by their respective spouses under applicable law.
<TABLE>
<CAPTION>
PERCENTAGE OWNED(2)
-------------------
SHARES OF COMMON STOCK AS OF
NAME, TITLE AND ADDRESS OF BENEFICIALLY OWNED AS OF MAY 15, AFTER
BENEFICIAL OWNER(1) MAY 15, 1998(2) 1998 OFFERING
-------------------------- ------------------------ ------- --------
<S> <C> <C> <C>
Mervyn Israel(3)................................... 493,834 9.83% 6.40%
Chairman of the Board and Secretary
c/o University of Tennessee
Department of Pharmacology
College of Medicine
874 Union Avenue,
Memphis, TN 38163
Michael C. Walker(4)............................... 550,500 10.97% 7.13%
President, Chief Executive Officer and Director
Joseph V. Gulfo(5)................................. 38,000 0.78% 0.50%
Chief Operating Officer, Executive Vice President
and Director
Pieter J. Schiller(6).............................. 3,334 0.07% 0.04%
Director
c/o Advanced Technology Ventures
281 Winter Street, Suite 350
Waltham, MA 02154
Stephen M. Dow(7).................................. 3,334 0.07% 0.04%
Director
c/o Sevin Rosen Fund III, L.P.
Two Galleria Tower
13455 Noel Road, Suite 1670
Dallas, TX 75240
Paul G. Gooding(8)................................. 19,334 0.40% 0.26%
Director
c/o Habitat
Hope Town, Abaco, Bahamas
William Engbers(9)................................. 3,334 0.07% 0.04%
Director
c/o Allstate Insurance Company
3075 Sanders Road, Suite G5D
Northbrook, IL 60062-7127
Allen L. Thunberg(10).............................. 14,000 0.29% 0.18%
Vice President -- Pre-Clinical Development
Allstate Insurance Company(11)..................... 1,140,392 23.49% 15.09%
3075 Sanders Road
Suite G5D
Northbrook, IL 60062-7127
Aperture Associates, L.P........................... 420,588 8.66% 5.57%
c/o Horsley Bridge Partners, Inc.
505 Montgomery Street, 21st Floor
San Francisco, CA 94111
Sevin Rosen Fund III, L.P.......................... 919,803 18.94% 12.17%
Two Galleria Tower
13455 Noel Road, Suite 1670
Dallas, TX 75240
</TABLE>
60
<PAGE> 62
<TABLE>
<CAPTION>
PERCENTAGE OWNED(2)
-------------------
SHARES OF COMMON STOCK AS OF
NAME, TITLE AND ADDRESS OF BENEFICIALLY OWNED AS OF MAY 15, AFTER
BENEFICIAL OWNER(1) MAY 15, 1998(2) 1998 OFFERING
-------------------------- ------------------------ ------- --------
<S> <C> <C> <C>
Advanced Technology Ventures III, L.P.............. 744,805 15.34% 9.86%
281 Winter Street, Suite 350
Waltham, MA 02154
Schering AG, Germany(12)........................... 471,276 9.71% 6.24%
13342 Berlin
Germany
Nycomed............................................ 300,000 6.18% 3.97%
Nycomed Pharma AS
P.O. Box 4220
Torshov, 0401 Oslo
Norway
All Directors and executive officers............... 1,125,670 21.38% 14.13%
as a group (8 persons)(13)
</TABLE>
- ---------------
(1) Unless otherwise noted, the address of each of the persons listed is 103
Carnegie Center, Suite 102, Princeton, New Jersey 08540.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired within 60 days from the date of this Prospectus through the
exercise of any option, warrant or right. Shares of Common Stock subject to
options, warrants or rights which are currently exercisable or exercisable
within 60 days are deemed outstanding for computing the ownership
percentage of the person holding such options, warrants or rights, but are
not deemed outstanding for computing the ownership percentage of any other
person. The amounts and percentages are based upon 4,855,183 shares of
Common Stock outstanding as of May 15, 1998, and 7,555,183 shares of Common
Stock outstanding as of the close of the Offering, respectively. The
calculation of the number of shares of Common Stock assumes the conversion
of the outstanding Preferred Stock upon consummation of the Offering and
the shares of Common Stock receivable upon such conversion are included in
such number.
(3) Includes 166,334 shares of Common Stock subject to options exercisable
within 60 days of the date of the Offering.
(4) Includes 163,000 shares of Common Stock subject to options exercisable
within 60 days of the date of the Offering, and excludes (i) 50,000 shares
of Common Stock subject to options, which vest on the achievement of a
certain milestone, issued on June 11, 1996, and (ii) 50,000 shares of
Common Stock subject to options, which vest over a five year period, issued
on October 16, 1997.
(5) Includes 38,000 shares of Common Stock subject to options exercisable
within 60 days of the date of the Offering, and excludes (i) 12,000 shares
of Common Stock subject to options, which vest over the next two years,
issued on February 10, 1995, (ii) 55,000 shares of Common Stock subject to
options, which vest in part on the achievement of a certain milestone and
in part, thereafter, over a two year period, issued on June 2, 1996, (iii)
20,000 shares of Common Stock subject to options, which vest over the next
four years, issued on February 21, 1997, (iv) 75,000 shares of Common Stock
subject to options, which vest over a five year period, issued on October
16, 1997, and (v) 75,000 shares of Common Stock subject to options, which
vest on the achievement of certain milestones or, in part, if such
milestones are not achieved, over a five year period commencing on the 49th
month anniversary of July 1, 1998 issued on May 15, 1998. With respect to
the foregoing clauses (i) and (iii), a total of 30,000 were issued on
February 10, 1995, 18,000 of which have vested over the past three years,
and a total of 25,000 were issued on February 21, 1997, 5,000 of which have
vested over the past year.
(6) Includes 3,334 shares of Common Stock subject to options exercisable within
60 days of the date of the Offering. Excludes 744,805 shares of Common
Stock owned by Advanced Technology Ventures III, L.P., a company for which
Mr. Schiller serves as a general partner. Mr. Schiller disclaims beneficial
ownership of any shares of Common Stock owned by Advanced Technology
Ventures III, L.P.
(7) Includes 3,334 shares of Common Stock subject to options exercisable within
60 days of the date of the Offering. Excludes 919,803 shares of Common
Stock owned by Sevin Rosen Fund III, L.P., a company for which Mr. Dow
serves as a general partner. Mr. Dow disclaims beneficial ownership of any
shares of Common Stock owned by Sevin Rosen Fund III, L.P.
(8) Includes 19,334 shares of Common Stock subject to options exercisable
within 60 days of the date of the Offering.
(9) Includes 3,334 shares of Common Stock subject to options exercisable within
60 days of the date of the Offering. Excludes 1,140,392 shares of Common
Stock owned by Allstate Insurance Company and Allstate Life Insurance
Company, companies for which Mr. Engbers serves as a venture capital
manager. Mr. Engbers disclaims beneficial ownership of any shares owned by
Allstate Insurance Company and Allstate Life Insurance Company.
(10) Includes 14,000 shares of Common Stock subject to options exercisable
within 60 days of the date of the Offering.
(11) Includes 456,157 shares of Common Stock owned by Allstate Life Insurance
Company, a wholly-owned subsidiary of Allstate Insurance Company.
(12) Includes 271,276 shares of Common Stock owned by Schering Berlin Venture
Corporation, an affiliate of Schering AG, Germany.
(13) Includes 410,670 shares of Common Stock subject to options exercisable
within 60 days of the date of the Offering.
61
<PAGE> 63
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company had an agreement with M.C. Walker & Associates, Inc., a New
Jersey corporation ("MCW") that is owned by Michael C. Walker, the Company's
President, Chief Executive Officer and Director, to provide certain
administrative services and maintain an office for the benefit of the Company
for a monthly fee of $4,166. The Company paid to MCW pursuant to this
arrangement a total of $81,667 (including amounts related to prior years) during
the 12 months ended June 30, 1997, and a total of $65,062 for the nine months
ended March 31, 1998, in each case in consideration for amounts owed for such
services prior to December 31, 1996. At March 31, 1998, no amounts remained
payable by the Company to MCW. There was no written agreement between MCW and
the Company in effect during 1997 and the arrangement between MCW and the
Company no longer exists. It is anticipated that there will be no such future
arrangement between the Company and MCW.
The Company has a consulting agreement with Dr. Mervyn Israel, the
Company's Chairman of the Board and Secretary, pursuant to which the Company
pays Dr. Israel $3,750 per month for scientific consulting services. See
"Management -- Employment Agreements." During the 12 months ended June 30, 1997,
the Company paid a total of $45,000 to Dr. Israel pursuant to this agreement,
which is expected to continue to be effective in the immediate future.
The Company provides an unrestricted gift of $10,100 for research support
on a monthly basis to the University of Tennessee, the entity at which Dr.
Israel, the Company's Chairman of the Board, Secretary and Director, is
employed. During the 12 months ended June 30, 1997, the Company paid a total of
$121,200 to the University of Tennessee, and thereafter has continued, and
anticipates continuing in the future, making such unrestricted monthly gifts for
research support.
The Company paid in its year ended June 30, 1997, the sum of $25,000 to
Starlight, a consulting firm, in respect of organizational and administrative
services regarding exhibits of the Company's products. Starlight is owned by Ms.
Canice Lindsay, the wife of Michael C. Walker, the President, Chief Executive
Officer and Director of the Company.
Any transactions between the Company and its affiliated entities, executive
officers, Directors, or significant stockholders require the approval of a
majority of the independent Directors of the Company and must be on terms that
must be no less favorable to the Company than the Company could obtain from non-
affiliated parties.
62
<PAGE> 64
DESCRIPTION OF CAPITAL STOCK
The following description of the Company's capital stock does not purport
to be complete and is subject in all respects to applicable Delaware law and to
the provisions of the Company's Amended Certificate of Incorporation, and
Bylaws, copies of which have been filed as exhibits to the Registration
Statement, as amended, of which this Prospectus is a part.
The authorized capital stock of the Company consists of (i) 15,000,000
shares of Common Stock; (ii) 3,789,683 shares of Preferred Stock; and (iii)
1,000,000 shares of preferred stock, $.01 par value, all of which are without
designation. Immediately prior to the completion of the Offering, 4,855,183
shares of Common Stock will be issued and outstanding (assuming no exercise of
outstanding options and including 3,789,683 shares issuable upon the conversion
of 3,789,683 outstanding shares of Preferred Stock), and no shares of Preferred
Stock will be issued and outstanding. Immediately following the completion of
the Offering, the Company plans to amend and restate the Amended Certificate of
Incorporation to (i) cancel and retire all currently authorized shares of
Preferred Stock, and (ii) integrate the Company's Certificate of Incorporation
and the amendments thereto into one document. The Company plans to solicit
shareholder approval for such action prior to the completion of the Offering.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held of
record on all matters on which stockholders are entitled to vote. Holders of
Common Stock do not have cumulative voting rights and, therefore, holders of a
majority of the shares of Common Stock voting for the election of Directors can
elect all of the Directors. In such event, the holders of the remaining shares
of Common Stock will not be able to elect any Directors.
Holders of Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor. The Company has not paid any cash dividends since inception
and does not anticipate paying cash dividends in the foreseeable future. In the
event of liquidation, dissolution, or winding up of the Company, the holders of
Common Stock are entitled to share ratably in any corporate assets remaining
after payment of all debts, subject to any preferential rights of any
outstanding preferred stock. See "Dividend Policy."
Holders of Common Stock have no preemptive, conversion, or redemption
rights and are not subject to further calls or assessments by the Company. All
of the outstanding shares of Common Stock are, and the shares offered by the
Company hereby will be, if issued, validly issued, fully paid, and
nonassessable.
PREFERRED STOCK
The Amended Certificate of Incorporation authorizes 1,000,000 shares of an
undesignated preferred stock which the Board of Directors of the Company has the
authority, without further action by the Company's stockholders, to issue from
time to time in one or more series and to fix the number of shares,
designations, voting powers, preferences, optional and other special rights, and
the restrictions or qualifications thereof. The rights, preferences, privileges,
and restrictions or qualifications, of different series of preferred stock may
differ with respect to dividend rates, amounts payable on liquidation, voting
rights, conversion rights, redemption provisions, sinking fund provisions, and
other matters. The issuance of preferred stock could: (i) decrease the amount of
earnings and assets available for distribution to holders of Common Stock; (ii)
adversely affect the rights and powers, including voting rights, of holders of
Common Stock and (iii) have the effect of delaying, deferring, or preventing a
change in control of the Company. The Company has no present plans to issue any
additional shares of preferred stock. The information set forth in this
Prospectus assumes that upon the completion of the Offering, 1,000,000 shares of
the Company's Series A Convertible Preferred Stock, 680,000 shares of Series B
Convertible Preferred Stock, 1,470,588 shares of Series C Convertible Preferred
Stock and 639,095 shares of Series D Convertible Preferred Stock will be
converted into 3,789,683 shares of Common Stock, and all such outstanding shares
of Preferred Stock will be cancelled and retired. The Series A, B and C
Convertible Preferred Stock automatically convert to Common Stock upon the
consummation of a firm commitment underwritten offering of Common Stock in which
the aggregate price paid for such shares by the public is at least $10,000,000
and the price per share is at least $7.50; for the Series D Convertible
Preferred
63
<PAGE> 65
Stock, a per share price of at least $11.06 in a public offering of at least
$10,000,000 is required for automatic conversion to Common Stock. All holders of
Series D Convertible Preferred Stock have agreed to convert their shares of
Series D Convertible Preferred Stock to Common Stock upon the consummation of
the Offering.
REGISTRATION RIGHTS
Beginning six months from the date of this Prospectus, certain stockholders
are entitled to demand registration rights with respect to 3,839,683 shares of
Common Stock (the "Registrable Securities"). Pursuant to these rights such
stockholders may require that the Company file (i) up to two registration
statements under the Securities Act upon request of holders of at least 40% of
the Registrable Securities, subject to certain minimum size conditions and (ii)
an unlimited number of registration statements on Form S-3 at such time as the
Company is eligible to use Form S-3. In addition, if the Company proposes to
register any of its securities under the Securities Act, holders of the
Registrable Securities plus holders of an additional 715,000 shares of the
Company's Common Stock are entitled, subject to certain restrictions and
limitations, to include such securities in such registration. The Company is
required to bear substantially all registration and selling expenses (except for
underwriting discounts and selling commissions) in connection with the above
described registrations. The foregoing registration rights are transferable in
certain circumstances and may be amended or waived only with the written consent
of the Company and holders of at least two-thirds of the Registrable Securities
then outstanding. The holders of the foregoing registration rights have waived
their rights to include such securities in the Offering because the Underwriters
have determined that including such securities in the Offering would adversely
affect the marketability of the Offering.
ANTI-TAKEOVER LAW
The Company is subject to Section 203 ("Section 203") of the Delaware
General Corporation Law ("DGCL"), which restricts certain transactions and
business combinations between a corporation and an "Interested Stockholder" (as
defined in Section 203) owning 15% or more of the corporation's outstanding
voting stock, for a period of three years from the date the stockholder becomes
an Interested Stockholder. Subject to certain exceptions, unless the transaction
is approved by the board of directors and the holders of at least two-thirds of
the outstanding voting stock of the corporation (excluding shares held by the
Interested Stockholder), Section 203 prohibits significant business transactions
such as a merger with, disposition of assets to, or receipt of disproportionate
financial benefits by the Interested Stockholder, or any other transaction that
would increase the Interested Stockholder's proportionate ownership of any class
or series of the corporation's stock. The statutory ban does not apply if, upon
consummation of the transaction in which any person becomes an Interested
Stockholder, the Interested Stockholder owns at least 85% of the outstanding
voting stock of the corporation (excluding shares held by persons who are both
directors and officers or by certain employee stock plans).
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Amended Certificate of Incorporation provides that to the fullest
extent permitted by Delaware law, a Director of the Company shall not be
personally liable to the Company or its stockholders for monetary damages for
breach of such Director's fiduciary duty, except for liability: (i) for any
breach of the Director's duty of loyalty to the Company or its stockholders;
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law; (iii) in respect of certain unlawful
dividend payments or stock redemptions or repurchases; and (iv) for any
transaction from which the Director derives an improper benefit. The effect of
the provisions of the Amended Certificate of Incorporation is to eliminate the
rights of the Company and its stockholders (through stockholders' derivative
suits on behalf of the Company) to recover monetary damages against a Director
for breach of the fiduciary duty of care as a director (including breaches
resulting from negligent or grossly negligent behavior), except in the
situations described in clauses (i) through (iv) above. These provisions do not
limit or eliminate the rights of the Company or any stockholder to seek
nonmonetary relief such as an injunction or recession in the event of a breach
of a Director's duty of care. The Amended Certificate of Incorporation further
provides that the Company shall indemnify any person who is or was a Director,
officer, employee, or agent of the Company, or who is or was serving at the
request of the Company as a Director, officer, employee, or agent of another
corporation or
64
<PAGE> 66
entity, against expenses, liabilities, and losses incurred by any such person by
reason of the fact that such person is or was acting in such capacity. The
Company also plans to secure insurance prior to the consummation of the Offering
on behalf of the Company's officers and Directors for certain liabilities
arising out of such person's actions in such capacity.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock of the Company is
American Stock Transfer & Trust Company.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the Offering, there has been no public market for the Common
Stock. Sales of substantial amounts of shares of the Common Stock in the public
market following the Offering could adversely affect the market price of the
Common Stock, making it more difficult for the Company to sell equity securities
in the future at a time and price which it deems appropriate.
Upon the completion of the Offering, the Company will have 7,555,183 shares
of Common Stock outstanding (7,960,183 if the Underwriters' over-allotment
option is exercised in full). Of these shares, the 2,700,000 shares sold in the
Offering will be freely tradable without restriction or further registration
under the Securities Act. The remaining 4,855,183 shares of Common Stock
outstanding as of the date of this Prospectus are "restricted securities" as
that term is defined by Rule 144 of the Securities Act, and were issued and sold
by the Company in reliance on exemptions from registration under the Securities
Act. These restricted shares may not be sold in the public market unless they
are registered under the Securities Act or are sold pursuant to an exemption
from registration, such as Rule 144, 144(k) or 701. Beginning 90 days after the
date of this Prospectus, approximately 4,555,183 restricted securities will
become eligible for sale in the public market pursuant to Rule 144 and Rule 701
under the Securities Act.
In general, under Rule 144, a person who has beneficially owned shares for
at least one year, including an "affiliate," as that term is defined in the
Securities Act, is entitled to sell within any three-month period a number of
shares that does not exceed the greater of 1% of the then outstanding shares of
Common Stock (approximately 75,552 shares after the completion of the Offering)
or the average weekly trading volume during the four calendar weeks preceding
filing of notice of such sale, subject to certain requirements concerning
availability of public information, and the manner and notice of sale.
In addition, affiliates must comply with the restrictions and requirements
of Rule 144, other than the one year holding period requirements, in order to
sell shares of Common Stock which are not restricted securities. Under Rule
144(k), a person who is not an affiliate and has not been an affiliate for at
least three months prior to the sale and who has beneficially owned restricted
shares for at least a two year holding period may resell such shares without
compliance with the foregoing requirements.
The Company has agreed, and the Underwriters have requested that the
Company's Directors, executive officers and stockholders holding 1% or more of
the Company's capital stock prior to the Offering agree, pursuant to certain
lock-up agreements, that for a period of 180 days after the date of this
Prospectus they will not directly or indirectly, without the prior written
consent of the Representatives, sell, offer for sale, contract to sell or
otherwise dispose of any shares of Common Stock or any securities exercisable
for or convertible into Common Stock or any rights to acquire Common Stock.
Certain holders of Common Stock have certain demand and piggyback
registration rights. See "Description of Capital Stock -- Registration Rights."
As of March 31, 1998, there were 1,088,987 shares of Common Stock issuable
upon exercise of options granted under the 1990 Plan. Under the 1990 Plan,
options may be granted with respect to up to 1,700,000 shares of Common Stock.
The Company intends to file Form S-8 registration statements covering these
shares within 90 days from the date of this Prospectus. The shares registered
under such registration statements will be available for resale in the open
market upon the exercise of vested options, subject to Rule 144 volume
limitations applicable to affiliates.
65
<PAGE> 67
UNDERWRITING
The Underwriters named below, for whom Allen & Company Incorporated and
Gruntal & Co., L.L.C. are acting as representatives (the "Representatives"),
have severally agreed, subject to the terms and conditions contained in the
Underwriting Agreement, in the form attached to the Registration Statement as an
exhibit (the "Underwriting Agreement"), to purchase from the Company the
aggregate number of shares of Common Stock set forth below opposite their
respective names.
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ---------
<S> <C>
Allen & Company Incorporated................................
Gruntal & Co., L.L.C. ......................................
---------
Total............................................. 2,700,000
=========
</TABLE>
Pursuant to the Underwriting Agreement, the several Underwriters have
agreed, subject to the terms and conditions therein, to purchase all of the
shares of Common Stock offered hereby (other than shares that may be purchased
under the over-allotment option, if any are purchased). The Underwriters propose
initially to offer the shares to the public at the public offering price set
forth on the cover page of this Prospectus. The Underwriters may allow a selling
concession not exceeding $ per share of Common Stock to certain
dealers. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $ per share to other dealers. The public offering
price and concessions may be changed by the Representatives after the Offering.
The Company has agreed to reimburse the Underwriters for up to $150,000 of
their out-of-pocket expenses in connection with the Offering.
The Company has granted to the Underwriters an option, expiring 30 days
after the date of the Underwriting Agreement, to purchase up to an additional
405,000 shares of Common Stock at the public offering price, less underwriting
discounts and commissions, all as set forth on the cover page of this
Prospectus. The Underwriters may exercise the option only to cover
over-allotments, if any, in the sale of shares of Common Stock in the Offering.
To the extent that the Underwriters exercise their option, each Underwriter will
be committed, subject to certain conditions, to purchase a number of such
additional shares proportionate to such Underwriter's initial commitment.
The Company has agreed, and the Underwriters have requested that the
Company's Directors, executive officers and stockholders holding 1% or more of
the Company's capital stock prior to the Offering agree, to deliver to the
Representatives prior to the date of this Prospectus lock-up agreements under
which they agree not to directly or indirectly sell, offer for sale, contract to
sell or otherwise dispose of any shares of Common Stock or any securities
exercisable for or convertible into Common Stock or any rights to acquire Common
Stock for a period of 180 days after the date of this Prospectus, without the
prior written consent of the Representatives.
The Company and the Underwriters have each agreed to indemnify one another
against certain liabilities, including liabilities under the Securities Act.
Prior to the Offering, there has been no public market for the shares of
Common Stock. The initial public offering price was negotiated between the
Company and the Representatives. Among the factors considered in determining the
initial public offering price of the shares of Common Stock, in addition to
prevailing market conditions, were the Company's historical performance and
capital structure, estimates of business potential and earnings prospects of the
Company, an overall assessment of the Company, an assessment of the Company's
management and the consideration of the above factors in relation to the market
valuation of companies in related businesses.
Certain of the shares of Common Stock offered hereby may be initially
offered outside of the United States by the Underwriters. No action has been or
will be taken in any jurisdiction (except in the United
66
<PAGE> 68
States) that would permit a public offering of the shares of Common Stock or the
possession, circulation or distribution of this Prospectus or any amendment or
supplement hereto or any other material relating to the Company or shares of
Common Stock in any jurisdiction where action for that purpose is required.
Accordingly, the shares of Common Stock may not be offered or sold, directly or
indirectly, and neither this Prospectus or any amendment or supplement hereto
nor any other offering material or advertisements in connection with the shares
of Common Stock may be distributed or published, in or from any country or
jurisdiction except in compliance with any applicable rules and regulations of
any such country or jurisdiction.
Each Underwriter has agreed that (i) it has not offered or sold and, for a
period of six months following consummation of the Offering, will not offer or
sell any shares of Common Stock to persons in the United Kingdom, except to a
person whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Common Stock in, from or
otherwise involving the United Kingdom; and (iii) it has only issued or passed
on and will only issue or pass on to any person in the United Kingdom any
document received by it in connection with the issuance of Common Stock if that
person is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements)(Exemptions) Order 1996, as amended, or is a
person to whom such document may otherwise lawfully be issued or passed on.
Application has been made to have the Common Stock approved for quotation
on the Nasdaq National Market, which has reserved the Nasdaq trading symbol
"ANTH" to identify the Company.
LEGAL MATTERS
The validity of the shares offered hereby is being passed upon for the
Company by Morrison & Foerster LLP, New York, New York. Certain legal matters
will be passed upon for the Underwriters by Werbel & Carnelutti, A Professional
Corporation, New York, New York.
EXPERTS
The financial statements of the Company as of June 30, 1996 and 1997, and
for each of the years in the three-year period ended June 30, 1997 have been
included herein and in the Registration Statement in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus constitutes a part of the Registration Statement and does not
contain all of the information set forth therein and in the exhibits thereto,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the Common Stock offered hereby, reference is hereby made to such
Registration Statement and exhibits. Statements contained in this Prospectus as
to the contents of any document are not necessarily complete and in each
instance are qualified in their entirety by reference to the copy of the
appropriate document filed with the Commission. For further information with
respect to the Company and the Common Stock, reference is hereby made to such
exhibits and schedules thereto, which may be inspected and copied at the
principal office of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Commission located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and copies of all or any
part thereof may be obtained at prescribed rates from the Commission's Public
Reference Section at such addresses. Also, the Commission maintains a World Wide
site on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. Upon approval of the Common Stock for
quotation on the Nasdaq National Market, such reports, proxy and information
statements and other information also can be inspected at the office of Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006.
67
<PAGE> 69
ANTHRA PHARMACEUTICALS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Consolidated Balance Sheets as of June 30, 1996 and 1997 and
March 31, 1998 (unaudited)................................ F-3
Consolidated Statements of Operations for the years ended
June 30, 1995, 1996 and 1997, the nine months ended March
31, 1997 and 1998 (unaudited) and for the period from June
25, 1985 (inception) to March 31, 1998 (unaudited)........ F-4
Consolidated Statements of Stockholders' Equity (Deficit)
for the period from June 25, 1985 (inception) to March 31,
1998 (unaudited for the periods from June 25, 1985
(inception) to June 30, 1994 and July 1, 1997 to March 31,
1998)..................................................... F-5
Consolidated Statements of Cash Flows for the years ended
June 30, 1995, 1996 and 1997, the nine months ended March
31, 1997 and 1998 (unaudited) and for the period from June
25, 1985 (inception) to March 31, 1998 (unaudited)........ F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 70
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Anthra Pharmaceuticals, Inc.:
We have audited the accompanying balance sheets of Anthra Pharmaceuticals,
Inc. (A Development Stage Enterprise) as of June 30, 1996 and 1997, and the
related statements of operations, stockholders' deficit and cash flows for each
of the years in the three-year period ended June 30, 1997. 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 generally accepted auditing
standards. 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 financial position of Anthra Pharmaceuticals, Inc.
(A Development Stage Enterprise) as of June 30, 1996 and 1997, and the results
of its operations and its cash flows for each of the years in the three-year
period ended June 30, 1997, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Princeton, New Jersey
September 9, 1997, except as to
the seventh paragraph of note 5
which is as of October 14, 1997
F-2
<PAGE> 71
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Consolidated Balance Sheets
June 30, 1996 and 1997 and
March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
JUNE 30, PRO FORMA
------------------------ MARCH 31, MARCH 31,
1996 1997 1998 1998
---------- ----------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $1,712,572 795,428 5,680,680 5,680,680
Other receivable (note 5)........................... 916,119 -- -- --
Prepaid expenses.................................... 24,975 38,105 85,617 85,617
---------- ----------- ----------- -----------
Total current assets......................... 2,653,666 833,533 5,766,297 5,766,297
Equipment, net (note 3)............................... 72,933 75,957 79,700 79,700
Deferred offering costs............................... -- -- 347,000 347,000
Other assets.......................................... 5,548 5,548 9,730 9,730
---------- ----------- ----------- -----------
Total assets................................. $2,732,147 915,038 6,202,727 6,202,727
========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.................................... $ 215,402 995,773 209,543 209,543
Accrued expenses (note 4)........................... 383,393 370,534 665,476 665,476
Due to related parties, net (note 6)................ 146,729 65,062 -- --
---------- ----------- ----------- -----------
Total current liabilities and total
liabilities................................ 745,524 1,431,369 875,019 875,019
Contingent stock obligation (note 5).................. -- -- 8,000,000 8,000,000
---------- ----------- ----------- -----------
Mandatorily redeemable convertible preferred stock (at
redemption value which includes accreted dividends
of $2,116,939, $2,769,998 and $3,259,793 at June 30,
1996 and 1997 and March 31, 1998, respectively)
(note 9); (converts into 3,150,588 pro forma common
shares at March 31, 1998 upon consummation of the
offering contemplated herein):
Series A, $0.01 par value; 1,000,000 shares
authorized, issued and outstanding.............. 2,169,960 2,289,960 2,379,002 --
Series B, $0.01 par value; 680,000 shares
authorized, issued and outstanding.............. 2,187,288 2,323,288 2,423,069 --
Series C, $0.01 par value; 1,470,588 shares
authorized, issued and outstanding.............. 5,959,690 6,356,749 6,657,721 --
---------- ----------- ----------- -----------
10,316,938 10,969,997 11,459,792 --
---------- ----------- ----------- -----------
Stockholders' deficit (notes 10 and 11):
Series D convertible preferred stock, $0.01 par
value; 271,276 shares authorized, issued and
outstanding at June 30, 1996; 471,276 shares
authorized, 339,095 shares issued and outstanding
at June 30, 1997; and 639,095 shares authorized,
issued and outstanding at March 31, 1998 (converts
into 639,095 pro forma common shares at March 31,
1998 upon consummation of the offering
contemplated herein).............................. 2,713 3,391 6,391 --
Common stock, $0.01 par value; 6,000,000 shares
authorized at June 30, 1996 and 1997 and 6,700,000
at March 31, 1998; 865,500, 1,065,500 and
1,065,500 shares issued and outstanding at June
30, 1996 and 1997 and March 31, 1998,
respectively; (4,855,183 pro forma shares at March
31, 1998 upon conversion)......................... 8,655 10,655 10,655 48,552
Additional paid-in capital.......................... 1,062,687 3,368,707 8,837,642 20,265,928
Deferred compensation............................... -- -- (986,080) (986,080)
Deficit accumulated during the development stage.... (9,404,370) (14,869,081) (22,000,692) (22,000,692)
---------- ----------- ----------- -----------
Total stockholders' deficit.................. (8,330,315) (11,486,328) (14,132,084) (2,672,292)
Commitments (notes 6, 8 and 11)
---------- ----------- ----------- -----------
Total liabilities and stockholders'
deficit.................................... $2,732,147 915,038 6,202,727 6,202,727
========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 72
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Consolidated Statements of Operations
For the years ended June 30, 1995, 1996 and 1997, the nine
months ended March 31, 1997 and 1998 (unaudited) and for
the period from June 25, 1985 (inception) to March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
NINE MONTHS ENDED JUNE 25, 1985
YEARS ENDED JUNE 30, MARCH 31, (INCEPTION) TO
------------------------------------- ------------------------- MARCH 31,
1995 1996 1997 1997 1998 1998
----------- ---------- ---------- ----------- ----------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Research and license revenues (note
5)................................... $ -- 2,170,518 399,875 199,875 -- 2,570,393
Other revenue (note 5)................. -- -- 1,288,240 1,288,240 -- 1,288,240
----------- ---------- ---------- ---------- ---------- -----------
-- 2,170,518 1,688,115 1,488,115 -- 3,858,633
----------- ---------- ---------- ---------- ---------- -----------
Operating expenses:
Research and development (note 5)...... 2,591,029 3,648,529 6,610,188 4,206,105 5,929,683 23,540,709
General and administrative (note 6).... 121,368 523,209 681,543 428,689 1,492,259 3,103,620
----------- ---------- ---------- ---------- ---------- -----------
Total operating expenses......... 2,712,397 4,171,738 7,291,731 4,634,794 7,421,942 26,644,329
Other income (expense):
Interest income........................ 94,895 111,519 138,905 119,264 290,331 820,012
Interest expense....................... -- -- -- -- -- (35,008)
----------- ---------- ---------- ---------- ---------- -----------
94,895 111,519 138,905 119,264 290,331 785,004
----------- ---------- ---------- ---------- ---------- -----------
Net loss......................... (2,617,502) (1,889,701) (5,464,711) (3,027,415) (7,131,611) (22,000,692)
Accretion of undeclared dividends
attributable to mandatorily redeemable
convertible preferred stock............ 653,059 653,059 653,059 489,795 489,795 3,259,793
----------- ---------- ---------- ---------- ---------- -----------
Net loss allocable to common
stockholders................... $(3,270,561) (2,542,760) (6,117,770) (3,517,210) (7,621,406) (25,260,485)
=========== ========== ========== ========== ========== ===========
Basic and diluted net loss per share
allocable to common stockholders (note
2)..................................... $ (4.24) (3.01) (5.79) (3.34) (7.15)
=========== ========== ========== ========== ==========
Shares used in computing basic and
diluted net loss per share allocable to
common stockholders (note 2)........... 771,062 843,993 1,056,733 1,054,511 1,065,500
=========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 73
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Consolidated Statements of Stockholders' Equity (Deficit)
For the period from June 25, 1985 (inception) to March 31, 1998
(unaudited for the periods from June 25, 1985 (inception) to
June 30, 1994 and July 1, 1997 to March 31, 1998)
<TABLE>
<CAPTION>
SERIES D CONVERTIBLE DEFICIT
PREFERRED STOCK COMMON STOCK ACCUMULATED TOTAL
--------------------- ------------------- ADDITIONAL DURING THE STOCKHOLDERS'
NUMBER OF NUMBER OF PAID-IN DEFERRED DEVELOPMENT EQUITY
SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION STAGE (DEFICIT)
---------- -------- --------- ------- ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 25, 1985
(inception).............. -- $ -- -- $ -- -- -- -- --
Issuance of common stock
(note 9)............... -- -- 153,000 1,530 3,060 -- -- 4,590
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, June 30, 1985.... -- -- 153,000 1,530 3,060 -- -- 4,590
Net loss................. -- -- -- -- -- -- (30) (30)
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, June 30, 1986.... -- -- 153,000 1,530 3,060 -- (30) 4,560
Net loss................. -- -- -- -- -- -- (4,629) (4,629)
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, June 30, 1987.... -- -- 153,000 1,530 3,060 -- (4,659) (69)
Net loss................. -- -- -- -- -- -- (98) (98)
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, June 30, 1988.... -- -- 153,000 1,530 3,060 -- (4,757) (167)
Net loss................. -- -- -- -- -- -- (352) (352)
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, June 30, 1989.... -- -- 153,000 1,530 3,060 -- (5,109) (519)
Net loss................. -- -- -- -- -- -- (57,428) (57,428)
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, June 30, 1990.... -- -- 153,000 1,530 3,060 -- (62,537) (57,947)
Issuance of common stock
(note 10).............. -- -- 562,500 5,625 139,625 -- -- 145,250
Accretion of undeclared
dividends on
mandatorily redeemable
convertible preferred
stock (note 9)......... -- -- -- -- (69,960) -- -- (69,960)
Net loss................. -- -- -- -- -- -- (490,526) (490,526)
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, June 30, 1991.... -- -- 715,500 7,155 72,725 -- (553,063) (473,183)
Accretion of undeclared
dividends on
mandatorily redeemable
convertible preferred
stock (note 9)......... -- -- -- -- (120,000) -- -- (120,000)
Net loss................. -- -- -- -- -- -- (554,447) (554,447)
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, June 30, 1992.... -- -- 715,500 7,155 (47,275) -- (1,107,510) (1,147,630)
Accretion of undeclared
dividends on
mandatorily redeemable
convertible preferred
stock (note 9)......... -- -- -- -- (199,288) -- -- (199,288)
Net loss................. -- -- -- -- -- -- (1,337,017) (1,337,017)
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, June 30, 1993.... -- -- 715,500 7,155 (246,563) -- (2,444,527) (2,683,935)
Accretion of undeclared
dividends on
mandatorily redeemable
convertible preferred
stock (note 9)......... -- -- -- -- (421,573) -- -- (421,573)
Net loss................. -- -- -- -- -- -- (2,452,640) (2,452,640)
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, June 30, 1994.... -- -- 715,500 7,155 (668,136) -- (4,897,167) (5,558,148)
Issuance of common stock
(notes 5 and 10)....... -- -- 100,000 1,000 33,000 -- -- 34,000
Accretion of undeclared
dividends on
mandatorily redeemable
convertible preferred
stock (note 9)......... -- -- -- -- (653,059) -- -- (653,059)
Net loss................. -- -- -- -- -- -- (2,617,502) (2,617,502)
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, June 30, 1995.... -- -- 815,500 8,155 (1,288,195) -- (7,514,669) (8,794,709)
Exercise of warrants
(note 9)............... -- -- 50,000 500 7,000 -- -- 7,500
Issuance of Series D
convertible preferred
stock (notes 5 and
9)..................... 271,276 2,713 -- -- 2,996,941 -- -- 2,999,654
Accretion of undeclared
dividends on
mandatorily redeemable
convertible preferred
stock (note 9)......... -- -- -- -- (653,059) -- -- (653,059)
Net loss................. -- -- -- -- -- -- (1,889,701) (1,889,701)
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, June 30, 1996.... 271,276 2,713 865,500 8,655 1,062,687 -- (9,404,370) (8,330,315)
Issuance of Series D
convertible preferred
stock (note 5)......... 267,819 2,678 -- -- 2,959,079 -- -- 2,961,757
Conversion of Series D
preferred stock to
common stock........... (200,000) (2,000) 200,000 2,000 -- -- -- --
Accretion of undeclared
dividends on
mandatorily redeemable
convertible preferred
stock (note 9)......... -- -- -- -- (653,059) -- -- (653,059)
Net loss................. -- -- -- -- -- -- (5,464,711) (5,464,711)
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, June 30, 1997.... 339,095 3,391 1,065,500 10,655 3,368,707 -- (14,869,081) (11,486,328)
Issuance of Series D
convertible preferred
stock (note 5)......... 300,000 3,000 -- -- 4,497,000 -- -- 4,500,000
Accretion of undeclared
dividends on
mandatorily redeemable
convertible preferred
stock (note 9)......... -- -- -- -- (489,795) -- -- (489,795)
Deferred compensation
resulting from grant of
options (note 10)...... -- -- -- -- 1,461,730 (1,461,730) -- --
Amortization of deferred
compensation (note
10).................... -- -- -- -- -- 475,650 -- 475,650
Net loss................. -- -- -- -- -- -- (7,131,611) (7,131,611)
-------- ------- --------- ------- ---------- ---------- ----------- -----------
Balance, March 31, 1998... 639,095 $ 6,391 1,065,500 $10,655 8,837,642 (986,080) (22,000,692) (14,132,084)
======== ======= ========= ======= ========== ========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 74
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
For the years ended June 30, 1995, 1996 and 1997, the nine months
ended March 31, 1997 and 1998 (unaudited) and the period
from June 25, 1985 (inception) to March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
NINE MONTHS ENDED JUNE 25, 1985
YEARS ENDED JUNE 30, MARCH 31, (INCEPTION) TO
------------------------------------- ------------------------- MARCH 31,
1995 1996 1997 1997 1998 1998
----------- ---------- ---------- ----------- ----------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................... $(2,617,502) (1,889,701) (5,464,711) (3,027,415) (7,131,611) (22,000,692)
Adjustments to reconcile net loss to net
cash used in operating activities:
Noncash compensation expense............ -- -- -- -- 475,650 475,650
Accrued interest converted to preferred
stock................................. -- -- -- -- -- 35,008
Depreciation expense.................... 18,160 16,514 24,317 18,113 20,271 79,262
Change in assets and liabilities:
(Increase) decrease in other
receivable........................... -- (916,119) 916,119 916,119 -- --
(Increase) decrease in prepaid
expenses............................. (6,194) (18,781) (13,130) 24,975 (47,512) (85,617)
(Increase) decrease in other assets... 195,141 (2,698) -- -- (4,182) (9,730)
Increase (decrease) in accounts
payable.............................. 72,767 142,635 780,371 (91,296) (786,230) 209,543
Increase (decrease) in accrued
expenses............................. 89,307 260,585 (12,859) (138,899) 294,942 665,476
Increase (decrease) in due to related
parties, net......................... 147,874 (110,088) (81,667) (51,667) (65,062) --
----------- ---------- ---------- ---------- ---------- -----------
Net cash used in operating
activities........................... (2,100,447) (2,517,653) (3,851,560) (2,350,070) (7,243,734) (20,631,100)
----------- ---------- ---------- ---------- ---------- -----------
Cash flows from investing
activities -- capital expenditures.......... (50,955) (50,072) (27,341) (27,341) (24,014) (158,962)
----------- ---------- ---------- ---------- ---------- -----------
Cash flows from financing activities:
Proceeds from issuance of promissory
notes..................................... -- -- -- -- -- 1,000,000
Proceeds from issuance of common stock and
exercise of warrants...................... 34,000 7,500 -- -- -- 191,340
Proceeds from issuance of preferred stock... -- 2,999,654 2,961,757 2,211,760 4,500,000 17,626,402
Proceeds from short-term borrowings......... -- -- -- -- -- 321,280
Repayment of short-term debt................ -- -- -- -- -- (321,280)
Increase in contingent stock obligation..... -- -- -- -- 8,000,000 8,000,000
Deferred offering costs..................... -- -- -- -- (347,000) (347,000)
----------- ---------- ---------- ---------- ---------- -----------
Net cash provided by financing
activities........................... 34,000 3,007,154 2,961,757 2,211,760 12,153,000 26,470,742
----------- ---------- ---------- ---------- ---------- -----------
Net increase (decrease) in cash and cash
equivalents................................. (2,117,402) 439,429 (917,144) (165,651) 4,885,252 5,680,680
Cash and cash equivalents at beginning of
period...................................... 3,390,545 1,273,143 1,712,572 1,712,572 795,428 --
----------- ---------- ---------- ---------- ---------- -----------
Cash and cash equivalents at end of period... $ 1,273,143 1,712,572 795,428 1,546,921 5,680,680 5,680,680
=========== ========== ========== ========== ========== ===========
Supplemental disclosure of noncash financing
activities:
Conversion of promissory notes to preferred
stock..................................... $ -- -- -- -- -- 1,000,000
=========== ========== ========== ========== ========== ===========
Deferred compensation....................... $ -- -- -- -- 1,461,730 1,461,730
=========== ========== ========== ========== ========== ===========
Accretion of undeclared dividends
attributable to mandatorily redeemable
convertible preferred stock............... $ 653,059 653,059 653,059 489,795 489,795 3,259,793
=========== ========== ========== ========== ========== ===========
Conversion of preferred stock to common
stock..................................... $ -- -- 2,000 2,000 -- 2,000
=========== ========== ========== ========== ========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 75
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
June 30, 1996 and 1997
(Information as of December 31, 1997 and with respect to the
nine months ended March 31, 1997 and 1998 is unaudited)
(1) ORGANIZATION AND BUSINESS ACTIVITIES
Anthra Pharmaceuticals, Inc. (Anthra or the Company) was incorporated in
Delaware on June 25, 1985. The Company is a development stage pharmaceutical
company engaged in clinical development and obtaining regulatory approval for a
portfolio of proprietary cancer drugs. The Company is currently devoting
substantially all of its efforts towards conducting pharmaceutical development,
raising capital, obtaining regulatory approval for products under development
and recruiting personnel.
The accompanying consolidated financial statements include the results of
operations of the Company and its wholly-owned subsidiary, Anthra
Pharmaceuticals Limited (since December 18, 1997), for the period from June 25,
1985 (inception) to March 31, 1998. All intercompany accounts and transactions
have been eliminated in consolidation.
The Company has not yet achieved profitable operations or positive cash
flow from operations. There is no assurance that profitable operations, if ever
achieved, could be sustained on a continuing basis. In addition, development
activities and the commercialization of proprietary medical therapies for the
treatment of cancer will require significant additional financing and regulatory
approval. The Company's deficit accumulated during the development stage
aggregated $22,000,692 through March 31, 1998 and it expects to incur
substantial losses in future periods. Further, the Company's future operations
are dependent on the success of the Company's research and commercialization
efforts and, ultimately, upon regulatory approval and market acceptance of the
Company's products.
The Company plans to continue to finance its operations with a combination
of stock issuances, such as the initial public offering contemplated herein
(Offering), private placements and follow-on public offerings, license payments,
payments from strategic research and development arrangements and, in the longer
term, revenues from potential product sales. There are no assurances, however,
that the Company will be successful in obtaining financing at the level needed
for the long-term development and commercialization of its planned products or
on terms acceptable to the Company.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less when purchased to be cash equivalents. All cash
and cash equivalents are held in United States financial institutions and money
market funds. To date, the Company has not experienced any losses on its cash
and cash equivalents. The carrying amount of cash and cash equivalents
approximates its fair value due to its short-term and liquid nature.
Equipment
Equipment, consisting primarily of computer and office equipment, is
recorded at cost. Depreciation is provided using the straight-line method over
the estimated useful lives of the assets, generally three to five years.
Expenditures for repairs and maintenance are expensed as incurred.
Research and Development
Research and product development costs are expensed as incurred.
F-7
<PAGE> 76
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements -- (Continued)
Revenue Recognition -- Research and Development and Licensing Agreements
The Company has entered into various research and development and licensing
agreements (see note 5). Research and development revenue from
cost-reimbursement agreements is recorded as the related expenses are incurred,
up to contractual limits and when the Company meets its performance obligations
under the respective agreements. Contract revenue is recognized under the other
agreements when milestones are met and the Company's significant performance
obligations have been satisfied in accordance with the terms of the respective
agreements. Cash received that is related to future performance under such
contracts is deferred and recognized as revenue when earned. Revenue recognized
is not subject to repayment. Future losses, if any, on research and development
agreements are recognized in the period when identified by the Company.
Accounting for Income Taxes
Deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when such
differences are expected to reverse. The measurement of deferred tax assets is
reduced, if necessary, by a valuation allowance for any tax benefits which are
not expected to be realized. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in the period that such tax rate changes
are enacted.
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 amount reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
Stock-based Compensation
The Company accounts for its stock option issuances in accordance with the
provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees", and related interpretations. As such, deferred
compensation is recorded to the extent that the current market value of the
underlying stock exceeds the exercise price on the date both the number of
shares and the price per share are known (measurement date). Such deferred
compensation is amortized over the respective vesting periods of such option
grants. On June 30, 1996, the Company adopted the disclosure requirements of
SFAS No. 123, "Accounting for Stock-Based Compensation", which permits entities
to continue to apply the provisions of APB Opinion No. 25 for financial
statement reporting purposes and provide pro forma net loss and pro forma net
loss per share disclosures for employee stock option grants made in fiscal year
1996 and future years as if the fair-value-based method defined in SFAS No. 123
had been applied. The Company has elected to continue to apply the provisions of
APB Opinion No. 25 for financial statement reporting purposes and to provide the
pro forma disclosures required by SFAS No. 123. Transactions with non-employees,
in which goods or services are the consideration received for the issuance of
equity instruments, are accounted for under the fair-value based method defined
in SFAS No. 123.
Equity Security Transactions
Since inception, the Board of Directors has established the deemed fair
value of common stock, Series A, B and C mandatorily redeemable convertible
preferred stock (Series A, B and C), Series D convertible preferred stock
(Series D) (together, Convertible Preferred Stock), stock options and warrants
based upon facts and circumstances existing at the dates such equity
transactions occurred, including the price at which equity instruments were sold
to independent third parties.
F-8
<PAGE> 77
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements -- (Continued)
Net Loss per Share
Net loss per share is computed in accordance with SFAS No. 128, "Earnings
Per Share," by dividing the net loss allocable to common stockholders (including
accretion of undeclared dividends) by the weighted average number of shares of
common stock outstanding. As of March 31, 1998, the Company has certain options,
warrants and Convertible Preferred Stock (see notes 9 and 10), which have not
been used in the calculation of diluted net loss per share because to do so
would be anti-dilutive. As such, the numerator and the denominator used in
computing both basic and diluted net loss per share allocable to common
stockholders are equal.
Pursuant to Securities and Exchange Commission (SEC) Staff Accounting
Bulletin No. 98 and SEC staff policy, all common stock issued for nominal
consideration during the periods presented herein and through the filing of the
registration statement for the Offering are to be reflected in a manner similar
to a stock split or stock dividend for which retroactive treatment is required
in the calculation of pro-forma basic net loss per share; the Company did not
have any such issuances. Similarly, common stock and potential common stock
issued for nominal consideration during the periods presented herein and through
the filing of the registration statement for the Offering are to be reflected in
a manner similar to a stock split or stock dividend for which retroactive
treatment is required in the calculation of pro forma diluted net loss per
share, even if anti-dilutive; the Company did not have any such issuances.
Pro Forma Net Loss per Share (Unaudited)
The following pro forma basic and diluted net loss per share allocable to
common stockholders (excluding accretion of undeclared dividends) and shares
used in computing pro forma basic and diluted net loss per share allocable to
common stockholders have been presented reflecting the automatic conversion into
shares of common stock of the Convertible Preferred Stock upon completion of the
Offering (see note 9) using the if converted method from their respective dates
of issuance:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
JUNE 30, MARCH 31,
1997 1998
---------- -----------
<S> <C> <C>
Pro forma basic and diluted net loss per share allocable to
common stockholders....................................... $ (1.22) $ (1.50)
========== ==========
Shares used in computing pro forma basic and diluted net
loss per share allocable to common stockholders........... 4,492,346 4,739,798
========== ==========
</TABLE>
Pro Forma Balance Sheet (Unaudited)
Upon the closing of the Offering, all of the outstanding shares of
Convertible Preferred Stock automatically convert into 3,789,683 shares of
common stock (see note 9). The unaudited pro forma presentation of the March 31,
1998 consolidated balance sheet has been prepared assuming the conversion of the
Convertible Preferred Stock into common stock as of March 31, 1998, the most
recent consolidated balance sheet included in the accompanying consolidated
financial statements.
Unaudited Financial Statements
The consolidated balance sheet at March 31, 1998, the consolidated
statements of operations and statements of cash flows for the nine months ended
March 31, 1997 and 1998 and the period from June 25, 1985 (inception) to March
31, 1998 and the consolidated statement of stockholders' equity (deficit) for
the
F-9
<PAGE> 78
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements -- (Continued)
periods from June 25, 1985 (inception) to June 30, 1994 and July 1, 1997 to
March 31, 1998 are unaudited. In the opinion of management of the Company, such
unaudited consolidated financial statements include all adjustments (consisting
of normal recurring accruals) necessary for a fair presentation of financial
results for these periods. The results of operations for the nine months ended
March 31, 1998 are not necessarily indicative of results to be expected for the
entire fiscal year.
(3) EQUIPMENT
Equipment is comprised of the following at June 30, 1996 and 1997 and March
31, 1998:
<TABLE>
<CAPTION>
JUNE 30,
------------------ MARCH 31,
1996 1997 1998
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Furniture and fixtures...................... $17,266 19,163 22,167
Computer and equipment...................... 84,318 109,762 133,155
Laboratory equipment........................ 3,640 3,640 3,640
Leasehold improvements...................... 2,383 2,383 --
------- ------- -------
107,607 134,948 158,962
Less accumulated depreciation............... 34,674 58,991 79,262
------- ------- -------
$72,933 75,957 79,700
======= ======= =======
</TABLE>
(4) ACCRUED EXPENSES
Accrued expenses is comprised of the following at June 30, 1996 and 1997
and March 31, 1998:
<TABLE>
<CAPTION>
JUNE 30,
------------------- MARCH 31,
1996 1997 1998
-------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Contract research and development.......... $352,377 292,966 317,476
Professional and consulting fees........... 13,219 -- 183,000
Payroll and related costs.................. 2,797 62,568 --
Offering costs............................. -- -- 150,000
Other...................................... 15,000 15,000 15,000
-------- ------- --------
$383,393 370,534 665,476
======== ======= ========
</TABLE>
(5) RESEARCH AND DEVELOPMENT AND LICENSE AGREEMENTS
University of Tennessee Research Corporation
In 1990, the Company entered into a license agreement with the University
of Tennessee Research Corporation (UTRC) (which is not owned by the University
of Tennessee) covering the commercial development of its technology. The Company
is also liable to UTRC for annual royalty fees based on net sales, if any, as
defined in the agreement. Annual minimum royalties of $25,000 and $50,000 are
required for calendar years 1997 and for each year thereafter, respectively. The
Company's obligation to pay royalties expires upon the expiration of the related
patent. The license agreement is in effect until the later to occur of the
expiration of all patent rights or seventeen years from Anthra's last acceptance
of a license to an unpatented improvement to the technology (see note 6).
F-10
<PAGE> 79
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements -- (Continued)
Dana Farber Licensing Agreement
In 1990, the Company entered into a licensing agreement with the Dana
Farber Cancer Institute (Dana-Farber) to acquire the unrestricted exclusive
worldwide patent and know-how license on certain technology, subject to certain
restrictions and limitations in an agreement between Dana-Farber and the U.S.
Department of Health and Human Services dated April 22, 1985. As a condition of
the agreement, the Company will grant back to Dana-Farber the right to conduct
research on a royalty-free basis on the technology. The Company is liable to
Dana-Farber for annual royalty fees based on net sales, if any, as defined in
the agreement. The Company agreed to pay Dana-Farber a minimum royalty of
$15,000 for each twelve-month period commencing on the anniversary of a New Drug
Application (NDA) approval in the United States of the technology. The
obligation to pay minimum royalties shall cease upon the termination of this
agreement. Absent any default, the agreement terminates in July 1999 or upon 90
days notice by Anthra.
Schering Development and License Agreement
In September 1995, the Company and Schering AG (Schering) entered into a
development and license agreement. Under this agreement the Company agreed to
conduct the research and development activities to prepare a certain product for
commercialization. Schering agreed to reimburse the Company for certain research
and development cost associated with the commercial development of the products
in certain territories. Under the agreement the Company granted to Schering the
exclusive, royalty bearing license in the North America and European Territories
to market, sell, and distribute the product. The Company retained co-promotion
rights in each territory, subject to certain limitations. In return, Schering
agreed to make certain lump and royalty payments to the Company based on certain
occurrences. During 1996 and 1997, the Company was entitled to reimbursement of
$2,170,518 and $199,875, respectively, which is recorded as revenue in the
accompanying statements of operations. Of these amounts $916,119 and $0 were
unpaid at June 30, 1996 and 1997, respectively. In connection with this
agreement, Schering Berlin Venture Corporation, an affiliate of Schering,
purchased 271,276 shares of Series D for $2,999,654 (see note 9).
On July 16, 1996, the Company entered into a termination, settlement and
investment agreement under which Schering paid the Company a total of $3,500,000
for 200,000 shares of Series D and for Anthra's release of Schering from the
September 1995 agreement. The Company allocated $2,211,760 of this amount to the
sale of the Series D utilizing a value of approximately $11 per share (the per
share price being ascribed to other Series D financings). The remaining
$1,288,240 of the payment is recorded as other revenue in fiscal 1997 as a fee
for release from the 1995 agreement. The $3,500,000 was used in 1997 for
research relating to the originally licensed technology, as required by the
agreement. The Company owns all rights, title and interest in and to any such
research, data, know how, intellectual property or any other property resulting
from the research and is required to pay Schering royalties on future product
sales, if any. Schering subsequently converted the 200,000 shares of Series D
into 200,000 shares of common stock in accordance with the terms of the
preferred stock.
Prodesfarma Exclusive License Agreement
On April 17, 1997, the Company entered into an exclusive license agreement
with Prodesfarma, S.A. (Prodesfarma). Under the agreement, Prodesfarma obtained
the exclusive distribution rights to a certain product in Spain and Portugal for
an initial term of ten years from the first commercial sale. Prodesfarma made a
nonrefundable payment of $200,000 to the Company upon the signing of this
agreement and is required to make further payments aggregating up to $400,000
upon the achievement of certain milestones.
F-11
<PAGE> 80
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements -- (Continued)
The Company is responsible for the remaining development costs and to supply the
product to Prodesfarma at prices described in the agreement. The agreement may
be terminated by either party in certain circumstances. Concurrent with the
license agreement, Prodesfarma purchased 67,819 shares of Series D for $749,997.
Medeva Agreement
On July 15, 1997, the Company entered into a development agreement with
Medeva California Inc. (Medeva). Under this agreement, Medeva was granted an
exclusive royalty bearing license to sell, distribute and market a certain
product for certain indications, in the United States, upon regulatory approval.
In exchange, Medeva made a non-refundable payment of $8.0 million on signing the
agreement and subject to certain restrictions and limitations, is required to
make future payments aggregating up to $18.2 million upon the achievement of
certain milestones. The Company is responsible for most remaining development
costs, although Medeva will fund certain costs related to the specific
indications covered under this agreement. The Company will also supply the
product to Medeva at certain stated prices. If regulatory approval is not
received for any of the indications covered by this agreement by December 31,
2002, Medeva will have the right to acquire the number of common shares equal to
20% of the then issued and outstanding voting equity securities of the Company.
Accordingly, the $8.0 million payment has been recorded as a contingent stock
obligation in the consolidated balance sheet at March 31, 1998. Upon receipt of
regulatory approval for one of the indications covered by the agreement on or
before December 31, 2002, the Company would account for that portion of the $8
million incurred on development costs under the agreement since July 15, 1997 as
research and development revenue. Any portion of the $8 million not spent on
development expenditures by the time of the regulatory approval would be
accounted for as deferred revenue and recognized as revenue as development
expenditures are made. Should the necessary regulatory approval not be received
by December 31, 2002, the $8 million would be accounted for as a contribution to
capital for the shares issued to Medeva. Any excess of the fair value of the
common stock issued to Medeva over the $8 million would represent a benefit to
Medeva and any excess of the $8 million over the fair value of the common stock
would represent a benefit to the Company. This agreement expires on the later of
loss of any orphan drug exclusivity, expiration of related patents or twelve
years.
Nycomed Agreement
In October 1997, the Company entered into an exclusive license, sales and
distribution agreement with Nycomed Pharma AS (Nycomed). Under the agreement,
Nycomed obtained the exclusive distribution rights to a certain product in
certain countries for an initial term of ten years from the first European
regulatory approval, as defined. The agreement provides for future payments by
Nycomed, which are subject to certain restrictions and limitations, aggregating
up to $2 million upon achieving certain milestones. The Company will grant to
Nycomed upon receipt of certain of these milestone payments, options to purchase
up to an aggregate of 66,666 shares of either common or Series D, as determined
in accordance with the agreement, for $15 per share. The Company will also grant
to Nycomed upon the payment of a certain milestone payment, options to purchase
shares of common or Series D, as determined in accordance with the agreement,
with a fair market value, as defined, of $1 million. The Company is responsible
for the remaining development costs and to supply the product to Nycomed at
prices described in the agreement. The agreement may be terminated by either
party in certain circumstances. Concurrent with the license, sales and
distribution agreement, Nycomed purchased 300,000 shares of Series D for
$4,500,000. These shares have the same rights as the previously issued Series D.
F-12
<PAGE> 81
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements -- (Continued)
(6) RELATED PARTY TRANSACTIONS
The Company previously had an agreement with an executive officer of the
Company to provide certain administrative services and maintain an office for a
monthly fee of $4,166 per month. Expenses charged to the Company under this
agreement aggregated $25,000 in 1996, $0 in 1997 and $0 (unaudited) for the nine
month period ended March 31, 1998. This officer also has not received payment
for salary and various expenses on the Company's behalf in the early years of
the Company's existence. Payables to this executive, net of receivables from
this executive of $67,925 at June 30, 1996 and 1997, were $146,729 and $65,062
at June 30, 1996 and 1997, respectively, and $0 (unaudited) at March 31, 1998.
The Company, on a monthly basis, has provided an unrestricted gift for
research support to the University of Tennessee at which a founder and director
of the Company is employed. Expenses charged to the Company for such
unrestricted gift aggregated $121,200 in both fiscal 1996 and 1997 and $90,900
(unaudited) for the nine month period ended March 31, 1998.
The Company has employed a consulting firm, whose owner is a relative of an
executive officer of the Company. Fees to the firm totaled $64,000 (unaudited)
from inception through March 31, 1998.
The Company has agreements with three executive officers to provide for
certain payments to these executives upon a change in control of the Company, as
defined, provided they continue to provide certain services to the Company.
(7) INCOME TAXES
At June 30, 1997, the Company had available net operating loss
carryforwards ("NOL") of approximately $13,473,000 and $13,369,000 for Federal
and state income tax reporting purposes, respectively, which are available to
offset future Federal and state taxable income, if any, through 2012 and 2004,
respectively. The Company also has research and development tax credit
carryforwards of approximately $257,500 and $76,500 for Federal and state income
tax reporting purposes, respectively, which are available to reduce Federal and
state income taxes, if any, through 2012 and 2004, respectively.
The Tax Reform Act of 1986 (the Act) provides for a limitation on the
annual use of NOL and research and development tax credit carryforwards
(following certain ownership changes, as defined by the Act) which could
significantly limit the Company's ability to utilize these carryforwards. The
Company has experienced various ownership changes, as defined by the Act, as a
result of past financings. Accordingly, the Company's ability to utilize the
aforementioned carryforwards may be limited. Additionally, because U.S. tax laws
limit the time during which these carryforwards may be applied against future
taxes, the Company may not be able to take full advantage of these attributes
for Federal income tax purposes.
F-13
<PAGE> 82
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements -- (Continued)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liability at June 30, 1996
and 1997 are presented below:
<TABLE>
<CAPTION>
JUNE 30,
------------------------
1996 1997
---------- ----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.................. $3,792,690 5,382,992
Tax credit carryforward........................... 179,457 334,365
Accrual to cash adjustment........................ -- 572,548
---------- ----------
Total gross deferred tax assets........... 3,972,147 6,289,905
Less valuation allowance.......................... (3,862,973) (6,284,988)
---------- ----------
Total deferred tax assets................. 109,174 4,917
---------- ----------
Deferred tax liability:
Accrual to cash adjustment........................ 105,210 --
Equipment, due to differences in depreciation..... 3,964 4,917
---------- ----------
Total deferred tax liability.............. 109,174 4,917
---------- ----------
Net deferred taxes........................ $ -- --
========== ==========
</TABLE>
The net change in the valuation allowance for the years ended June 30, 1996
and 1997 were increases of $740,319 and $2,422,015, respectively, related
primarily to additional net operating losses incurred by the Company which are
not currently deductible.
(8) COMMITMENTS
The Company has leases for office space in New Jersey and the United
Kingdom, under which the Company incurred rental expense for fiscal 1996, 1997
and the nine month period ended March 31, 1998 of $92,874, $107,314 and $104,909
(unaudited), respectively.
Minimum lease payments under noncancellable leases are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
----------
<S> <C>
1998.................................................... $124,019
1999.................................................... 108,676
--------
$232,695
========
</TABLE>
(9) MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND CONVERTIBLE PREFERRED
STOCK
The Company completed the sale of Series A, Series B, Series C and Series D
in fiscal 1991, 1993, 1994, 1996 and 1997 (see note 5). Aggregate net cash
proceeds from such equity transactions totaled $13,126,402 ($14,161,410
including cash received for promissory notes plus accrued interest converted to
preferred stock).
The holders of Series A, Series B, Series C and Series D vote together with
all other classes and series of stock of the Company as a single class on all
actions to be taken by the stockholders of the Company. Each share of preferred
stock entitles the holder to an equal number of votes as the number of common
shares into which each share of preferred stock is convertible.
F-14
<PAGE> 83
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements -- (Continued)
The holders of Series A, Series B and Series C shall be entitled to
receive, out of funds legally available, when and if declared by the Board of
Directors, quarterly dividends at the rate per annum of $0.12 per share of
Series A, $0.20 per share of Series B and $0.27 per share of Series C. The
dividends accrue daily, whether or not earned or declared, and are cumulative.
Cumulative dividends in arrears at March 31, 1998 were $3,259,793 (unaudited) in
the aggregate for Series A, B and C. Such amounts have been accreted in the
accompanying consolidated financial statements for the respective periods in
which they accumulated. As of March 31, 1998, no such dividends have been
declared (unaudited). Due to the mandatory redemption feature, these securities
are classified at their accreted value outside of stockholders' deficit in the
accompanying consolidated balance sheets.
The holders of Series A, Series B, Series C and Series D are entitled to
liquidation preferences over all other types of capital stock in accordance with
the following amounts (same per share amounts as paid by such preferred
stockholders): $1.50 per share for the Series A, $2.50 per share for the Series
B, $3.40 per share for the Series C and $11.06 per share of the Series D plus in
the case of each share of Series A, Series B and Series C, an amount equal to
all cumulative dividends unpaid (whether or not declared) and any other
dividends declared but not paid. The computation of the dividends will be
computed to the date payment is made available.
The holders of Series A, Series B, Series C and Series D have the right at
any time to convert any share of preferred stock into fully-paid nonassessable
shares of common stock at a redemption price of $1.50, $2.50, $3.40 and $11.06
per share, respectively. If at any time the Company effects a firm commitment
underwritten public offering of shares of common stock in which the aggregate
price paid for such shares by the public is at least $10,000,000 and the price
paid per share is at least $7.50 per share then effective on the closing of the
sale of such shares, all outstanding shares of Series A, Series B, and Series C
automatically convert to shares of common stock. In the case of Series D, if the
above mentioned public offering occurs with a price of at least $11.06 or the
Company's common stock is publicly traded on a national securities exchange and
the average of the closing sale prices for the common stock within any 10
consecutive trading day period is $11.06 or more, then all outstanding shares of
Series D automatically convert to shares of common stock (see note 11).
Commencing January 27, 2000, the Company is required to redeem the
outstanding shares of Series A, Series B and Series C at liquidation prices,
including cumulative dividends, in the percentages per year shown in the
following schedule:
<TABLE>
<S> <C>
2000........................................................ 10%
2001........................................................ 15%
2002........................................................ 25%
2003........................................................ 25%
2004........................................................ 25%
</TABLE>
These mandatory redemptions are subject to waiver by holders of 60% of the
shares of Series A, B and C.
(10) COMMON STOCK AND COMMON STOCK OPTIONS
The following transactions were consummated using prices determined by the
Board of Directors to be the deemed fair value at the date of the respective
transaction:
- In June 1985, the Company issued 153,000 shares of common stock to
executive officers for the price of $0.03 per share.
- In October 1990, the Company issued 562,500 shares of common stock to an
executive officer and consultant for the cash price of approximately $.26
per share.
F-15
<PAGE> 84
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements -- (Continued)
- In July 1994, the Company issued 20,000 shares of common stock to an
executive officer for the price of $.34 per share as part of a stock
subscription and shareholder agreement.
- In January 1995, the Company issued 80,000 shares of common stock to an
executive officer for the price of $.34 per share as part of the
aforementioned subscription and shareholder agreement.
- In December 1995, the Company issued 50,000 shares of common stock to
Advanced Technology Ventures III, LP for the price of $.15 per share upon
exercise of stock warrants granted in December 1990.
In 1990, the Company adopted the 1990 Stock Plan (the 1990 Plan) whereby
incentive and nonqualified stock options may be granted to directors, employees,
and consultants to purchase an aggregate of 374,187 (increased to 1,700,000 in
1997) shares of the Company's common stock (see note 11). The incentive stock
options are to be granted at no less than fair market value at the measurement
date (usually the grant date), as determined by the Board of Directors. The
nonqualified option prices are to be determined by the Board of Directors and
may be less than the fair market value. The options are exercisable generally
for a period of ten years after the date of grant and generally vest over a
five-year period.
The Company applies APB Opinion No. 25 in accounting for the 1990 Plan.
Certain employees of the Company were granted options to acquire 333,000 shares
of common stock at exercise prices ranging from $1.00 to $3.00 per share during
the nine month period ended March 31, 1998. Certain employees of the Company
were granted performance-based options to acquire 192,000 shares of common stock
at exercise prices ranging from $.34 to $1.00 per share during fiscal 1995, 1996
and 1997 and the nine month period ended March 31, 1998 for which the
measurement date occurred during the nine month period ended March 31, 1998 when
the Company amended these option terms to include a fixed vesting schedule (at
the end of five years from the original date of grant) without regard for the
performance criteria. The exercise price of all of these options was equal to
the deemed fair value of the common stock on the date of grant, as determined by
the Board of Directors. However, for financial statement purposes, the
difference between the deemed fair value and the respective exercise prices at
the measurement dates has been recorded as deferred compensation in the amount
of $1,461,730 (unaudited) and is being amortized over the five-year vesting
period. Compensation expense for the aforementioned options aggregated $475,650
(unaudited) for the nine month period ended March 31, 1998.
Had the Company determined compensation cost based on the fair value at the
measurement date for its stock options under SFAS 123, the Company's net loss
would have been increased to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
1996 1997
----------- ----------
<S> <C> <C>
Net loss:
As reported...................................... $(1,889,701) (5,464,711)
Pro forma........................................ (1,891,547) (5,480,739)
</TABLE>
Pro forma net loss reflects only options granted in fiscal 1996 and 1997.
Therefore, the full impact of calculating compensation cost for stock options
under SFAS No. 123 is not reflected in the pro forma net loss amounts presented
above because compensation cost is reflected over the options' vesting period
and compensation expense for options granted prior to June 30, 1995 is not
considered.
F-16
<PAGE> 85
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements -- (Continued)
A summary of activity under the 1990 Plan is as follows:
<TABLE>
<CAPTION>
PRICE
SHARES PER SHARE
--------- ------------
<S> <C> <C>
Balance, June 30, 1994..................................... 465,687 $0.15 -- 0.25
Granted.................................................. 70,500 0.34
Cancelled................................................ (14,000) 0.34
---------
Balance, June 30, 1995..................................... 522,187 0.15 -- 0.34
Granted.................................................. 198,000 0.70
Cancelled................................................ (7,500) 0.25
---------
Balance, June 30, 1996..................................... 712,687 0.15 -- 0.70
Granted.................................................. 75,500 0.70
Cancelled................................................ (54,200) 0.15 -- 0.34
---------
Balance, June 30, 1997..................................... 733,987 0.15 -- 0.70
Granted (unaudited)...................................... 378,000 0.70 -- 8.00
Cancelled (unaudited).................................... (23,000) 0.70
---------
Balance, March 31, 1998 (unaudited)........................ 1,088,987 0.15 -- 8.00
=========
Shares exercisable at March 31, 1998 (unaudited)........... 500,357 $0.15 -- 0.70
=========
</TABLE>
At June 30, 1997, the range of exercise prices, weighted-average exercise
price per share and weighted-average remaining contractual life of outstanding
options were $0.15 -- $0.70, $0.38 and 6 years, respectively.
At June 30, 1997, the number of options exercisable were 454,187 and the
weighted-average exercise price of those options was $0.19.
The per share weighted-average fair value of stock options granted during
1996 and 1997 was $.28 on the date of grant using the Black Scholes
option-pricing model with the following weighted-average assumptions: for both
1996 and 1997 -- expected dividend yield 0%, risk-free interest rate of 6.5%,
and expected life of 8 years.
(11) SUBSEQUENT EVENTS (UNAUDITED)
Initial Public Offering
On February 23, 1998, the Board of Directors authorized the filing of a
registration statement for the offering with the SEC for the sale of shares of
common stock. If the offering is consummated under terms presently anticipated,
all shares of Series A, B, C and D outstanding as of the closing date of the
offering will convert into shares of common stock on a one-for-one basis, and no
dividends will be payable on any of the preferred stock.
1990 Stock Plan Authorized Shares
In December 1997, the Board of Directors authorized an amendment to the
1990 Plan increasing the number of shares issuable under the 1990 Plan to
1,700,000 shares.
F-17
<PAGE> 86
ANTHRA PHARMACEUTICALS, INC.
AND SUBSIDIARY
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements -- (Continued)
Authorized Shares
In May 1998, the Company filed a Certificate of Amendment to its Amended
and Restated Certificate of Incorporation which increased the number of
authorized shares of Common Stock to 15,000,000 and authorized 1,000,000 shares
of undesignated preferred stock.
Development Agreement
In December 1997, the Company signed a term sheet with affiliates of
Schering to acquire the exclusive United States development and marketing rights
to a certain product for certain indications. Upon signing of the letter of
intent, the Company paid a nonrefundable amount of $250,000 to Schering in
consideration for a period of exclusivity in which to negotiate a final
agreement. This amount was charged to operations in the nine month period ended
March 31, 1998. If a final agreement is consummated as contemplated in the term
sheet, the Company would make additional payments aggregating up to $3,500,000
upon the achievement of certain future milestones. Schering would have the
option to acquire from the Company the exclusive right to market the product in
the United States for certain indications for payments aggregating up to
$21,000,000, plus royalties.
Automatic Conversion
In February 1998, the Company received conversion notices from all of the
Series D stockholders directing the Company to convert their Series D shares
into common stock provided the Offering is consummated by August 31, 1998,
regardless of the Offering price or the proceeds raised.
F-18
<PAGE> 87
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO
WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO
ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 20
Dividend Policy....................... 20
Capitalization........................ 21
Dilution.............................. 22
Selected Financial Data............... 23
Management's Discussion and
Analysis of Financial Condition and
Results of Operations............... 24
Business.............................. 28
Management............................ 52
Principal Stockholders................ 60
Certain Relationships and
Related Transactions................ 62
Description of Capital Stock.......... 63
Shares Eligible for Future Sale....... 65
Underwriting.......................... 66
Legal Matters......................... 67
Experts............................... 67
Additional Information................ 67
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
UNTIL , 1998 (25 CALENDAR DAYS AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATIONS OF THE DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
======================================================
2,700,000 SHARES
[ANTHRA PHARMACEUTICALS, INC. LOGO]
COMMON STOCK
--------------------
PROSPECTUS
--------------------
ALLEN & COMPANY
INCORPORATED
GRUNTAL & CO., L.L.C.
, 1998
======================================================
<PAGE> 88
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Other expenses in connection with the issuance and distribution of the
securities to be registered hereunder, all of which will be paid by the
Registrant, will be substantially as follows:
<TABLE>
<CAPTION>
ITEM AMOUNT
- ---- ----------
<S> <C>
Commission Registration Fee................................. $10,533.71
Nasdaq National Market Initial Listing Fee.................. $ 5,000.00
*Nasdaq National Market Entry Fee........................... $64,375.00
*Nasdaq National Market Pro-rated Annual Fee................ $ 7,268.33
NASD Filing Fee............................................. $ 4,071.00
*Blue Sky Fees and Expenses (including legal fees).......... $ +
*Accounting Fees and Expenses............................... $ +
*Legal Fees and Expenses.................................... $ +
*Consulting Fees............................................ $ +
*Printing and Engraving..................................... $ +
*Registrar and Transfer Agent's Fees........................ $ +
*Underwriters' Expenses..................................... $ +
*Miscellaneous Expenses..................................... $ +
----------
Total............................................. $ +
==========
</TABLE>
- ---------------
* Estimated
+ To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Amended Certificate of Incorporation provides that a Director of the
Company shall not be personally liable to the Company or its stockholders for
monetary damages for breach of the fiduciary duty as a director, except for
liability, to the extent imposed by applicable law, for: (i) any breach of the
Director's duty of loyalty to the Company or its stockholders; (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) liability for payments of dividends or stock purchases
or redemptions in violation of Section 174 of the DGCL; or (iv) any transaction
from which the Director derived an improper personal benefit. In addition, the
Amended Certificate of Incorporation provides that the Company shall, to the
fullest extent permitted by Section 145 of the DGCL, as the same exists or may
hereafter be amended and supplemented, indemnify any and all persons who it
shall have the power to indemnify under such law from and against any and all of
the expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for therein is not exclusive of any
other rights to which those indemnified may be entitled under any Bylaw,
agreement, vote of stockholders or disinterested Directors, or otherwise, both
as to action in his official capacity and as to action in another capacity while
holding such office, and continues as to a person who has ceased to be a
Director, officer, employee, or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
The right to indemnification set forth above includes the right to be paid
by the Company the expenses (including attorneys' fees) incurred in defending
any such proceeding in advance of its final disposition; provided, however,
that, to the extent required by the DGCL, an advancement of expenses incurred by
an indemnitee shall be made only upon delivery to the Company of an undertaking,
by or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is not
further right to appeal that such indemnitee is not entitled to be indemnified
for such expenses under the relevant provisions of the DGCL or otherwise. The
rights to indemnification and to the advancement of expenses conferred are
contract rights and continue as to an indemnitee who has ceased to be
II-1
<PAGE> 89
a Director, officer, employee or agent and inures to the benefit of the
indemnitee's heirs, executors and administrators.
Section 145 of the DGCL provides that indemnification is permissible only
when the Director, officer, employee, or agent acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the conduct was unlawful. Section
145 of the DGCL also precludes indemnification in respect of any claim, issue,
or matter as to which an officer, Director, employee, or agent shall have been
adjudged to be liable to the Company unless and only to the extent that the
Delaware Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite such adjudication of liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper.
The Company has agreed to indemnify the Underwriters and their controlling
persons, and the Underwriters have agreed to indemnify the Company and its
controlling persons, against certain liabilities, including liabilities under
the Securities Act. Reference is made to the Underwriting Agreement filed as
part of the Exhibits hereto.
For information regarding the Company's undertaking to submit to
adjudication the issue of indemnification for violation of the securities laws,
see Item 17 hereof.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On September 20, 1995, the Company issued 271,276 shares of its Series D
Convertible Preferred Stock to Schering Berlin Venture Corporation at an
aggregate price of approximately $3.0 million pursuant to a Series D Convertible
Preferred Stock Purchase Agreement between such parties. The sale of stock to
Schering Berlin Venture Corporation was an integral part of, and condition
precedent to, the Development Agreement. In July 1996, the Company and Schering
AG, Germany converted the Development Agreement to the Support Agreement for
which Schering AG, Germany paid $3.5 million in consideration for its release
from the Development Agreement and 200,000 shares of the Company's Series D
Convertible Preferred Stock, which shares Schering AG, Germany subsequently
converted to Common Stock.
On April 17, 1997, the Company issued 67,819 shares of its Series D
Convertible Preferred Stock to Almirall at an aggregate price of approximately
$750,000 in connection with the Almirall Agreement.
On July 15, 1997, the Company entered into the Medeva Agreement. Under the
Medeva Agreement, in the event that the Company has not obtained certain NDA
approvals for Valstar by December 31, 2002, Medeva has the right to require the
Company to issue to it such number of shares of Common Stock equal to 20% of the
outstanding voting equity securities of the Company at the time of its exercise
of such right. As of the date hereof, no equity securities of the Company have
been issued to Medeva pursuant to the Medeva Agreement.
On October 14, 1997, the Company issued 300,000 shares of its Series D
Convertible Preferred Stock to Nycomed at an aggregate price of $4.5 million in
connection with the Nycomed Agreement.
Exemption from registration for each transaction described above was
claimed pursuant to Section 4(2) of the Securities Act regarding transactions by
an issuer not involving any public offering.
II-2
<PAGE> 90
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE.
EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
1 Form of Underwriting Agreement by and between the
Representatives and the Company.[ ]
3.1 Amended and Restated Certificate of Incorporation of the
Company, as amended.#
3.2 Bylaws of the Company.#
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Common Stock Certificate.[ ]
4.3 Fifth Amended and Restated Registration Rights Agreement,
dated October 14, 1997, by and among the Company, Advanced
Technology Ventures III, L.P., Sevin Rosen Fund III, L.P.,
Allstate Insurance Company, Allstate Life Insurance Company,
Aperture Associates, L.P., Schering Berlin Venture
Corporation, Prodesfarma, S.A. and Nycomed Pharma AS.#
5 Form of Opinion of Morrison & Foerster LLP. #
10.1 Agreement, dated November 6, 1990, by and between the
Company and Dana-Farber Cancer Institute.*[ ]
10.2 Letter agreement, dated December 5, 1990, by and between the
Company and Michael C. Walker.#
10.3 Letter agreement, dated December 5, 1990, by and between the
Company and Mervyn Israel.#
10.4 Exclusive Supply Agreement, dated June 1, 1991, by and
between the Company and Omnichem S.A.*[ ]
10.5 Termination, Settlement and Investment Agreement, dated July
16, 1996, by and between the Company and Schering AG,
Germany (f/k/a Schering AG).*[ ]
10.6 Agreement, dated September 1996, between the Company and
Allen L. Thunberg.#
10.7 Agreement, dated September 1996, between the Company and
Michael C. Walker.#
10.8 Agreement, dated November 27, 1996, between the Company and
Dr. Joseph V. Gulfo.#
10.9 Exclusive License Agreement, dated April 17, 1997, by and
between the Company and Prodesfarma, S.A. (a/k/a Almirall
Prodesfarma, S.A.).*[ ]
10.10 Sublease, dated July 2, 1997, by and between the Company and
the Presbyterian Homes of New Jersey Foundation, Inc.#
10.11 Development Agreement, dated July 15, 1997, by and between
the Company and Medeva California Inc.*[ ]
10.12 Supply Agreement, dated September 11, 1997, by and between
the Company and Genchem Pharma Ltd.*[ ]
10.13 1990 Stock Plan, as amended.#
10.14 Exclusive License, Sale and Distribution Agreement, dated
October 14, 1997, by and between the Company and Nycomed
Pharma AS.*[ ]
10.15 Term Sheet, dated December 12, 1997, by and among Berlex
Laboratories, Inc., the Company and Leiras Oy.*[ ]
10.16 Underlease of Suite B Second Floor Premises known as The
Malt House, Malt House Square, Princes Risborough,
Buckinghamshire, dated December 27, 1997, by and between the
Company and Allen-Martin Conservation Limited.#
</TABLE>
II-3
<PAGE> 91
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
21 Subsidiary.#
23.1 Consent of KPMG Peat Marwick LLP. [ ]
23.2 Consent of MedProbe, Inc. [ ]
24 Powers of Attorney (set forth on signature page to the
Registration Statement or included in Exhibit 24 to
Amendment No. 1 to the Registration Statement).#
27.1 Summary Financial Data Schedule.#
</TABLE>
- ---------------
+ To be filed by amendment.
* Confidential treatment has been requested with respect to certain portions of
this Exhibit. Omitted portions will be filed separately with the Commission.
# Previously filed.
[ ] Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denomination and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered in the Offering, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
the Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act, shall be deemed to be part of the
Registration Statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 92
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment to Registration Statement on Form S-1 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on May 21, 1998.
ANTHRA PHARMACEUTICALS, INC.
By: /s/ MICHAEL C. WALKER
------------------------------------
Michael C. Walker
President and Chief Executive
Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act, this Amendment to
Registration Statement on Form S-1 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME AND SIGNATURE TITLE DATE
------------------ ----- ----
<C> <S> <C>
/s/ MERVYN ISRAEL* Chairman of the Board and Secretary May 21, 1998
- ------------------------------------------
Mervyn Israel
/s/ MICHAEL C. WALKER Director, Chief Executive Officer and May 21, 1998
- ------------------------------------------ President (Principal Executive Officer)
Michael C. Walker
/s/ JOSEPH V. GULFO* Chief Operating Officer, Executive Vice May 21, 1998
- ------------------------------------------ President and Director
Joseph V. Gulfo
/s/ KAREN KRUMEICH* Chief Financial Officer and Vice May 21, 1998
- ------------------------------------------ President -- Finance (Principal
Karen Krumeich Financial and Accounting Officer)
/s/ PIETER J. SCHILLER* Director May 21, 1998
- ------------------------------------------
Pieter J. Schiller
/s/ PAUL G. GOODING* Director May 21, 1998
- ------------------------------------------
Paul G. Gooding
/s/ WILLIAM ENGBERS* Director May 21, 1998
- ------------------------------------------
William Engbers
</TABLE>
II-5
<PAGE> 93
<TABLE>
<CAPTION>
NAME AND SIGNATURE TITLE DATE
------------------ ----- ----
<C> <S> <C>
/s/ STEPHEN M. DOW* Director May 21, 1998
- ------------------------------------------
Stephen M. Dow
*By: /s/ MICHAEL C. WALKER
- ------------------------------------------
Michael C. Walker
Attorney-in-Fact
</TABLE>
II-6
<PAGE> 94
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ---------------------- ------------
<C> <S> <C>
1 Form of Underwriting Agreement by and between the
Representatives and the Company.[ ]
3.1 Amended and Restated Certificate of Incorporation of the
Company, as amended.#
3.2 Bylaws of the Company.#
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Common Stock Certificate.[ ]
4.3 Fifth Amended and Restated Registration Rights Agreement,
dated October 14, 1997, by and among the Company, Advanced
Technology Ventures III, L.P., Sevin Rosen Fund III, L.P.,
Allstate Insurance Company, Allstate Life Insurance Company,
Aperture Associates, L.P., Schering Berlin Venture
Corporation, Prodesfarma, S.A. and Nycomed Pharma AS.#
5 Form of Opinion of Morrison & Foerster LLP. #
10.1 Agreement, dated November 6, 1990, by and between the
Company and Dana-Farber Cancer Institute.*[ ]
10.2 Letter agreement, dated December 5, 1990, by and between the
Company and Michael C. Walker.#
10.3 Letter agreement, dated December 5, 1990, by and between the
Company and Mervyn Israel.#
10.4 Exclusive Supply Agreement, dated June 1, 1991, by and
between the Company and Omnichem S.A.*[ ]
10.5 Termination, Settlement and Investment Agreement, dated July
16, 1996, by and between the Company and Schering AG,
Germany (f/k/a Schering AG).*[ ]
10.6 Agreement, dated September 1996, between the Company and
Allen L. Thunberg.#
10.7 Agreement, dated September 1996, between the Company and
Michael C. Walker.#
10.8 Agreement, dated November 27, 1996, between the Company and
Dr. Joseph V. Gulfo.#
10.9 Exclusive License Agreement, dated April 17, 1997, by and
between the Company and Prodesfarma, S.A. (a/k/a Almirall
Prodesfarma, S.A.).*[ ]
10.10 Sublease, dated July 2, 1997, by and between the Company and
the Presbyterian Homes of New Jersey Foundation, Inc.#
10.11 Development Agreement, dated July 15, 1997, by and between
the Company and Medeva California Inc.*[ ]
10.12 Supply Agreement, dated September 11, 1997, by and between
the Company and Genchem Pharma Ltd.*[ ]
10.13 1990 Stock Plan, as amended.#
10.14 Exclusive License, Sale and Distribution Agreement, dated
October 14, 1997, by and between the Company and Nycomed
Pharma AS.*[ ]
10.15 Term Sheet, dated December 12, 1997, by and among Berlex
Laboratories, Inc., the Company and Leiras Oy.*[ ]
10.16 Underlease of Suite B Second Floor Premises known as The
Malt House, Malt House Square, Princes Risborough,
Buckinghamshire, dated December 27, 1997, by and between the
Company and Allen-Martin Conservation Limited.#
</TABLE>
<PAGE> 95
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ---------------------- ------------
<C> <S> <C>
21 Subsidiary.#
23.1 Consent of KPMG Peat Marwick LLP. [ ]
23.2 Consent of MedProbe, Inc. [ ]
24 Powers of Attorney (set forth on signature page to the
Registration Statement or included in Exhibit 24 to
Amendment No. 1 to the Registration Statement).#
27.1 Summary Financial Data Schedule.#
</TABLE>
- ---------------
+ To be filed by amendment.
* Confidential treatment has been requested with respect to certain portions of
this Exhibit. Omitted portions will be filed separately with the Commission.
# Previously filed.
[ ] Filed herewith.
<PAGE> 1
Exhibit 1
================================================================================
2,700,000 SHARES
ANTHRA PHARMACEUTICALS, INC.
COMMON STOCK
____________________________
UNDERWRITING AGREEMENT
SELECTED DEALER AGREEMENT
____________________________
____________, 1998
================================================================================
<PAGE> 2
2,700,000 SHARES
ANTHRA PHARMACEUTICALS, INC.
COMMON STOCK
____________________________
UNDERWRITING AGREEMENT
____________________________
___________, 1998
ALLEN & COMPANY INCORPORATED
GRUNTAL & CO., L.L.C.
As Representatives of the Several
Underwriters
c/o Allen & Company Incorporated
711 Fifth Avenue
New York, New York 10022
Dear Sirs:
Anthra Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), hereby confirms its agreement with the several Underwriters named in
schedule A hereto (the "Underwriters"), for which you are acting as
representatives (the "Representatives"), as follows:
1. DESCRIPTION OF SECURITIES. The Company has authorized by appropriate
corporate action and proposes to issue and sell to the Underwriters its shares
of Common Stock, $.01 par value. As further described in Section 3 hereof,
2,700,000 of such shares (the "Purchased Shares") are being sold by the Company
to the Underwriters and the Company is granting to the Underwriters an option to
purchase up to 405,000 additional shares (the "Option Shares"). The Purchased
Shares and Option Shares are herein collectively referred to as the "Shares".
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The Company
represents and warrants to and agrees with each Underwriter that:
(a) A registration statement on Form S-1 (File No. 333-47725) with
respect to the Shares, including a preliminary
<PAGE> 3
form of prospectus, copies of which have heretofore been delivered to you, has
been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Act, and has been filed with the Commission under the
Act; such amendment or amendments to such registration statement, copies of
which have heretofore been delivered to you, as may have been made prior to the
date of this Agreement have been so prepared and filed; and the Company has so
prepared and proposes so to file in a timely manner after the effective date of
such registration statement the final form of prospectus. Such registration
statement (including all exhibits thereto), as finally amended and revised as of
the time the Underwriters first offer the Shares for sale to the public together
with information, if any, which is permitted to be, and is, subsequently filed
pursuant to Rule 430A of the Rules and Regulations, is herein referred to as the
"Registration Statement". Such prospectus in the form filed pursuant to Rule
424(b) of the Rules and Regulations, or, if no final prospectus is filed with
the Commission pursuant to Rule 424(b), in such form as such final prospectus is
included in the Registration Statement, is herein referred to as the
"Prospectus". Each preliminary form of prospectus is herein referred to as a
"Preliminary Prospectus".
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus. At the time of filing of each Preliminary
Prospectus, such prospectus did not include any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. When the Registration Statement was or is declared effective and at
all times subsequent thereto up to and at each Closing Date (hereinafter
defined) (i) the Registration Statement contained or will contain as of its date
all material statements and information which are required to be included
therein in accordance with the Act and Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, and (ii) the Registration Statement did not or will not include as
of its date any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading. When the
Prospectus or any amendment or supplement thereto is filed with the Commission
pursuant to Rule 424(b) (or, if the Prospectus or such amendment or supplement
is not required to be so filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the Prospectus was or is
declared effective), on the date when the Prospectus is otherwise amended or
supplemented and on each Closing Date (as hereinafter defined), the Prospectus,
as amended or supplemented at any such time, (i) contained or will contain all
statements required to be
3
<PAGE> 4
stated therein in accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the Rules and Regulations and
(ii) did not or will not include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
foregoing representations and warranties shall not apply to information
contained in or omitted from the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon, and in conformity with, written
information furnished to the Company by any Underwriter through you specifically
for use in the preparation thereof.
(c) Set forth on Schedule B hereto is the name of each subsidiary of
the Company which holds assets or conducts operations which are material to the
condition (financial or otherwise), results of operations, business or prospects
of the Company and its subsidiaries taken as a whole, and, unless otherwise
indicated thereon, the Company holds all right, title and interest in and to the
entire equity interest in each such subsidiary. Except as described in the
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, neither the Company, nor any
entity which is either identified in the Prospectus as a subsidiary of the
Company or listed on Schedule B hereto (each individually a "Subsidiary" and
collectively the "Subsidiaries"), taken as a whole, has incurred any direct or,
to the best of the Company's knowledge, contingent material liabilities or
material obligations, or entered into any material transactions or contracts not
in the ordinary course of business, and there has not been any change in its
capital shares, options or warrants, nor any material increase or decrease in
the amount thereof outstanding or in any of its long-term debt outstanding,
except pursuant to the terms of the instruments governing the same, or any
material adverse change in the condition (financial or otherwise), results of
operations, business or prospects of the Company and the Subsidiaries taken as a
whole.
(d) Except as set forth in the Prospectus, there is not now pending
or, to the knowledge of the Company, threatened, any action, suit or proceeding
to which the Company or any Subsidiary is a party before any court or
governmental agency or body which could reasonably be expected to result in any
material adverse change in the condition (financial or otherwise), results of
operations, business or prospects of the Company and the Subsidiaries taken as a
whole, or could reasonably be expected to materially and adversely affect the
properties, assets or ability to do business as contemplated in the Prospectus
of the Company and the Subsidiaries taken as a whole; and there are no contracts
or documents required to be filed as exhibits to the Registration Statement by
the Act or by the Rules and Regulations which have not been filed as exhibits to
the Registration Statement.
4
<PAGE> 5
(e) This Agreement has been duly authorized, executed and delivered
on behalf of the Company and constitutes a valid and binding agreement of the
Company, enforceable in accordance with its terms, except (1) that such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
and (2) as rights to indemnity or contribution hereunder may be limited by
federal or state securities laws; the execution, delivery and performance of
this Agreement and the consummation of the transactions herein contemplated will
not result in a breach or violation of any term or provision of, or constitute a
default under, (i) any currently existing statute, any indenture, mortgage, deed
of trust, note agreement or other agreement or instrument filed as an exhibit to
the Registration Statement or any other material indenture, mortgage, deed of
trust, note or agreement or other agreement or instrument to which the Company
or any Subsidiary is a party or by which it or its property is bound; (ii) the
charter or by-laws of the Company or any Subsidiary; or (iii) any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or over their properties; no consent, approval, authorization or
order of any court or governmental agency or body is required for the
consummation by the Company of the transactions on its part herein contemplated,
except such as have been obtained or such as may be required under the Act or as
may be required under state or other securities or blue sky laws in connection
with the purchase and distribution of the Shares by the Underwriters; and
neither the Company nor any of the Subsidiaries is now in default, and no event
has occurred which with the giving of notice or lapse of time or both would be a
default, under any contract, agreement, indenture, mortgage or other undertaking
to which such entity is a party and which is material to the condition
(financial or otherwise), results of operations, business or prospects of the
Company and the Subsidiaries taken as a whole.
(f) Each of the Company and the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, with full power and authority,
corporate or otherwise, to own its properties and conduct its business as
described and contemplated in the Registration Statement, and is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions where its operations or ownership of property requires such
qualifications and where failure so to qualify would impair title to any
material properties of the Company or its rights to enforce contracts against
others or expose it to liabilities material to the Company and the Subsidiaries
taken as a whole in such jurisdictions.
5
<PAGE> 6
(g) The Company has the authorized and outstanding capital stock set
forth in the Prospectus; the outstanding capital stock of the Company conforms,
and the Shares when issued and sold as herein contemplated will conform, in all
material respects, to all statements in relation thereto contained in the
Registration Statement and the Prospectus and all such stock has been duly
authorized and the outstanding capital stock has been and the Shares, when
issued and delivered against payment therefor as provided herein, will be
validly issued, fully-paid and nonassessable; except as stated in the
Prospectus, the stockholders of the Company have no preemptive rights with
respect to the Shares and there are no outstanding rights, options or warrants
to acquire any securities of the Company; to the extent that any rights, options
or warrants to acquire any securities of the Company are outstanding, except as
otherwise set forth in the Prospectus, the issuance of the Shares as described
in the Prospectus will not result in an adjustment of the exercise price or
number of shares issuable upon the exercise in respect of any such rights,
options or warrants; and, except as otherwise set forth in the Prospectus, the
Company owns (directly or indirectly) under valid title the respective
outstanding shares of capital stock of the Subsidiaries, free and clear of any
material liens, encumbrances or claims.
(h) Except as otherwise set forth in the Prospectus, each of the
Company and the Subsidiaries owns or possesses, or can acquire on reasonable
terms, adequate patents, patent licenses, trademarks, service marks and trade
names necessary to carry on its business as presently conducted, and except as
set forth in the Prospectus, neither the Company nor any of the Subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any patents, patent licenses, trademarks, service marks
or trade names which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could materially and adversely affect
the condition (financial or otherwise), earnings, affairs, business or prospects
of the Company and the Subsidiaries taken as a whole.
(i) Except as set forth in the Prospectus, the Company and its
Subsidiaries hold in good standing or have applied for all material licenses,
permits, authorizations, franchises, consents and orders of all federal, state,
local, and foreign governmental bodies necessary to carry on their respective
businesses as reflected or contemplated in the Prospectus; except as stated in
the Prospectus the Company has good and marketable title in fee simple to all
real property and good and marketable title to all personal property owned by
it, in each case free and clear of all liens, encumbrances and defects, other
than for, in each case, such exceptions as are not material to the Company and
the Subsidiaries taken as a whole; and the real property and personal property
referred to in the Prospectus as held under
6
<PAGE> 7
lease by the Company is held by it under valid, subsisting and enforceable
leases with only such exceptions as in the aggregate are not material and do not
materially interfere with the conduct of the business of the Company and the
Subsidiaries taken as a whole as contemplated by the Prospectus.
(j) The Company is conducting and proposes to conduct its business
so as to comply in all material respects with all applicable federal, state,
local and foreign governmental statutes, rules and regulations; and except as
set forth in the Prospectus, neither the Company nor any Subsidiary is charged
with, or, is under investigation with respect to, any violation of any of such
statutes, rules or regulations or is the subject of any pending or threatened
proceeding by a governmental body or regulatory authority relating to any such
violation, except for such violations which, individually or in the aggregate,
would not materially and adversely affect the business or financial condition of
the Company and the Subsidiaries taken as a whole.
(k) The Company and each of the Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are customary in the business in which they are engaged; and neither
the Company nor any of the Subsidiaries has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not materially and adversely
affect the business or financial condition of the Company and the Subsidiaries
taken as a whole, except as described or contemplated in the Prospectus.
(l) KPMG Peat Marwick LLP, which has examined and expressed its
opinion on certain of the financial statements of the Company filed with the
Commission as a part of the Registration Statement, are, to the Company's best
knowledge, independent accountants with respect to the Company within the
meaning of the Act and the Rules and Regulations; the financial statements,
together with the related notes, forming part of the Registration Statement and
Prospectus fairly present the financial condition of the Company and its results
of operations as of the dates and for the periods described in such opinion in
the Prospectus; and such financial statements have been prepared in accordance
with the requirements of the Commission.
(m) The Company and each of the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
transactions are executed in accordance with management's general or specific
authorizations and are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles.
7
<PAGE> 8
(n) Except as stated in the Prospectus, the Company knows of no
outstanding claims for services, either in the nature of a finder's fee or
origination fee, with respect to the transactions contemplated hereby, and the
Company agrees to indemnify and hold the Underwriters harmless from any such
claim for any such services of such nature arising from the act of any person
other than any Underwriter.
(o) No person holds a right to require or participate in the
registration under the Act of the Common Stock of the Company to be effected by
the Registration Statement, which right has not been effectively waived by the
holder thereof as of the date hereof.
(p) The Company has obtained from each of its officers and
directors, and from each of its shareholders owning in excess of 1.0% of the
shares of the Company's Common Stock outstanding immediately prior to the
consummation of the offering contemplated hereby, and will use its best efforts
to seek from each of its other shareholders (provided that a failure to obtain
agreements from such other shareholders will not be deemed a breach of this
representation), an executed agreement in form and substance satisfactory to the
Representatives that each such party will not, without the prior written consent
of the Representatives on behalf of the Underwriters, sell, offer for sale,
contract to sell or otherwise dispose of any shares of the Company's Common
Stock or any securities exercisable for or convertible into its Common Stock or
any rights to acquire Common Stock for a period of 180 days from the date of the
final Prospectus.
3. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to each
Underwriter and each Underwriter agrees, severally and not jointly, to purchase
from the Company, at a purchase price of $______ per Share, the number of Shares
set forth opposite the name of such Underwriter in Schedule A hereto.
The Company will deliver the Purchased Shares to you for the
accounts of the several Underwriters at the office of Allen & Company
Incorporated, 711 Fifth Avenue, New York, New York, against payment of the
purchase price therefor by certified or official bank check or checks in New
York Clearing House funds, payable to the order of Anthra Pharmaceuticals, Inc.,
at 10:00 A.M., New York Time, on ____________, 1998 or at such other time and
date not later than five full business days thereafter as you and the Company
may mutually determine, such time and date of delivery and payment being herein
called the "First Closing Date". The certificates for the Purchased Shares to be
so delivered will be made available to you at such office for
8
<PAGE> 9
checking at least one full business day prior to such Closing Date and will be
in such names and denominations as you may request in writing not less than two
full business days prior to such Closing Date.
On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company grants to the Underwriters an option to purchase up to 405,000 Option
Shares at the same price per share as the Underwriters shall pay for the
Purchased Shares. Such option may be exercised only to cover over-allotments
arising in connection with the sale of Purchased Shares by the Underwriters,
such exercise to be upon written notice by you to the Company within 30 days of
the date hereof setting forth the number of Options Shares as to which the
Underwriters are exercising the option, the denominations and names in which
certificates for such Shares should be registered and the time and place at
which such certificates are to be delivered. Such time and place (unless such
time is the First Closing Date), herein referred to as the "Second Closing
Date", shall be determined by you but shall not be earlier than the First
Closing Date, nor earlier than three full business days or later than ten full
business days after the exercise of such option. The Company will deliver Option
Shares to you for the accounts of the several Underwriters against payment of
the purchase price therefor by certified or official bank check or checks in New
York Clearing House funds payable to the order of Anthra Pharmaceuticals, Inc.
The number of Option Shares to be purchased by each Underwriter shall be in the
same proportion to the aggregate number of Option Shares purchased as the number
of Purchased Shares set forth opposite the name of such Underwriter in Schedule
A hereto bears to 2,700,000.
It is understood that you, individually and not as the
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment on behalf of any Underwriter or Underwriters for Shares to be
purchased by such Underwriter or Underwriters. Any such payment by you shall not
relieve any such Underwriter or Underwriters of any of its or their obligations
hereunder.
After the Registration Statement becomes effective, the several
Underwriters propose to offer the Shares to the public as set forth in the
Prospectus.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement and any subsequent amendment thereto to become effective as promptly
as possible; it will notify you, promptly after it shall receive notice thereof,
of the time when
9
<PAGE> 10
the Registration Statement or any subsequent amendment to the Registration
Statement has become effective or any supplement to the Prospectus has been
filed; it will notify you promptly of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus or for
additional information; it will prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration Statement
or Prospectus which, in your reasonable opinion, may be necessary or advisable
in connection with the distribution of the Shares by the Underwriters; it will
promptly prepare and file with the Commission, and promptly notify you of the
filing of, any amendments or supplements to the Registration Statement or
Prospectus which may be necessary to correct any statements or omissions, if, at
any time when a prospectus relating to the Shares is required to be delivered
under the Act, any event shall have occurred as a result of which the Prospectus
or any other prospectus relating to the Shares as then in effect would include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading; in case any Underwriter
is required to deliver a prospectus after the nine-month period referred to in
Section 10(a)(3) of the Act in connection with sales of the Shares purchased by
the Underwriters from the Company pursuant to Section 3 or otherwise acquired by
the Underwriters during the distribution of the Shares in connection with
stabilization or otherwise, the Company will prepare and file with the
Commission promptly upon request of, but at the expense of, such Underwriter,
any amendments or supplements to the Registration Statement or Prospectus as may
be necessary, in such Underwriter's reasonable opinion, to permit the sale of
such Shares in the manner determined by such Underwriter, in compliance with the
requirements of the Act, including Section 10(a)(3) thereunder; and it will file
no amendment or supplement to the Registration Statement or Prospectus that
shall not previously have been submitted to you in writing a reasonable time
prior to the proposed filing thereof or to which you shall reasonably object in
writing.
(b) The Company will advise you, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of any
order suspending trading in the Shares or other of the Company's securities or
of the initiation or threat of any proceeding for that purpose; and it will use
promptly its best efforts to prevent the issuance of any stop order or to obtain
its withdrawal if such a stop order should be issued.
(c) The Company will use its best efforts to qualify the Shares for
sale under the blue sky or securities laws of such jurisdictions as you may
reasonably designate and to continue such qualifications in effect for so long
as may be required for
10
<PAGE> 11
purposes of the distribution of the Shares, except that the Company shall not be
required in connection therewith or as a condition thereof to qualify as a
foreign corporation or to execute a general consent to service of process in any
state.
(d) The Company will furnish to you, as soon as available, copies of
the Registration Statement (two of which will be signed and will include all
exhibits), each Preliminary Prospectus, the Prospectus, and any amendments or
supplements to such documents, including any prospectus prepared to permit
compliance with Section 10(a)(3) of the Act, all in such quantities as you may
from time to time reasonably request.
(e) The Company will make generally available to its security
holders as soon as practicable, an earnings statement (which will be in
reasonable detail but need not be audited) covering a 12-month period beginning
after the effective date of the Registration Statement which shall satisfy the
provisions of Section 11(a) of the Act.
(f) The Company agrees, during each fiscal year for a period of five
years from the date hereof, to furnish to its stockholders as promptly as may be
practicable an annual report (including financial statements audited by
independent public accountants) and to publish quarterly financial statements
(which need not be audited) for each of the first three quarters of each fiscal
year, and to furnish, upon request, to each Underwriter hereunder (i) as soon as
practicable after the end of each of the first three quarters of each fiscal
year, the Company's quarterly report on Form 10-Q or statements of operations
and surplus of the Company for such quarter in reasonable detail and certified
by the Company's principal financial or accounting officer; (ii) as soon as
practicable after the end of each fiscal year, financial statements of the
Company as at the end of such fiscal year, including statements of operations,
retained earnings and changes in financial position of the Company for such
fiscal year, all in reasonable detail and accompanied by a copy of the report
thereon of independent public accountants or the Company's annual report on Form
10-K; and (iii) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission. During such
period, if and so long as the Company shall have active subsidiaries, the
foregoing financial statements shall be on a combined or consolidated basis to
the extent that the accounts of the Company and its subsidiaries are combined or
consolidated.
(g) The Company covenants and agrees with the several Underwriters
that the Company will pay or cause to be paid the
following: (i) the fees, disbursements, and expenses of the Company's counsel
and accountants in connection with the registration of the Shares under the Act;
(ii) all other expenses in connection with the preparation, printing, and filing
of the
11
<PAGE> 12
Registration Statement, each Preliminary Prospectus, and the Prospectus
and amendments and supplements thereto, and the mailing and delivering of copies
thereof to the Underwriters and dealers; (iii) the cost of printing this
Agreement, the Selected Dealer Agreement, the Blue Sky Memorandum, and any other
documents in connection with the offering, purchase, sale and delivery of the
Shares; (iv) all costs and expenses in connection with the issuance and delivery
of the Shares hereunder to the Underwriters, including related transfer taxes,
if any; (v) all expenses in connection with the qualification of the Shares for
offering and sale under the securities laws of various jurisdictions, including
the fees and disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky Survey; (vi) the filing
fees incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Shares; (vii) the costs
of preparing stock certificates; (viii) the cost and charges of any transfer
agent or registrar; and (ix) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section 4. In addition to the foregoing, the Company shall
reimburse the Underwriters, upon request from time to time, for their reasonable
itemized out-of-pocket expenses up to a maximum of $150,000, including their
legal fees and disbursements and travel, roadshow and syndicate expenses, upon
the presentation of reasonable documentation thereof. If the Company determines
not to proceed with the offering for any reason, other than the Underwriters'
unwillingness to proceed on the terms and conditions set forth in this
Agreement, or if the Representatives exercise their right to terminate this
Agreement pursuant to Section 10(b)(i) hereof, the Company shall reimburse the
Underwriters for all reasonable out-of-pocket expenses including legal fees and
disbursements and travel, roadshow and syndicate expenses actually incurred by
the Underwriters up to a maximum of $150,000. The Company shall not in any event
be liable to any of the Underwriters for the loss of anticipated profits from
the transactions covered by this Agreement.
(h) The Company agrees that it will not, without the prior written
consent of the Representatives on behalf of the Underwriters, sell, offer for
sale, contract to sell or otherwise dispose of any shares of its Common Stock or
any securities exercisable for or convertible into shares of its Common Stock or
any rights to acquire Common Stock, for a period of 180 days after the date of
the final Prospectus.
(i) The Company understands that no action has been or will be taken
in any jurisdiction (except in the United States) that would permit a public
offering of the Shares or the possession, circulation or distribution of the
Prospectus or any amendment or supplement thereto or any other material
relating to the Company or the Shares in any jurisdiction where action for that
purpose is required. Accordingly, the Company agrees that it will not offer or
sell, directly or indirectly, the Shares, nor will it distribute or publish the
Prospectus or any amendment or supplement thereto nor any other offering
material or advertisements in connection with the Shares, in or from any country
or jurisdiction except in compliance with any applicable rules and regulations
of any such country or jurisdiction.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the several
Underwriters to purchase and pay for the Purchased Shares on the First Closing
Date and the Option Shares on the Second Closing Date, as provided herein shall
be subject to the accuracy, as of the date hereof and such Closing Date (as if
made on and as of such Closing Date), of the
12
<PAGE> 13
representations and warranties of the Company herein, to the performance by the
Company of its obligations hereunder, and to the following additional
conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., New York City Time, on the date of this Agreement, or such later
date as shall be consented to in writing by you; if required, the Prospectus and
any amendment or supplement thereto shall have been filed with the Commission in
the manner and within the time period required by Rule 424(b) under the Act; and
no stop order suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the knowledge of
the Company or any Underwriter, threatened by the Commission, and any request of
the Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to your
satisfaction.
(b) Prior to such Closing Date, except as contemplated in the
Prospectus, there shall not have been any change in the capital shares, nor the
issuance of any rights, options, or warrants to purchase any capital shares, nor
any material increase or decrease in any long-term debt of the Company or any of
the Subsidiaries or any material adverse change in the condition (financial or
otherwise), results of operations, business or prospects of the Company or any
of the Subsidiaries which in your reasonable judgment renders it inadvisable to
proceed with the offering and sale of the Shares.
(c) You shall have received the opinion of Morrison & Foerster LLP,
counsel for the Company, dated such Closing Date, in the form substantially set
forth as Exhibit A attached hereto.
(d) You shall have received from Covington & Burling, regulatory
counsel to the Company, an opinion, dated such Closing Date, in form and
substance satisfactory to you, to the effect that the statements in the
Prospectus under the captions "Risk Factors - Uncertainty of Government
Regulatory Requirements; Lengthy Approval Process" and "Business - Government
Regulation", insofar as they pertain to legal matters, fairly present in all
material respects the information presented therein.
(e) You shall have received from Werbel & Carnelutti, A Professional
Corporation, counsel for the several Underwriters, an opinion or opinions, dated
such Closing Date, in form and substance satisfactory to you, with respect to
the sufficiency of all such corporate proceedings and other legal matters
relating to this Agreement and the transactions contemplated hereby as you
may reasonably require, and the Company shall have furnished to such counsel
such documents as they may have requested for the purpose of enabling them to
pass upon such matters.
13
<PAGE> 14
(f) You shall have received, at the time of execution of this
Agreement and on such Closing Date from KPMG Peat Marwick LLP, independent
public accountants, a letter or letters, dated the date of delivery thereof,
substantially in the form and substance heretofore approved by you.
(g) You shall have received a certificate, dated such Closing Date,
of each of the President and Chief Executive Officer and the Chief Financial
Officer of the Company, delivered on behalf of the Company, to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects as if made
on and as of such Closing Date; and the Company has complied with
all the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to such Closing Date in all
material respects;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that
purpose have been instituted or, to their knowledge, are
contemplated by the Commission; and
(iii) except as contemplated by or described in the Prospectus,
the Company and/or its Subsidiaries taken as a whole have not
incurred any direct or, to the best of the Company's knowledge,
contingent material liabilities or obligations, or entered into any
material transactions or contracts not in the ordinary course of
business, and there has not been any change in the capital shares of
the Company and/or its Subsidiaries, nor the issuance of any rights,
options, or warrants to purchase any capital shares, nor any
material increase or decrease in any thereof or in any long-term
debt or any material adverse change in the condition (financial or
otherwise) results of operations, business or prospects of the
Company and its Subsidiaries taken as a whole; provided, however,
that all of the outstanding shares of the Company's preferred stock
shall have been converted, simultaneously with the First Closing
Date, into shares of Common Stock as contemplated in the Prospectus.
(h) The Company shall have furnished to you such certificates, in
addition to those specifically mentioned herein, as you may have reasonably
requested, as to the accuracy and completeness at such Closing Date of any
statement in the Registration Statement or Prospectus, as to the accuracy at
such Closing Date of the representations and warranties of the Company herein,
as to the performance by the Company of its obligations
14
<PAGE> 15
hereunder, and as to the fulfillment of the conditions concurrent and precedent
to the obligations of the Underwriters hereunder.
(i) The Company shall have furnished to you the agreements described
in Section 2(p) of this Agreement.
6. INDEMNIFICATION. (a) The Company will indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or such controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter and each such controlling person for any legal or
other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending against any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
such Preliminary Prospectus, the Prospectus or such amendment or such supplement
in reliance upon and in conformity with written information furnished to the
Company by any Underwriter through you specifically for use therein; and
provided further, that the foregoing indemnity with respect to Preliminary
Prospectuses shall not inure to the benefit of any Underwriter (or to the
benefit of any person controlling such Underwriter) if such untrue statement or
omission or alleged untrue statement or omission made in any Preliminary
Prospectus is eliminated or remedied in the Prospectus and a copy of the
Prospectus has not been furnished to the person asserting any such losses,
claims, damages, or liabilities at or prior to the written confirmation of the
sale of such Shares to such person. Such indemnity obligation will be in
addition to any liability which the Company may otherwise have. The indemnity
agreement of the Company contained in this paragraph (a) and the representations
and warranties of the Company contained in Section 2 hereof shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any indemnified party and shall survive the delivery of and
payment for the Shares.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors,
15
<PAGE> 16
each of its officers who signed the Registration Statement, and each person, if
any, who controls the Company within the meaning of the Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company or any
such director, officer or controlling person may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through you specifically for use therein; and will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending against any
such loss, claim, damage, liability or action. Such indemnity obligation will be
in addition to any liability which such Underwriter may otherwise have. The
indemnity agreement of each Underwriter contained in this paragraph (b) shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any indemnified party and shall survive the delivery of
and payment for the Shares.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify the indemnifying party of the commencement thereof.
Indemnification shall not be available to any party who shall fail so to give
notice, if the party to whom notice was required to be given was unaware of the
action, suit, investigation, inquiry or proceeding to which the notice would
have related, to the extent that such party was prejudiced by the failure to
give notice; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
otherwise than under this Section. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel chosen by such indemnifying party which is reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying
16
<PAGE> 17
party will not be liable to such indemnified party under this Section for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that (i) if the indemnified party reasonably
determines that there may be a conflict between the positions of the
indemnifying party and of the indemnified party in conducting the defense of
such action, suit, investigation, inquiry or proceeding or that there may be
legal defenses available to such indemnified party different from or in addition
to those available to the indemnifying party, then counsel for the indemnified
party shall be entitled to conduct the defense to the extent reasonably
determined by such counsel to be necessary to protect the interests of the
indemnified party and (ii) in any event, the indemnified party (at its own
expense) shall be entitled to have counsel chosen by such indemnified party
participate in, but not conduct, the defense. No indemnifying party shall be
liable to any indemnified party in respect to any settlement effected without
its prior written consent, which consent shall not be unreasonably withheld. In
addition, the indemnifying party will not, without the prior written consent of
an indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not such
indemnified party is a party to such claim, action or suit or proceeding),
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability arising out of such claim, action,
suit or proceeding.
7. CONTRIBUTION. In order to provide for just and equitable contribution
in case the indemnification provided for in Section 6 shall be unavailable to or
insufficient to hold harmless an indemnified party under Sections 6(a) or 6(b)
hereof, then each indemnifying party under any such paragraph, in lieu of
indemnifying such party thereunder, shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Shares. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to
17
<PAGE> 18
be in the same proportion as the total net proceeds from the offering of the
Shares (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 7 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this Section 7, (i)
except as may be provided in its Master Agreement Among Underwriters provided to
Allen & Company Incorporated, in no case shall any Underwriter be responsible
for any amount in excess of the underwriting discount and commission applicable
to the Shares purchased by such Underwriter hereunder and (ii) no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the Act
shall have the same rights to contribution as such Underwriter, and each person,
if any, who controls the Company within the meaning of Section 15 of the Act,
each officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same right to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 7. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 7, notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this Section 7.
No party shall be liable for contribution with respect to any action or claim
settled
18
<PAGE> 19
without its consent, which consent shall not be unreasonably withheld.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements of the Company or of the Underwriters
herein or in certificates delivered pursuant hereto shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
any Underwriter or any controlling person, the Company, or any of its officers,
directors, or controlling persons, and shall survive delivery of the Shares to
the several Underwriters hereunder.
9. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or Underwriters shall
fail to take up and pay for the number of Shares to be purchased by such
Underwriter or Underwriters hereunder upon tender of such Shares in accordance
with the terms hereof, and if the aggregate number of Shares which such
defaulting Underwriter or Underwriters so agreed but failed to purchase does not
exceed 10% of the Shares, the remaining Underwriters shall be obligated
severally in proportion to their respective commitments hereunder to take up and
pay for the Shares of such defaulting Underwriter or Underwriters. If one or
more of the Underwriters shall fail or refuse (other than for a reason
sufficient to justify the termination of this Agreement) to purchase on any
Closing Date the aggregate number of Shares agreed to be purchased by such
Underwriter or Underwriters and the aggregate number of Shares agreed to be
purchased by such Underwriter or Underwriters shall exceed 10% of the aggregate
number of Shares to be sold on any Closing Date hereunder by the Company to the
Underwriters, then the other Underwriters shall have the right to purchase or
procure one or more other underwriters to purchase, in such proportions as they
may agree upon and upon the terms herein set forth, the Shares which such
defaulting Underwriter or Underwriters agreed to purchase, and this Agreement
shall be carried out accordingly. If such other Underwriters do not exercise
such right within thirty-six hours after receiving notice of any such default,
which notice the Representatives shall have also promptly delivered to the
Company, then the Company shall have the right, but not the obligation, to
procure another party or parties reasonably satisfactory to the Representatives
to purchase or agree to purchase such Shares on the terms herein set forth. If
the Company is unable to procure another such party, the Company shall have the
right, but not the obligation, to notify the Representatives that the
non-defaulting Underwriters are, by the giving of such notice, released from
their obligations to purchase such number of Shares being sold hereunder by the
Company as are indicated in such notice as, when subtracted from the total
number of Shares originally agreed to be purchased by all of the Underwriters
hereunder, shall leave a reduced number of Shares to be purchased by the
non-defaulting Underwriters not in excess of 110% of the aggregate number of
Shares originally
19
<PAGE> 20
contracted to be purchased hereunder by the non-defaulting Underwriters, and
each of them, in which event such non-defaulting Underwriters shall purchase
such reduced number of Shares. In any such case, either the Representatives or
the Company shall have the right to postpone any Closing Date for a period of
not more than seven business days in order that necessary changes and
arrangements may be effected by the Representatives and the Company. If neither
the non-defaulting Underwriters nor the Company shall make arrangements within
the period stated for the purchase of the Shares which such defaulting
Underwriter or Underwriters agreed to purchase, including such arrangements for
the purchase of a reduced number of Shares as are provided for in this Section
9, then this Agreement shall terminate without liability on the part of any
non-defaulting Underwriters to the Company and without liability on the part of
the Company to the Underwriters.
In the event of any termination of this Agreement pursuant to the
preceding paragraph of this Section, the Company shall not be under any
liability to any Underwriter (except as provided in Section 4(g) and 6 hereof)
nor shall any Underwriter (other than an Underwriter who shall have failed,
otherwise than for some reason permitted under this Agreement, to purchase the
number of Shares to be purchased by such Underwriter hereunder, which
Underwriter shall remain liable to the Company and the other Underwriters for
damages resulting from such default) be under any liability to the Company
(except as provided in Section 6 hereof).
The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section 9.
10. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at such time after the
declaration by the Commission of the effectiveness of the Registration Statement
as you in your discretion shall first release the Shares for sale to the public.
For the purposes of this Section, the Shares shall be deemed to have been
released for sale to the public upon release by you for publication of a
newspaper advertisement relating to the Shares or upon release by you of letters
or telegrams offering the Shares for sale to securities dealers, whichever shall
first occur. By giving notice as hereinafter specified before the time this
Agreement becomes effective, you, as Representatives of the several
Underwriters, or the Company may prevent this Agreement from becoming effective
without liability on the part of the Company to any Underwriter or of any
Underwriter to the Company, other than as provided in Sections 4(g) and 6
hereof.
(b) You, as Representatives of the several Underwriters, shall have
the right to terminate this Agreement by
20
<PAGE> 21
giving notice as hereinafter specified at any time at or prior to the First
Closing Date if (i) the Company shall have failed, refused or been unable, at or
prior to the First Closing Date, to perform any material agreement on its part
to be performed, or because any other material condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company is not fulfilled;
(ii) trading on the New York Stock Exchange shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required, on the New York Stock
Exchange by the New York Stock Exchange or by order of the Commission or any
other governmental authority having jurisdiction, since the execution of this
Agreement; (iii) a banking moratorium shall have been declared by Federal or New
York authorities since the execution of this Agreement; or (iv) an outbreak of
major hostilities or other national calamity shall have occurred. Any such
termination shall be without liability on the part of the Company to any
Underwriter or of any Underwriter to the Company other than as provided in
Sections 4(g) and 6 hereof.
(c) If you elect to prevent this Agreement from becoming effective
or to terminate this Agreement as provided in this Section, the Company shall be
notified promptly by you by telephone or telegram, confirmed by letter. If the
Company shall elect to prevent this Agreement from becoming effective, you shall
be notified promptly by the Company by telephone or telegram, confirmed by
letter.
11. AGREEMENTS OF THE UNDERWRITERS.
(a) Each Underwriter understands that no action has been or will be
taken in any jurisdiction (except in the United States) that would permit a
public offering of the Shares or the possession, circulation or distribution of
the Prospectus or any amendment or supplement thereto or any other material
relating to the Company or the Shares in any jurisdiction where action for that
purpose is required. Accordingly, each Underwriter agrees, on a several basis,
that it will not offer or sell, directly or indirectly, the Shares, nor will it
distribute or publish the Prospectus or any amendment or supplement thereto nor
any other offering material or advertisements in connection with the Shares, in
or from any country or jurisdiction except in compliance with any applicable
rules and regulations of any such country or jurisdiction.
(b) Each Underwriter represents and agrees, on a several basis, that
(i) it has not offered or sold and, for a period of six months following
consummation of the Offering, will not offer or sell any shares of Common Stock
to persons in the United Kingdom, except to a person whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Common Stock in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and
will only issue or pass on to any person in the United Kingdom any document
received by it in connection with the issuance of Common Stock if that person
is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996, as amended, or is a person
to whom such document may otherwise lawfully be issued or passed on.
12. NOTICES. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall be
mailed, delivered or telecopied and confirmed to you c/o Allen & Company
Incorporated, 711 Fifth Avenue, New York, New York 10022, with copy to Werbel &
Carnelutti, a Professional Corporation, 711 Fifth Avenue, New York, New York
10022, Attention: Guy N. Molinari, Esq. or if sent to the Company shall be
mailed, delivered or telecopied and confirmed to the Company at 103 Carnegie
Center, Suite 102, Princeton, New Jersey 08540, Attention: Mr. Michael C.
Walker, President with a copy to Morrison & Foerster LLP, 1290 Avenue of the
Americas, New York, New York 10104-0012, Attention: Joseph W. Bartlett, Esq.
Notice to any Underwriter pursuant to Section 6 shall be mailed, delivered or
telecopied and confirmed to such Underwriter's address as set forth in its
Master Agreement Among Underwriters furnished to Allen & Company Incorporated.
13. PARTIES. This Agreement shall inure to the benefit of and be binding
upon the several Underwriters and the Company and their respective successors
and assigns. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person or corporation, other than the parties
hereto and their respective successors and assigns and the controlling
21
<PAGE> 22
persons, officers and directors referred to in Section 6, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto and their respective successors and assigns and said controlling persons
and said officers and directors, and for the benefit of no other person or
corporation. No purchaser of any of the Shares from any Underwriter shall be
construed a successor or assign merely by reason of such purchase.
In all dealings with the Company under this Agreement, you shall be
and are authorized to act on behalf of each of the several Underwriters, and the
Company shall be entitled to act and rely upon any statement request, notice or
agreement on behalf of each of the several Underwriters if the same shall have
been made or given in writing by you.
14. APPLICABLE LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made, and to be fully performed, therein.
22
<PAGE> 23
If the foregoing correctly sets forth the understanding between the
Company and the several Underwriters, please so indicate in the space provided
below for that purpose whereupon this letter shall constitute a binding
agreement between the Company and the several Underwriters.
Very truly yours,
ANTHRA PHARMACEUTICALS, INC.
By:_________________________
President
Accepted as of the date
first above written:
ALLEN & COMPANY INCORPORATED
GRUNTAL & CO., L.L.C.
By: ALLEN & COMPANY INCORPORATED
By:___________________________
On behalf of each of the several
Underwriters named in Schedule A hereto.
23
<PAGE> 24
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER
OF
NAME OF UNDERWRITER SHARES
------
<S> <C>
Allen & Company Incorporated......................................
Gruntal & Co., L.L.C. ............................................
Total............................................................. 2,700,000
</TABLE>
<PAGE> 25
SCHEDULE B
SUBSIDIARIES OF THE COMPANY
<PAGE> 26
2,700,000 Shares
ANTHRA PHARMACEUTICALS, INC.
Common Stock
________________________
SELECTED DEALER AGREEMENT
________________, 1998
Dear Sirs:
1. PURCHASE OF SECURITIES BY THE SEVERAL UNDERWRITERS. The several
Underwriters named in the enclosed Prospectus, on whose behalf we are acting as
Representatives, have severally agreed to purchase from Anthra Pharmaceuticals,
Inc. (the "Company") an offering of 2,700,000 Shares of the Company's Common
Stock (the "Shares"), as set forth in the Prospectus and subject to the terms of
the Underwriting Agreement between the several Underwriters and the Company. The
Shares are described in the Prospectus, additional copies of which will be
supplied in reasonable quantities upon request to us.
2. OFFERING TO SELECTED DEALERS. One or more of the several Underwriters
acting through us are severally offering a portion of the Shares to certain
dealers ("Selected Dealers") as principals, subject to the terms and conditions
of their purchase, to the terms and conditions hereof, and to the modification
or cancellation of the offering without notice, at the public offering price set
forth in the Prospectus, less a concession not in excess of $.____ per Share.
Shares purchased by the several Underwriters, and not sold to the Selected
Dealers as aforesaid, may be sold by the several Underwriters. Any of the
several Underwriters may be included among the Selected Dealers.
The offering of a portion of the Shares to Selected Dealers may be made on
the basis of reservations or allotments against subscription. We are advising
you by telegram of the method and terms of the offering. Acceptance of any
reserved Shares received by us at the office of Allen & Company Incorporated,
711 Fifth Avenue, New York, New York 10022, after the time specified therefor in
the telegrams, and any subscriptions for additional Shares, will be subject to
prior sale and allotment. Subscription books may be closed by us at any time
without notice, and the right is reserved to reject any subscriptions in whole
or in part.
3. OFFERING TO PUBLIC BY SELECTED DEALERS. Upon receipt of the
aforementioned telegram, the Shares purchased by you hereunder may be re-offered
to the public in conformity with the
1
<PAGE> 27
terms of offering set forth in the Prospectus. You may, in accordance with the
rules of the National Association of Securities Dealers, Inc., reallow a
concession of $.___ per Share sold by you to any other dealer or broker who is a
member of the National Association of Securities Dealers, Inc., provided such
discount is retained.
Neither you nor any other person is or has been authorized by the Company,
any of the several Underwriters or us to give information or make any
representations in connection with the sale of the Shares other than those
contained in the Prospectus.
In the event that during the term of this agreement we, as Representatives
for the account of the several Underwriters, shall purchase or contract to
purchase, at or below the original public offering price set forth in the
Prospectus, any of the Shares purchased by you hereunder (which Shares
theretofore were not effectively placed for investment by you, including Shares
represented by transfers), we may, at our election, either (a) require you to
repurchase such Shares at a price equal to the total cost of such Shares
purchased by us, including brokerage commissions, if any, and transfer taxes on
the redelivery, or (b) charge you with and collect from you an amount equal to
the selling concession with respect to the Shares so purchased by us.
4. PAYMENT AND DELIVERY. Payment for the Shares which you have agreed to
purchase hereunder shall be made by you on _______, 1998, or such later date as
we may advise you, at 9:00 a.m., New York Time, at Allen & Company
Incorporated's office at 711 Fifth Avenue, New York, New York 10022, by
certified or bank cashier's check payable in New York Clearing House funds to
the order of Allen & Company Incorporated, against delivery of such Shares.
Delivery instructions must be in our hands at said address at such time as we
request.
Additional Shares confirmed to you shall be delivered on such date or
dates as we shall advise you.
5. BLUE SKY MATTERS. Neither we nor any of the several Underwriters shall
have any obligation or responsibility with respect to the right of any dealer to
sell the Shares in any jurisdiction, notwithstanding any information which may
be furnished as to the states under the securities laws of which it is believed
the Shares may be sold.
6. TERMINATION. This agreement shall terminate 20 full days after the
First Closing Date (as defined in the Underwriting Agreement) but may be
extended for a period or periods not exceeding in the aggregate 20 days as we
may determine. We may terminate this Agreement at any time without prior notice.
Notwithstanding the termination of this agreement, you shall remain liable for
your portion of any transfer tax or other
2
<PAGE> 28
liability which may be asserted or assessed against us or any one or more of the
several Underwriters or Selected Dealers based upon the claim that the Selected
Dealers or any of them constitute a partnership, an association, an
unincorporated business or other separate entity.
7. OBLIGATIONS OF SELECTED DEALERS. Your acceptance hereof will constitute
an obligation on your part to purchase, upon the terms and conditions hereof,
the aggregate amount of the Shares reserved for and accepted by you and to
perform and observe all the terms and conditions hereof.
You are not authorized to act as agent for any of the several Underwriters
in offering Shares to the public or otherwise. Nothing contained herein shall
constitute the Selected Dealers an association, or partners with the several
Underwriters, with us, or with each other.
8. POSITION OF THE REPRESENTATIVES. We shall have full authority to take
such action as we may deem advisable in respect of all matters pertaining to the
offering or arising hereunder, but shall act only as Representatives of the
several Underwriters. Neither we nor any of the several Underwriters shall be
under any liability to you, except for our own want of good faith, obligations
assumed in this agreement, or any liabilities arising under the Securities Act
of 1933. No obligation not expressly assumed by us in this agreement shall be
implied hereby or inferred herefrom.
9. NOTICES. All communications from you should be addressed to us, c/o
Allen & Company Incorporated, 711 Fifth Avenue, New York, New York 10022. Any
notice from us to you shall be deemed to have been duly given if mailed or
telegraphed to you at the address to which this letter is mailed.
Please confirm the foregoing by signing the duplicate copy of this
agreement enclosed herewith and returning it to us at the address in Section 9
above.
Very truly yours,
ALLEN & COMPANY INCORPORATED
GRUNTAL & CO., L.L.C.
By: ALLEN & COMPANY INCORPORATED
By:_________________________
Vice President
3
<PAGE> 29
ALLEN & COMPANY INCORPORATED
GRUNTAL & CO., L.L.C.
As Representatives of the Several
Underwriters
c/o Allen & Company Incorporated
711 Fifth Avenue
New York, New York 10022
Sirs:
We hereby confirm our agreement to purchase Shares of the Anthra
Pharmaceuticals, Inc. (the "Shares"), subject to your acceptance or rejection in
whole or in part in the case of a subscription subject to allotment or in excess
of any reservation, and subject to all the other terms and conditions stated in
the foregoing letter.
We hereby acknowledge receipt of the prospectus relating to the above
described Shares (the "Prospectus") and we further state that in purchasing the
Shares confirmed to us we have relied upon such Prospectus and on no other
statements whatsoever, written or oral.
We hereby represent that we are a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD") and agree to comply with the
provisions of Article III, Section 24 of the NASD's Rules of Fair Practice (the
"NASD Rules"), or, if we are not such a member, we are a foreign dealer or
institution that is not registered under Section 15(b) of the Securities
Exchange Act of 1934 and that hereby agrees (i) to make no sales within the
United States, its territories or its possessions or to persons who are citizens
thereof or residents therein, (ii) if the offering of the Shares is one within
the scope of the NASD's Interpretation with Respect to Free-Riding and
Withholding, not to make other sales of Shares to persons enumerated in
paragraphs "1" through "5" of such Interpretation or in a manner inconsistent
with paragraph "6" thereof and (iii) to comply with the provisions of Article
III, Sections 8, 24, 25 (as applicable to a non-member broker/dealer in a
foreign country) and 36 of the NASD Rules.
Name of Selected Dealer
____________________________________
____________________________________
(Authorized Signature)
Dated:________________ , 199__
<PAGE> 1
Exhibit 4.2
NUMBER SHARES
[ANTHRA PHARMACEUTICALS, INC. LETTERHEAD]
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP 037022 10 0
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
SPECIMEN
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE OF $.01
PER SHARE, OF ANTHRA PHARMACEUTICALS, INC. transferable on the books of the
Corporation by the holder hereof in person or by a duly authorized attorney
upon surrender of this Certificate properly endorsed. This Certificate is not
valid unless countersigned and registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
[CORPORATE SEAL]
/s/ Mervyn Israel /s/ Michael C. Walker
CHAIRMAN OF THE BOARD AND SECRETARY CHIEF EXECUTIVE OFFICER AND PRESIDENT
COUNTERSIGNED AND REGISTERED.
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, NEW YORK)
TRANSFER AGENT
AND REGISTRAR
BY ------------------------------------
AUTHORIZED SIGNATURE
<PAGE> 2
ANTHRA PHARMACEUTICALS, INC.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT-____________ Custodian ____________________
(Cust) (Minor)
under Uniform Gifts to Minors
Act_______________________
(State)
Additional abbreviations may also be used though not in the above list.
For value received, ____________________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
/ /
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
______________________________________________________________________________
_______________________________________________________________________________
_________________________________________________________________________shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated_______________________________
X______________________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
______________________________________________________
SIGNATURE(S) GUARANTEED: THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of
blackout of the text (the "Mark"). This Exhibit has been filed separately with
the Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under
the Securities Act.
EXHIBIT 10.1
AGREEMENT
This agreement, effective as of November 6. 1990 (the "Effective Date"),
by and between Dana-Farber Cancer Institute, a Massachusetts corporation
("DFCI"), and Anthra Pharmaceuticals, Inc., a Delaware corporation ("ANTHRA").
WITNESSETH THAT:
WHEREAS, N-trifluoroacetyladriamycin-14-valerate ("AD 32") and congeners,
pharmaceutical compounds with antineoplastic application, were discovered by Dr.
Mervyn Israel and colleagues while engaged as a professional at DFCI; and
WHEREAS, N-Trifluoroacetyladriamycin-14-0-hemiadipate ("AD 143") and
congeners, pharmaceutical compounds with antineoplastic application, were
discovered by Dr. Mervyn Israel and colleagues while engaged as a professional
at DFCI; and
WHEREAS, Dr. Israel and other inventors of AD 32 and AD 143 previously
assigned their rights in AD 32 and AD 143 to DFCI and DFCI has obtained United
States Patent No. 4,035,566 (July 12, 1977) and United States Patent No.
4,299,822 covering AD 32 and AD 143 and congeners in the United States. DFCI has
also obtained corresponding foreign patents for AD 32 in Canada and for AD 143
in France, Switzerland, Canada, West Germany, the United Kingdom, The
Netherlands and Japan; and,
WHEREAS, ANTHRA desires to acquire from DFCI an unrestricted exclusive
worldwide patent and know-how license on both AD 32 and AD 143 and congeners,
subject to such restrictions that have been or may be imposed by the U.S.
Department of Health and Human Services ("HHS"); and,
WHEREAS, DFCI is willing to grant such a license to ANTHRA;
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1 -- DEFINITION
1.1 "Patent Rights" means all United States and foreign patents granted
thereon, owned or controlled by DFCI, relating to the manufacture, use
and/or sale of AD 32, AD 143, and AD 32 and AD 143 congeners, and any
division, reissue, extension, patent of addition, registration or
continuation of the foregoing patents.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 2
1.2 "Net Sales Price" means ANTHRA' s gross invoice price to customers of
AD 32, AD 143 or a congener, in whatever form, loss discounts,
transportation costs, costs of premiums for product liability and shipping
insurance, delivery, expenses, packaging costs, taxes based directly On
manufacture, use, sale or delivery (other than incomes taxes), duties and
allowances to customers; provided, however, that in determining Net Sales
Price to any customer in any way affiliated with ANTHRA, through stock
ownership, management or otherwise, invoice price shall be the same as if
sold at arm's length to an unrelated customer. The Net Sales of any AD 32,
AD 143 or a congener that is a combination or mixture of a therapeutic or
prophylactic agent, shall be the Net Sales Price of a corresponding
quantity of AD 32 or AD 143 or congener when sold separately in the form
in which said combination or mixture is sold. In the event that there is
no established net Sales Price for AD 32 or AD 143 or a congener sold as a
component of such combination or mixture in the form in which such
combination or mixture is sold, ANTHRA shall so notify DFCI in writing and
ANTHRA and DFCI shall negotiate in good faith to establish a basis that is
equivalent to the Net Sales Value for AD 32 or AD 143 or a congener in
the form in which said combination or mixture is sold.
ARTICLE 2 -- GRANT
2.1 DFCI hereby grants to ANTHRA an exclusive license and right, as of the
Effective Date, for the maximum period permissible under applicable
federal regulations in the United States, and for a period ending at the
termination of the Patents Rights outside the United States, to
sublicense, to manufacture, have manufactured, use and sell AD 32 and AD
143 and congeners under the patent rights and accompanying know-how,
subject to the restrictions and limitation enumerated in the agreement
between DFCI and HHS, accepted April 22, 1985, and attached hereto as
Attachment A and made a part hereof (the "HHS Agreement"), or to other
similar restrictions and limitations applicable to AD 32 or to
restrictions imposed by applicable law.
2.2 DFCI hereby grants to ANTHRA the non-exclusive license and right upon
termination of the exclusive license (in the United States) and for a
period ending at the termination of this agreement, to sublicense, to
manufacture, have manufactured, use and sell AD 32 and AD 143 and
congeners under the patent Rights (including know-how relating thereto)
subject to the restrictions and limitations enumerated in the agreement
between DFCI and HHS, accepted April 22, 1985 and attached hereto as
Attachment A and made a part hereof (the "HHS Agreement") or to other
similar restrictions and limitations applicable to AD 32 or to
restrictions imposed by applicable law.
2.3 ANTHRA herewith grants back to DFCI the right for DFCI, to conduct
research on a royalty-free basis on AD 32 and AD 143 and congeners. It is
understood, however, that specific arrangements for DFCI's participation
in Phase I/II clinical studies under ANTHRA's sponsorship and support
shall be the subject of a separate agreement. DFCI reserves the right to
transfer to other not-for-profit organizations the technology described
herein as long as such technology is utilized in non-commercial research
with the agreement of DFCI and that Anthra is apprised by written notice
that such transfer is taking place.
*** CONFIDENTIAL TREATMENT REQUESTED. 2
<PAGE> 3
2.4 ANTHRA shall have the right to filet, at ANTHRA's expense, a New Drug
Application ("NDA") or an Investigational New Drug Application ("IND") to
be prepared by and submitted in the name of ANTHRA to the Food and Drug
Administration ("FDA") or any successor thereto. ANTHRA shall be free to
arrange for clinical studies of AD 32 and AD 143 and congeners within and
outside the United States.
2.5 ANTHRA will use its best efforts to bring AD 32 and AD 143 to early
clinical trial and to commercial development; and will provide DFCI with
reports at regular intervals relative to its progress along these
objectives.
ARTICLE 3 -- DISCLOSURE
3.1 DFCI shall disclose and make available to ANTHRA all data in its
possession on the Effective Date regarding AD 32 and AD 143 and congeners,
including, but not limited to, formula, method of preparation, testing and
any other data useful in the preparation of the IND or NDA on AD 32, AD
143 and/or congeners.
3.2 ANTHRA shall make available to DFCI without charge, all clinically
related data on AD 32, AD 143 and congeners generated or caused to be
generated by ANTHRA such data to be used by DFCI for clinical research
purposes only.
3.3 ANTHRA may wish, from time to time, during the term of this Agreement,
to disclose its confidential and proprietary information to DFCI
personnel. Any agreement relating to the terms and conditions of such
disclosure shall be negotiated separately by ANTHRA with the individuals
and shall require that any such information disclosed must be in writing
and designated by ANTHRA, in writing, as confidential. It is understood
that DFCI will not require individuals to enter into such agreements and
will not provide assistance to ANTHRA in enforcing such agreements. If
ANTHRA and DFCI personnel enter into such agreements, DFCI shall have no
obligations to protect the confidentiality of information transmitted
under them. Notwithstanding the foregoing, DFCI shall be responsible for
assuring the confidentiality of ANTHRA proprietary information disclosed
in writing to members of the DFCI administration, responsible for
administering this Agreement, where such information is clearly designated
in writing as confidential.
3.4 Nothing in this Agreement or in any license or sublicense granted
under the provisions hereof shall in any way restrict the right and
obligation of either DFCI or ANTHRA to comply with any requirement for the
supply of information imposed by HHS in granting the aforesaid petition by
DFCI, provided, however, that either DFCI or Anthra will give the other
party prior notice of any potential required disclosure of Confidential
Information, a right to appeal such required disclosure to appropriate
authorities, and a right to cause the disclosing party to comply with the
required disclosure so as to limit any adverse affect such disclosure may
have on the value, uniqueness or protection of such Confidential
Information.
*** CONFIDENTIAL TREATMENT REQUESTED. 3
<PAGE> 4
ARTICLE 4 -- PAYMENT
4.1 If and when AD 32 and/or AD 143 become(s) commercially available
ANTHRA agrees to pay DFCI a royalty ("running royalty") equal to *** which
are sold by ANTHRA under an exclusive license during the life of the
respective product patents; *** which are sold by ANTHRA in the United
States after the expiration of the patent, as consideration of the
technical information, know-how, tangible research property and other
commercially advantageous material and/or information conveyed by DFCI to
ANTHRA. This royalty will continue until the introduction of any
generically equivalent version of such product. *** received by ANTHRA
from sublicenses outside of the United States until the expiration of the
applicable patent and from sublicenses inside the United States until the
termination of this Agreement.
4.2 ANTHRA agrees to pay DFCI a minimum royalty ("minimum royalty") of
Fifteen Thousand Dollars ($15,000.00) for each twelve month period
commencing on the anniversary of the KDA approval in the United States of
AD 32 ("anniversary date") and ending on the termination of the Agreement
(see Article 11.5); if the royalty under Article 4.1 for any such twelve
month period (or portion thereof as provided in the foregoing proviso) is
less than the minimum royalty for the same period, the difference between
the running and minimum royalty shall be paid to DFCI within sixty (60)
days after the anniversary date (or the termination of this Agreement, as
the case may be). If the royalty for any such twelve month period (or
portion thereof as provided in the foregoing proviso) is equal to or
exceeds the minimum royalty, no minimum royalty shall be paid. This
obligation to pay minimum royalties shall cease upon the termination of
this Agreement, OR at such times as minimum royalties have been paid for
eight (8) successive twelve month periods.
4.3 All payments to DFCI under this Agreement shall be in United States
dollars and shall be accompanied by a written statement, duly certified by
an officer of ANTHRA or an independent certified public accountant,
showing, in reasonable detail, the calculation of the sums paid. As to all
sales on which royalties are payable in respect of which payment has been
made to ANTHRA or a sublicensee in a currency other than United States
dollars, conversion to United States dollars shall be made at the rate of
exchange reported in The Wall Street Journal for the last business day of
the calendar quarter in which such sales have taken place, or if no rate
of exchange is reported therein, at the rate quoted for that day by the
First National Bank of Boston, 100 Federal Street, Boston, Massachusetts.
4.4 ANTHRA shall pay DFCI upon the execution and delivery of this
Agreement a payment of *** as reimbursement of expenses incurred by DFCI
in obtaining patents relating to AD 32 and AD 143. DFCI represents and
warrants that it has, and on the Effective Date will have, full ownership
of the following patents, and that it has the right to license each of
them pursuant hereto: for AD 32 United States Patent No. 4,035,566;
Canadian Patent No. 1,060,003 and for AD 143 United States Patent No.
4,299,822; Canadian Patent No. 1,150,245; British Patent No. 2,077,265;
French Patent No. 2,483,928; Swiss Patent No. 645,387; West German Patent
No. 3,122,689; Holland Patent No. 184,420; and Japan Patent No. 1,458,104.
ARTICLE 5 -- ACCOUNTING
5.1 ANTHRA shall keep true books of account containing an accurate and
complete record of all data necessary for the computation of monies
payable to DFCI according to this Agreement. ANTHRA shall permit access to
such books during regular business hours (at DFCI's expense and upon at
least five (5) days' notice) by an independent public accountant selected
by DFCI (except one to whom ANTHRA has some reasonable objection) to
examine and take abstracts from the relevant records of ANTHRA to such
extent as may be reasonably necessary to enable such accountant to verify
or determine monies paid or payable by ANTHRA under this Agreement. In the
event such auditing discloses a deficiency in monies paid to DFCI, the
accountants' expenses shall be borne by ANTHRA.
5.2 A provision equivalent to Article 5.1 shall be included for the
benefit of DFCI in each sublicense granted by ANTHRA under this Agreement.
ARTICLE 6 -- SUBLICENSES
6.1 Any sublicense granted by ANTHRA hereunder shall be in conformity with
the mandatory restrictions and limitations imposed upon DFCI and HHS,
including those enumerated in the HHS Agreement.
*** CONFIDENTIAL TREATMENT REQUESTED. 4
<PAGE> 5
ARTICLE 7 -- CONVERSION TO NONEXCLUSIVE LICENSE
7.1 In the event ANTHRA shall default in payment of any minimum royalty
due under Article 4.2, DFCI may notify ANTHRA and if the default is not
remedied within ninety (90) days after the date of notice, then, whether
it is during the period of exclusivity or non-exclusivity of the license
to ANTHRA, DFCI shall have the right to terminate ANTHRA's license under
this Agreement by a second notice to ANTHRA. A default by ANTHRA in
payment of the minimum or running royalty under Articles 4.1 and 4.2 or
any other default by ANTHRA shall be subject to the provision of Article
11.
7.2 ANTHRA's exclusive license under this Agreement shall be automatically
converted to a nonexclusive license at such time, if any, as is specified
in the HHS Agreement.
ARTICLE 8 -- PROSECUTION AND MAINTENANCE OF PATENT RIGHTS
8.1 The costs and responsibility of filing, prosecuting and maintaining
all domestic and foreign and other patent applications and patents within
the Patent Rights shall be borne by ANTHRA. ANTHRA, in coordination with
DFCI will be responsible for the maintenance of all such patents.
ARTICLE 9 -- MOST FAVORED LICENSEE
9.1 If, after conversion of ANTHRA's license to a nonexclusive license
under other provisions of this Agreement, DFCI shall grant to any third
party a license under any of the Patent Rights on royalty or other
monetary terms, or on other condition, More favorable than those provided
to ANTHRA in this Agreement, ANTHRA shall be entitled to such more
favorable terms. DFCI shall notify ANTHRA of the grant of any license to a
third party (whether or not more favorable) and the terms and conditions
within thirty (30) days of such grant. ANTHRA shall be entitled to the
benefit of such more favorable royalty or other monetary terms or other
terms or conditions from the effective date of and for the term of such
license to such third party but subject to the same conditions of
enjoyment as said third party.
ARTICLE 10 -- PROSECUTION OF INFRINGERS; ADVERSE GOVERNMENTAL ACTIONS
10.1 If a third party shall infringe any granted patent within the Patent
Rights on a substantial commercial scale, or if any adverse governmental
actions are taken relating to AD 32 or AD 143 or any congener (such as
actions by the FDA), ANTHRA shall give notice to DFCI. If by the end of
three months after the date of such notice DFCI has not brought suit
against the infringer or procured a cessation of the infringement, then
(a) if ANTHRA's license is still an exclusive license, ANTHRA shall be
entitled to bring suit at its own expense against the infringer in its own
name and any recoveries made in a suit brought by ANTHRA shall be for the
sole benefit of ANTHRA, or (b) if ANTHRA's
*** CONFIDENTIAL TREATMENT REQUESTED. 5
<PAGE> 6
license has been converted to a nonexclusive license, ANTHRA shall be
excused from paying any royalty in respect to the infringed patent until
such time as the. infringement has ceased or suit has been brought against
the infringer.
ARTICLE 11 -- TERM AND TERMINATION
11.1 Upon the default by ANTHRA of any obligations under this Agreement,
DFCI may give notice to ANTHRA specifying the default and indicating
intent to terminate this Agreement if the default is not cured within
ninety (90) days after the date of notice. If the default is not cured
within said ninety day (90) period, DFCI may terminate this Agreement
forthwith by further notice to ANTHRA.
11.2 ANTHRA shall have the right to terminate this Agreement at any time
by giving ninety (90) days' advance written notice.
11.3 Termination under Article 11.1, 11.2, or 11.3 shall not relieve
ANTHRA of the obligation to pay any monies earned by DFCI up to the date
of termination.
11.4 If not earlier terminated under the provisions of Article 11.1, 11,2,
or 11.3, this Agreement shall terminate upon the fifth anniversary of the
expiration of the applicable U.S. patent in the United States and upon the
expiration of the applicable patent outside the United States.
ARTICLE 12 -- NOTICES
12.1 All notices and other communications hereunder shall be in writing.
Such notices and communications shall be sent by first class mail, or hand
delivered, and if relating to a default, alleged default or termination,
by registered mail or by personal hand delivery. All notices and
communications shall be addressed to the other party at the following
addresses, or to such other address as the addressee shall have last
furnished to the communicating party:
DANA FARBER CANCER INSTITUTE
44 Binney Street
Boston, MA 02115
Attention: Dr. Bernard W. Janicki
Director for Research
ANTHRA PHARMACEUTICALS, INC.
19 Carson Road
Princeton, NJ 08540
Attention: Michael C. Walker
Chief Executive officer
*** CONFIDENTIAL TREATMENT REQUESTED. 6
<PAGE> 7
With a copy to:
Lieberman Rudolph and Nowak
292 Madison Avenue
New York, NY 10017
Attention: Norman Friedland
The date of giving any notices or other communications shall be the date on
which the envelope was deposited or hand delivered. A post office receipt
shoving the date of deposit shall be prima facie evidence of the date of giving
a mailed notice.
ARTICLE 13 -- AMENDMENT AND WAIVER
13.1 Neither this Agreement nor any term, covenant, condition or other
provision hereof may be changed, waived, discharged or terminated orally,
but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought. No
waiver by either party of any breach of this Agreement by the other party
shall be effective an to any breach occurring before or after the date of
such waiver.
ARTICLE 14 -- GOVERNING LAW; SUCCESSION; ENTIRE AGREEMENT AND ARBITRATION
14.1 This Agreement shall be construed in accordance with and shall be
governed by the laws of the Commonwealth of Massachusetts.
14.2 This Agreement shall be binding upon and shall inure to the benefit
of the successors of the parties hereto, but shall not be otherwise
assignable by either of the parties without the prior written consent of
the other.
14.3 This document, together with the HHS Agreement, constitutes the
entire agreement between the parties hereto with reference to the subject
matter hereof and there are no understandings or representations of any
kind except as expressly set forth herein.
14.4 Any controversy or claim arising out of or relating to this Agreement
shall be submitted to final and binding arbitration in Boston,
Massachusetts, to the exclusion of all other remedies, in accordance with
the rules of the American Arbitration Association then in effect. The
party in whose favor a decision is rendered shall be entitled to recover
reasonable attorneys' fees in an amount determined by the arbitrators.
*** CONFIDENTIAL TREATMENT REQUESTED. 7
<PAGE> 8
ARTICLE 15 -- INDEMNIFICATION AND INSURANCE
15.1 ANTHRA shall indemnify, defend and hold harmless DFCI and its
trustees, officers, medical and professional staff, employees and agents
and their respective successors, heirs and assigns, (the "Indemnitees"),
against any liability, damage, loss or expense (including reasonable
attorney's fees and expenses of litigation) incurred by or imposed upon
the Indemnitees, or any one of them in connection with any claims, suits,
actions, demands or judgements (a) arising out of the design, production,
manufacture, sale, use in commerce, lease, or promotion by ANTHRA or by a
licensee, affiliate or agent of ANTHRA of any product, process or service
relating to, or developed pursuant to, this Agreement or (b) arising out
of any other activities to be carried out pursuant to the Agreement.
15.2 ANTHRA'S indemnification under 15.1(a) shall apply to any liability,
damage, loss or expense whether or not it is attributable to the negligent
activities of the Indemnitees. ANTHRA'S indemnification under 15. 1 (b)
shall not apply to any liability, damage, loss or expense to the extent
that it is attributable to (A) the negligent activities of the
Indemnitees, (B) failure to adhere to the study protocol by the
Indemnitees, or (C) the intentional wrongdoing or intentional misconduct
of the Indemnitees.
15.3 ANTHRA agrees, at its own expense, to provide attorneys reasonably
acceptable to DFCI to defend against any actions brought or filed against
any party indemnified hereunder with respect to the subject of indemnity
contained herein, whether or not such actions are rightfully brought.
15.4 At such time as any product, process or service relating to, or
developed pursuant to, this Agreement is being commercially distributed or
sold (other than for the purpose of obtaining regulatory approvals) by
ANTHRA or by a licensee, affiliate or agent of ANTHRA, ANTHRA shall at its
sole cost and expense procure and maintain policies of comprehensive
general liability insurance in amounts not less than $2,000,000 per
incident and $2,000,000 annual aggregate and naming the Indemnities as
additional insureds. Such comprehensive general liability insurance shall
provide (i) product liability coverage and (ii) broad form contractual
liability coverage for ANTHRA'S indemnification under section 15.1 through
15.3 of this Agreement. If ANTHRA elects to self-insure all or part of the
limits described above (including deductibles or retentions which are in
excess of $250,000 annual aggregate) such self-insurance program must be
acceptable to the DFCI and DFCI's associated Risk Management Foundation.
The minimum amounts of insurance coverage required under these provisions
shall not be construed to create a limit of ANTHRA's liability with
respect to its indemnification obligation under section 15.1 through 15.3
of this Agreement.
15.5 ANTHRA shall provide DFCI with written evidence of such insurance
upon request of DFCI. ANTHRA shall provide DFCI with written notice at
least fifteen (15) days prior to the cancellation, non-renewal or material
change in such insurance; if ANTHRA does not obtain replacement insurance
providing comparable coverage with such fifteen (15) day period, DFCI
shall have the right to terminate this Agreement effective at the and of
such fifteen (15) day period without any notice or additional waiting
periods.
15.6 ANTHRA shall maintain such comprehensive general liability insurance
beyond the expiration or termination of this Agreement during (a) the
period that any product, process, or service relating to or developed
pursuant to this Agreements being commercially distributed or sold (other
than for the purpose of obtaining regulatory approvals) by ANTHRA or by a
licensee, affiliate or agent of ANTHRA and (b) a reasonable period after
the period referred to in 15.6 (a) above which in no event shall be less
than fifteen (15) years.
15.7 In the event any such action is commenced or claim made or threatened
against DFCI or other Indemnitees as to which ANTHRA is obligated to
indemnify it (them) or hold it (them) harmless, DFCI or the other
Indemnitees shall promptly notify ANTHRA of such event. ANTHRA shall
assume the defense of, and may settle, that part of any
*** CONFIDENTIAL TREATMENT REQUESTED. 8
<PAGE> 9
such claim or action commenced or made against DFCI (or other Indemnitees)
which relates to ANTHRA's indemnification and ANTHRA may take such other
steps as may be necessary to protect itself . ANTHRA shall not be liable
to DFCI or other Indemnitees on account of any settlement of any such
claim or litigation effected without ANTHRA's consent. The right of ANTHRA
to assume the defense of any action shall be limited to that part of the
action commenced against DFCI and /or Indemnitees which relates to
ANTHRA's obligation of indemnification and holding harmless.
15.8 This section 15 shall survive expiration or termination of this
Agreement.
ARTICLE 16 -- DISCLAIMER OF WARRANTY
16.1 DFCI MAKES NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO ANY PATENT, TRADEMARK, SOFTWARE, TRADE
SECRET, TANGIBLE RESEARCH PROPERTY, INFORMATION OR DATA LICENSED OR
OTHERWISE PROVIDED TO ANTHRA HEREUNDER AND HEREBY DISCLAIMS THE SAME.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives to be effective as of the year and the
day first above written.
DANA FARBER CANCER INSTITUTE
By /s/ Bernard W. Janicki Phd
-------------------------------
Name: Dr. Bernard W. Janicki
Title: Director for Research
ANTHRA PHARMACEUTICALS, INC.
By /s/ Michael c. Walker
-------------------------------
Name: Michael C. Walker
Title: Chief Executive Officer
*** CONFIDENTIAL TREATMENT REQUESTED. 9
<PAGE> 10
Attachment A
[Department of Health & Human Services Letterhead]
Our reference: G-91-80
Dr. David F. Kiszkiss
Director of Research
Dana-Farber Cancer Institute
44 Binney Street
Boston, MA 02115
Dear Dr. Kiszkiss:
Reference is made to the report of an invention entitled,
"N-Trifluoroacetyladriamycin 14-0-Hemiglutarate and -Hemiadipate and Therapeutic
Compositions Containing Same," which was developed by Drs. Mervyn Israel and
Gopalakrishnan P.G. Potti at the Dana-Faber Cancer Institute with support from
National Institutes of Health research grant: Nos. CA-17263, CA-19118, and
CA-06516.
Reference is also made to the petition submitted by you on August 31,
1983, requesting that Dana-Farber Cancer Institute (hereinafter sometimes
referred to an "DFCI") be permitted to retain and administer the principal
patent rights in the invention. United States Patent No. 4,299,822, which
describes and claims this invention, issued November 10, 1981.
Evaluated to determine whether it is consistent under Section 8.2(b) of
the Federal Procurement Regulations, with Section 8.1(a) of the HHS regulations
(45 C.F.R., Parts 6 and 8), more specifically with Section 8.2(b), and with the
intent of the Presidents' Statements and Memoranda on Government Patent Policy
(36 FR 16887, August 26, 1971, and 2B FR 10943, October 12, 1963). Consideration
has also been given to whether the invention will be more adequately and quickly
developed for widest use if it is assigned to DFCI for development and
administration.
Consistent with the regulations cited supra, it is my determination
that:
1. The public interest will be best served by the expeditious development
of the invention described in United States Patent No. 4,299,822. The estimated
time required for the continued development and clinical investigation of this
invention is 8-10 years at an estimated cost of approximately $750,000. It is
anticipated that the company receiving the license from DFCI will perform the
work and bear a significant portion of the above costs. It is not anticipated
that the Government will make additional monetary contributions to the
development of the invention.
<PAGE> 11
2. To encourage the above development, all right, title and interest in
the invention is hereby left to DFCI for development and administration, subject
to the following terms and conditions:
(a) The inventors, Drs. Mervyn Israel and Gopalakrishnan P.G. Potti, shall
assign all of their rights in the invention, including their rights in the
patent application, to DFCI. The assignment under the patent application shall
be recorded by the DFCI in the United States patent and Trademark Office, and
copies thereof shall be furnished to this office.
(b) The DFCI shall not assign its U.S. patent rights in the invention to
parties other than the United States government, except that it may assign such
rights in the invention to a patent management organization, provided that the
patent administration agreement between such organization and the DFCI is
approved by the HHS. Any reference in this determination to the DFCI shall also
include such patent management organization when applicable, and any assignment
to such an organization shall be subject to all the terms and conditions of this
determination.
(c) The determination of whether or not patent application shall be filed
in foreign countries is left to the discretion of the DFCI. Foreign patent
rights may be licensed or assigned by the DFCI to any party of its choice.
However, any exclusive license or assignment of foreign patent rights to such
party shall include a provision for royalty payments to the DFCI based on
foreign sales related to such license or assignment and, provided that such
party has a license or right to market in the United States, a provision for
nonexclusive licensing in the country covered by the licensed or assigned rights
on the basis of not having made the invention available in the United States
within a reasonable time after marketing abroad.
(d) In the event that such party has a license or right to market in the
United States, such party shall agree to grant nonexclusive licenses for
sublicenses for marketing rights in the invention outside the United States, as
directed by the United States Government;
(1) if that party is marketing a product embodying the invention
outside the United States for at least two (2) years and
(a) such product is not then being marketed in the United
States, or
(b) if required, Food and Drug Administration approval for
marketing in the United States is not being actively pursued, or
(2) if that party is marketing a product embodying the invention
outside the United States for at least two (2) years from the date the
product has Food and Drug Administration approval for marketing in the
United States, and such product is not then being marketed in the United
States.
(e) The DFCI shall grant to the Government of the United States (including
any agency thereof, state, or domestic municipal government) a nonexclusive,
irrevocable, royalty-free license for governmental purposes, and on behalf of
any foreign government pursuant to any existing or future treaty or agreement
with the United States under each United
2
<PAGE> 12
States or foreign patent application filed. The form of license to be granted
under each patent application is enclosed.
(f) The DFCI shall provide written annual reports to the HHS commencing
one (1) year from the date of this agreement regarding the development and
commercial use that is being made and is intended to be made of the invention,
including the amounts and source of money expended in such development and such
other data and information as the HHS may specify. After the first commercial
sale of any product embodying the invention, such report shall specify the date
of the first commercial sale and shall include information relating to gross
sales by licensees, and gross royalties received by the DFCI.
(g) With regard to the U.S. patent application, the DFCI agrees that if it
or its licensee has not taken effective steps within three (3) years after a
patent issues on the invention to bring the invention to the point of practical
application, or has not made the invention available for licensing royalty-free
or on terms that are reasonable in the circumstances, or cannot show cause why
it should retain all right, title and interest for a further period of time, the
HHS shall have the right to require (1) assignment of the invention and the U.S.
patent to the United States; (2) cancellation of any outstanding exclusive
licenses; and/or (3) the granting of licenses to an applicant on a nonexclusive,
royalty-free basis or on terms that are reasonable in the circumstances.
(h) With regard to the United States patent application, the HHS reserves
the right to license or to require the granting of a nonexclusive or exclusive
license to a responsible applicant or applicants to practice the invention on
terms that are reasonable in circumstances, if the DFCI and/or any of its
licensees fail to comply with any of the provisions of this determination, or if
the HHS determines that the public health, safety, or welfare requires the
issuance of such licenses, or that the public interest would otherwise suffer
unless such licenses were granted.
The DFCI and its licensee shall be given written notice of any proposed
determination pursuant to the provisions of this paragraph not less than thirty
(30) days prior to the effective date of such determination and, if requested,
shall be granted a hearing before the determination is put into effect.
(i) The DFCI shall use all reasonable effort to bring the invention to the
commercial market through licensing on a nonexclusive, royalty-free or
reasonable royalty basis. However, exclusive licenses may be granted after
reasonable efforts have been made to license on a nonexclusive basis, or where
the DFCI has determined that an exclusive license is necessary as an incentive
for development of the invention, or where market conditions are such as to
require exclusive licensing.
(j) Any exclusive license granted by the DFCI under the U.S. patent
application to a qualified manufacturer for research, development, and marketing
shall be for a limited period of time, and in no event shall the period be
longer than five (5) years from the date of the first commercial sale in the
United States of products embodying said invention, or eight (8) years from the
date of the exclusive license, whichever occurs first (excepting that time
before regulatory agencies necessary to obtain premarket clearance unless, on a
case-by-case
3
<PAGE> 13
basis, the government approves a longer period of exclusivity), provided that
the licensee shall use all reasonable effort to effect introduction into the
commercial market as soon as practicable, consistent with sound and reasonable
business practices and judgment.
(k) Any extension of the maximum five (5)-year period of exclusivity shall
be subject to the approval of the HHS. Any request for such an extension shall
be considered on its merits upon written request and justification, it being
understood that, upon expiration of the period of exclusivity or any extension
thereof, any license thereafter shall be granted to all competent and properly
qualified applicants either royalty-free or at a uniform rate to all licensees,
and not in excess of the royalty rate of the previously granted exclusive
license.
(l) Unless otherwise provided in this determination, nothing herein shall
be construed as a requirement that DFCI obtain the agreement from any of its
licensees to license its improvement inventions or technical data to subsequent
licensees.
(m) The DFCI or its patent management organization may not grant to any
person the exclusive right to use or sell any subject invention in the United
States unless such person agrees that any products embodying the subject
invention, or produced through the use of the subject invention, will be
manufactured substantially in the United States. However, the Department may
waive such requirement upon a showing by the DFCI or the patent management
organization that reasonable but unsuccessful efforts have been made to grant
licenses on similar terms to potential licenses that would be likely to
manufacture substantially in the United States, or that under the circumstances
domestic manufacture is not commercially feasible.
(n) Any license granted by the DFCI under the U.S. patent application
shall include adequate safeguards against unreasonable royalties and repressive
practices. royalties shall not in any event be in excess of normal trade
practice. Such license shall also provide that all sales to the U.S. Government
shall be royalty-free.
(o) In accordance with Section 202(c)(7)(c) of P.L. 96-517, the DFCI is
required to share royalties received with the inventors. The balance of the
royalty income, after payment of expenses incident to the administration of the
invention, shall be utilized for the support of educational and research
pursuits.
(p) All licenses issued by the DFCI shall be subject to the conditions of
this determination, and shall specifically incorporate by reference all
applicable provisions contained herein. The DFCI shall promptly furnish copies
of any license agreements entered into by it to the HHS.
(q) The DFCI shall upon request grant a power of attorney authorizing the
HHS to inspect and make copies of any documents in the United States Patent and
Trademark Office pertaining to the prosecution of the U.S. patent application.
(r) The DFCI shall not abandon the patent application without first
offering to transfer all rights to in and to such application to the United
States Government as represented by the Secretary, HHS, not less than forty-five
(45) days prior to the date a reply to a Patent and Trademark Office action is
due. If the Government does not request assignment within thirty (30) days of
receipt of this offer, the DFCI may permit the application to go abandoned.
4
<PAGE> 14
(s) Any United States patent application filed by the grantee institution
shall include the following statement in the first paragraph of the
specification following abstract: the Invention described herein was made in the
course of work under a grant or award from the Department of Health and Human
Services. If the application does not now contain this statement, please request
the Patent and Trademark Office to amend the application, and furnish this
office with a copy of your request.
If the foregoing determination is acceptable to the Dana-Farber Cancer
Institute, we request that such acceptance be indicated in the space provided
below, and that a signed copy be returned to the Patent Branch, HHS, c/o
National Institutes of Health, Room 5A03, Westwood Building, Bethesda, Maryland
20205.
This determination will become effective upon receipt of the signed copy.
Executed copies of the appropriate assignments and licenses required by this
determination should be submitted to the Patent Branch as soon as possible.
Sincerely Yours,
/s/ James O. Mason
James O. Mason, M.D., Ph.D.
Acting Assistant Secretary
for Health
Accepted: Dana-Farber Cancer Institute
By: /s/ David Kiszkiss
------------------
Type Name: David Kiszkiss
Title: Director for Research
Date: April 22, 1985
Enclosure
cc: Dr. Israel
Dr. Potti
5
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of
blackout of the text (the "Mark"). This Exhibit has been filed separately with
the Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.4
EXCLUSIVE SUPPLY AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of the 1st day of
June, 1991,
BY AND BETWEEN:
1. ANTHRA PHARMACEUTICALS Inc., a company incorporated and organized under
the laws of the State of Delaware, U.S.A., having a place of business at 19,
Carson Road, Princeton, NJ 08540, U.S.A. ("ANTHRA"),
AND,
2. OMNICHEM S.A., a company incorporated and organized under the laws of
Belgium, having a place of business at the Industrial Research Park, 1348
Louvain-la-Neuve, Belgium ("OMNICHEM").
WITNESSETH:
WHEREAS, ANTHRA has acquired, via exclusive licence agreements entered
into with DANA-FABER CANCER INSTITUTE, Boston, Massachusetts, the exclusive
rights to the hereafter defined AD32 and other anthracycline products, and has
as a result sufficient right in and to said products to enable it to enter into
this Agreement and to grant OMNICHEM the hereincontained rights;
WHEREAS, OMNICHEM has, on the basis of the technological files supplied by
ANTHRA, developed a technology enabling the conversion of daunorubicin into AD32
in substantially more efficient proportions, which could allow the profitable
marketing of the AD32;
WHEREAS, ANTHRA is willing to complete the clinical development and
marketing of AD32 in the U.S. market and subsequently in other markets, and will
thereto need a long term source of AD32 as produced by OMNICHEM.
WHEREAS, OMNICHEM is desirous to manufacture the AD32 and other
anthracycline products to which ANTHRA has exclusive rights;
*** CONFIDENTIAL TREATMENT REQUESTED.
1
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto have agreed the following:
Article 1: Exclusive Production and Supply
1.1. For the purpose of this Agreement, "the AD32" shall mean the daunorubicin
derivate for which ANTHRA has an exclusive licence, and regarding which
OMNICHEM has developed a more efficient conversion process
1.2. During the term of this Agreement, ANTHRA grants to OMNICHEM, which
accepts, the worldwide exclusive right to manufacture only for ANTHRA the
AD32 bulk substance using daunorubicin delivered by ANTHRA or any of its
sublicencees.
1.3. ANTHRA shall not manufacture the AD32 or have the AD32 manufactured by
suppliers other than OMNICHEM prior to the termination of this Agreement
pursuant to Article 5. ANTHRA shall pass this obligation on to, and see to
the acceptance thereof by, all its sublicencees and other contractors
which would acquire rights to the AD32 during the term of this Agreement
as specified in Article 5.
1.4. During the term of this Agreement, ONMICHEM shall supply the AD32
exclusively to ANTHRA. The price at which OMNICHEM shall supply the AD32
to ANTHRA shall be agreed upon in good faith upon registration of the AD32
as produced using OMNICHEM's technology regarding the conversion of
daunorubicin into AD32. Parties hereby presently agree that the target
price of the AD32 shall be ***. Anthra has an obligation to place minimum
orders for AD32 ***. This price covers the costs of ***. OMNICHEM shall be
entitled to adjust the supply price, once agreed, on *** in order and
insofar as necessary to account for changes in the manufacturing costs of
the AD32. Such price increases shall not exceed more than ***. OMNICHEM
shall thereto communicate in writing to ANTHRA, at least sixty (60) days
before the proposed adjustment showing in particular the changes both
negative and positive in the relevant manufacturing costs. The parties
also agree to negotiate in good faith a rebate or discount for orders of
AD32 exceeding five kilograms.
1.5. All payments pursuant to a delivery of AD32 shall be due within 30 days of
the date of the invoice, which shall be established and sent to ANTHRA
upon shipment.
1.6. All payments shall be made in Belgian francs on the Belgian bank account
communicated by OMNICHEM to ANTHRA from time to time, net from any banking
commission or fee.
1.7. Unless otherwise agreed between the parties, delivery shall be made within
sixty (60) days to the port of arrival in the U.S.A. and risk shall pass
at the port of departure. OMNICHEM shall obtain all necessary licences and
permits required for the delivery of the product. OMNICHEM shall deliver
the product to ANTHRA in accordance with ANTHRA's reasonable written
instructions. OMNICHEM shall bear the cost of shipment to ANTHRA.
Article 2: Registration
OMNICHEM shall submit to ANTHRA before July 15th a draft Drug Master file
which is necessary for the registration by ANTHRA of the AD32. The Drug Master
File shall be submitted by Anthra to the Food and Drug Administration. ANTHRA
will refund to OMNICHEM the costs incurred in the preparation and drawing up of
the Drug Master File, which costs are currently estimated at ***. OMNICHEM
agrees to prepare the necessary annual reports to the Drug Master File to keep
it up to date. OMNICHEM agrees not to make any change to the manufacturing
process for AD32 which would
*** CONFIDENTIAL TREATMENT REQUESTED.
2
<PAGE> 3
necessitate an amendment to the Drug Master File without the prior written
consent of ANTHRA.
Article 3: Other Agreements
3.1. In respect of Contract Products other than the AD32, ANTHRA, prior to
negotiating the development and production of such products with third
parties, shall consult and negotiate in good faith with OMNICHEM the
possible conditions under which OMNICHEM could undertake this development,
production and supply.
Article 4: Quality Control
4.1. OMNICHEM warrants that all shipments of AD32 will meet the specifications
listed in Attachment A, shall be manufactured in accordance with current
good manufacturing practices as defined by the U.S. Food and Drug
Administration and shall not contain any product or article which is
adulterated or misbranded as these terms are defined in the U.S. Food,
Drug, and Cosmetic Act or in similar laws enacted by the states. OMNICHEM
will supply to ANTHRA a certificate of analysis for each lot of AD32
supplied pursuant to this Agreement evidencing that the lot of AD32 meets
the specifications listed in Attachment A. Following receipt of each
shipment of AD32, ANTHRA shall be entitled to inspect the AD32 and to
perform, at its own costs, such quality control checks as it deems
necessary to confirm that the product is free from defects and complies
with the specifications listed in Attachment A. In the event that any
delivery of AD32 contains defects or does not comply with the
specifications, ANTHRA shall inform OMNICHEM of such non-conformity in
writing, within one months after receipt of the shipment, specifying the
non-complying characteristics of the AD32.
4.2. Upon receipt of such notice, OMNICHEM shall replace at its own costs the
AD32 which does not comply with the quality control specifications or, at
the election of ANTHRA, refund its money. OMNICHEM shall make every
reasonable effort to perform such replacement within 60 days after having
received such notice. ANTHRA shall have the right to inspect OMNICHEM's
manufacturing facilities and any documents held by OMNICHEM relating to
the manufacture of AD32 upon reasonable written notice to OMNICHEM. ANTHRA
shall also have the option to be present during any inspection of
OMNICHEM's manufacturing facility by officials of the U.S. Food and Drug
Administration, and shall receive copies of any FDA documents, letters or
forms received by OMNICHEM relating to its manufacturing of AD32.
4.3. OMNICHEM agrees to pay any damages incurred by Anthra and flowing directly
from the failure of the product to meet specifications. ANTRHA agrees to
bear the risks that may be incurred through use of the product as a
therapeutic agent.
*** CONFIDENTIAL TREATMENT REQUESTED.
3
<PAGE> 4
Article 5: Duration and Termination
5.1. This Agreement shall be binding and remain in force:
5.1.1. for the period starting on the signing of this Agreement and ending
on the date of expiration of the validity of the U.S. Patent No. 4,035,566
covering the AD32.
5.2. Each party shall however have the right to forthwith terminate this
Agreement by written notice at any given time if:
5.2.1. the other party fails to observe any of the terms hereof to a
material and significant extent, provided the non-defaulting party
provides the defaulting party with sixty (60) days notice of
termination, within which time the default or breach may be cured;
5.2.2. the other party becomes insolvent, or has a receiver appointed, or
execution or distress levied upon its assets;
5.2.3. as a result of an order of government or any other official
authority, the continued operation of this Agreement in all of its
provisions is prevented or delayed for an unspecified and indeterminate
period.
5.3. ANTHRA shall have the right to terminate this Agreement if, for any
reason, OMNICHEM can no longer continue to manufacture AD32.
5.4. If ANTHRA terminates this Agreement pursuant to Article 5.3, OMNICHEM
shall no longer have any licence, exclusive or otherwise, to manufacture
AD32 for ANTHRA. The exclusive licence shall revert back to ANTHRA without
charge. Along with the requisite technical information to enable Anthra to
manufacture AD32, OMNICHEM shall also provide ANTHRA with all prior
manufacturing documentation to support prior shipments of AD32 to Anthra.
Article 6: Right of Last Refusal after termination
6.1 After termination of this Agreement as per Article 5, ANTHRA shall be
entitled to have the manufacture of any and all AD32 undertaken by any
party of its choice.
6.2. However, ANTHRA grants OMNICHEM, which accepts, a right of last refusal to
further manufacture the AD32 at conditions equal in all respects,
including price, to those offered by a third party supplier.
This right of last refusal shall remain in force for a period of ten (10) years
after termination of this Agreement. It shall however not apply if this
Agreement is terminated by ANTHRA, in due application of subarticle 5.2.
*** CONFIDENTIAL TREATMENT REQUESTED.
4
<PAGE> 5
Article 7: Disclosure of Information
7.1. Anything in this Agreement to the contrary notwithstanding, the parties
shall hold in confidence, during the performance of this Agreement and for
a period of ten (10) years thereafter, any knowledge, know-how, practices,
process or other information pertaining to AD32, hereinafter referred to
as "Information", disclosed by the other party, and shall not disclose,
during the said period, that Information to any third party, including to
its own sublicencees and contractors without first obtaining the written
consent of the disclosing party, except as may be otherwise provided
herein, or as may be required for purposes of investigating, manufacturing
and marketing AD32 or for securing essential or desirable authorizations,
privileges, or rights from governmental agencies, or as required to be
disclosed to a governmental agency or as necessary to file or prosecute
patent applications or to carry out any litigation concerning AD32.
7.2. The party's duty of confidentiality shall not extend to:
- any Information that, at this time of disclosure, is in or later
becomes part of the public domain;
- any Information that is published after disclosure, unless
publication is a breach by any party of this clause;
- any Information that, prior to disclosure by the disclosing party,
was already in the possession of the recipient party in the ordinary
course of its business, or as evidenced by proof of actual prior use
by the recipient party;
- any Information which obtained by the recipient party from a third
party, who is lawfully in possession of such Information, is not in
violation of any contractual, legal or fiduciary obligation to the
disclosing party with respect to that Information, and does not
prohibit the recipient from disclosing such Information to others.
7.3. During the performance of this Agreement and for a period of ten (10)
years thereafter, the parties shall use any Information disclosed by the
other party solely for the purposes contemplated by this Agreement. No
party shall use or exploit the Information in any other way.
7.4. Any trademarks or designs created by either ANTHRA or OMNICHEM shall be
used by each party as the party owning the trademark may reasonably
require. The parties shall immediately bring to each other's attention any
improper or wrongful use of any trademark or other intellectual property
and take all steps necessary to defend the rights and interest in all
trademarks and intellectual property.
7.5. Any inventions, findings, discoveries, additions, modifications,
formulations, changes or proprietary information jointly conceived,
created or developed by the
*** CONFIDENTIAL TREATMENT REQUESTED.
5
<PAGE> 6
parties relating to AD32 hereto shall belong jointly to the parties unless
otherwise agreed.
Article 8: Late Payments
All sums due by one of the parties to this Agreement to the other pursuant
to any provision of this Agreement, shall bear, from the due date to the day of
effective crediting of the creditor's account for the proper amount, an interest
computed for each started month of delay at an annual rate of 2 points above the
average one-year term LIBOR rate for BEF applying on the first day of such
month.
Article 9: Force Majeure
Notwithstanding anything to the contrary herein contained, if the
performance of this Agreement by any party, or any obligation of any party
hereunder is temporarily prevented, restricted or interfered with by reason of
any event beyond the reasonable control of a party hereto, then the party so
affected shall promptly notify the other party of all reasonable resulting
difficulties. Events beyond the reasonable control of a party hereto shall
include strikes, lockouts, labor disputes, riots, fires, explosions, and damages
due to natural forces. Upon such notice, the disabled party shall, for the
duration of its disability, be excused from the performance of such of its
obligations as are prevented, restricted, or of such of its obligations as are
prevented, restricted, or interfered with by reason of the occurrence of any of
the events above enumerated and such party shall not be deemed to be in default
under this Agreement nor be subject to any liability or damage provided that the
affected party shall use its best efforts to avoid or remove such causes of
non-performance and shall continue performance with the utmost dispatch whenever
such causes are removed. The time period within which any party is to perform
such obligation under this Agreement shall be extended by the period of such
disability. When any such circumstances arrive, the parties shall discuss what,
if any, modification of the terms of this Agreement may be required in order to
arrive at any equitable solution.
Article 10: Severability
If any term or provision of this Agreement is held to be illegal or
unenforceable, then this Agreement, except for such part or parts thereof, shall
continue to be in full force and effect. The parties shall in good faith seek to
supersede the unenforceable or invalid clause with an enforceable and valid one
providing to the largest possible extent the same financial and commercial
effect on the parties.
Article 11: Governing law and competent jurisdiction
11.1. The present Agreement shall be governed by Belgian law.
11.2. All disputes arising out of the validity, construction or performance of
the present Agreement shall be settled by arbitration under the Rules of
the American Arbitration Association.
*** CONFIDENTIAL TREATMENT REQUESTED.
6
<PAGE> 7
11.2.1. The arbitral tribunal shall consist of three arbitrators. One
arbitrator shall be appointed by ANTHRA and one shall be appointed
by OMNICHEM; these two arbitrators shall jointly select the third
arbitrator. If the arbitrators cannot agree on the designation of
a third arbitrator, or if one party fails to designate an
arbitrator, the authority provided by the Rules of the American
Arbitration Association shall make the appointment.
11.2.2. The seat of arbitration shall be London, England.
11.2.3. The arbitration shall be held in the English language.
11.2.4. For enforcement of this Agreement or an arbitration award or in
aid of arbitration, the parties consent to the jurisdiction of the
courts of Brussels, Belgium, and New Jersey, U.S.A.
Article 12: Miscellaneous
12.1. The provisions of this Agreement shall not be modified other than by a
written agreement signed by the parties. This Agreement constitutes the
entire Agreement of the parties and supercedes all existing agreements.
12.2. This Agreement may not be assigned by OMNICHEM without the prior consent
of ANTHRA which consent shall not be unreasonably withheld.
12.3. Any notice required or permitted under this Agreement shall be sent by a
certified air mail, postage prepaid, international cable, facsimile
transmission or telex (notice by cable, facsimile or telex must also be
confirmed by a certified, air mail copy, postage prepaid) to the following
addresses of the parties:
to ANTHRA:
Anthra Pharmaceuticals, Inc.
19 Carson Road
Princeton, New Jersey 08540
Fax: 609-924-3875
to OMNICHEM:
Omnichem S.A.
Industrial Research Park
1348 Louvain-la-Neuve
Belgium
Fax: ________________________
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
duplicate by their duly qualified officers or representatives.
*** CONFIDENTIAL TREATMENT REQUESTED.
7
<PAGE> 8
Done in /s/ Michael C. Walker on 28 June, 1991, FOR AND ON BEHALF OF ANTHRA
PHARMACEUTICALS Inc.
Done in /s/ B. de Traux de Wardin on 22nd July, 1991, FOR AND ON BEHALF OF
OMNICHEM S.A.
B. de Traux de Wardin
Manager Marketing & Business Operations
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.5
TERMINATION, SETTLEMENT
AND INVESTMENT AGREEMENT
THIS TERMINATION, SETTLEMENT AND INVESTMENT AGREEMENT (hereinafter
"Agreement"), made as of July 16, 1996, by and between Anthra Pharmaceuticals,
Inc., a corporation organized under the laws of the State of Delaware, U.S.A.,
having its principal business office at 19 Carson Road, Princeton, New Jersey
08540, U.S.A. ("Anthra"), and Schering AG, a corporation organized under the
laws of the Federal Republic of Germany, having its principal business office at
13342 Berlin, Germany ("Schering"),
WITNESSETH:
WHEREAS, Anthra has developed certain proprietary know-how and data
with respect to N-Trifluoroacetyladriamycin-14 valerate, a doxorubicin
derivative ("AD 32"); and
WHEREAS, Anthra and Schering entered into a Development and License
Agreement, dated as of September 20, 1995, relating to AD 32 ("D&L Agreement");
and
WHEREAS, Anthra and Schering have agreed to terminate the D&L
Agreement and render the D&L Agreement null
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 2
-2-
and void except as restated herein; and
WHEREAS, it is the intention of Anthra and Schering that all issues
in connection with the D&L Agreement be forever settled, that this Agreement be
substituted in place of the D&L Agreement, and that neither of the parties, upon
the signing of this Agreement, be further obligated under the D&L Agreement;
NOW, THEREFORE, in consideration of the recitals above made, and the
payments, covenants and obligations set forth herein, and intending to be
legally bound, the parties agree as follows:
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 3
-3-
ARTICLE I
DEFINITIONS
1.1 "AD 32" shall have the meaning set forth in the preamble hereto.
1.2 "Affiliate" of a person shall mean any corporation, partnership
or other entity that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such person.
"Control" and, with correlative meanings, the terms "controlled by" and "under
the common control with" shall mean the power to direct or cause the direction
of the management or policies of a person, whether through the ownership of
voting securities, by contract, resolution, regulation, or otherwise.
1.3 "Anthra" shall mean Anthra Pharmaceuticals, Inc. and its
Affiliates.
1.4 "Audit Disagreement" shall have the meaning set forth in Section
5.7.
1.5 "Contract Quarter" shall mean each period of three consecutive
calendar months during the term of this Agreement, commencing on the first day
of January, April, July or October, as the case may be, and any partial such
period ending on the date of expiration or earlier termination of this
Agreement.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 4
-4-
1.6 "D&L Agreement" shall mean the Development and Licensing
Agreement entered into between Anthra and Schering, as of September 20, 1995.
1.7 "Disclosing Party" shall have the meaning set forth in Section
6.3.
1.8 "Licensee" shall mean any third party to which Anthra grants a
license to market, sell and distribute the Product.
1.9 "Net Sales" shall mean, ***
1.10 "Notice" shall have the meaning set forth in Section 8.1.
1.11 "Product" shall mean AD 32, in finished dosage form, including
all forms of application and administration, whether or not in combination with
any other pharmacologically active ingredient.
1.12 "Purchaser" shall mean any third party which purchases or
otherwise acquires Anthra's rights in or to AD32 and/or the Product.
1.13 "Receiving Party" shall have the meaning set forth in Section
6.3.
1.14 "Schering" shall mean Schering AG and its Affiliates.
1.15 "Shares" shall have the meaning set forth in Section 4.1.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 5
-5-
ARTICLE II
RELEASES
2.1 Mutual Releases. In consideration of the promises, covenants,
and payments under this Agreement, Anthra, for the first part, and Schering, for
the second part, and their respective successors, administrators, legal
representatives, assigns, employees, parent and subsidiary corporations,
partners, their respective stockholders, officers, directors, representatives,
principals, agents, successors, and assigns, and each of their associated
entities and Affiliates, do hereby release, acquit, satisfy, fully release and
forever discharge one another and one another's successors, administrators,
legal representatives, assigns, employees, parent and subsidiary corporations,
partners, their respective stockholders, officers, directors, representatives,
principals, agents, successors, and assigns, and each of their associated
entities and Affiliates, of and from all, and all manner of actions, causes of
actions, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, executions, claims and demands
whatsoever, in law or in equity, which either party ever had, now has, or which
either party's successors, heirs, executors or administrators, hereafter can,
shall or
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 6
-6-
may have, in any manner arising from, related to, or in connection with the D&L
Agreement.
ARTICLE III
PAYMENTS TO ANTHRA
3.1 Settlement Payment. In partial consideration of the execution
and delivery by Anthra of this Agreement and the issuance and delivery of the
Shares, Schering shall pay Anthra the sum of Three Million Five Hundred Thousand
(U.S.) Dollars (US $3,500,000), which proceeds shall be used in research
relating to AD32. Schering expressly acknowledges that, as between Anthra and
Schering, Anthra will own all rights, title and interest in and to any such
research, and any data, know-how, intellectual property, or other property of
any kind whatsoever, tangible or intangible, resulting from any such research.
3.2 Manner of Payment. Payment to Anthra by Schering under this
Article III shall be made within two (2) business days of the execution and
delivery of this Agreement, in U.S. Dollars, by wire transfer of immediately
available funds to the following account: ***.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 7
-7-
ARTICLE IV
ISSUANCE OF SHARES TO SCHERING
4.1 Issuance of Stock. In partial consideration of the execution
and delivery by Schering of this Agreement, Anthra shall issue and deliver to
Schering 200,000 shares of its Series D Convertible Preferred Stock, $0.01 par
value (the "Shares"), free and clear of all restrictions upon transfer, liens,
pledges, charges, and encumbrances of any kind, nature or restriction.
4.2 Representations and Warranties of Anthra. In connection with the
issuance of the Shares to Schering, Anthra hereby makes the following
representations and warranties:
A. Organization and Qualification of Anthra. Anthra is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation with full power and
authority to own or lease its properties and to conduct the business
heretofore conducted by it in the manner and in the places where such
properties are owned or leased or such business is conducted by it.
B. Authority of Anthra. Anthra has full power and authority to
issue and deliver the Shares in accordance with the terms of this
Agreement. When issued in accordance with this Agreement, the Shares will
be validly issued, fully paid and nonassessable. All necessary action,
corporate or otherwise, has been taken by Anthra to
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 8
-8-
authorize the issuance and delivery of the Shares.
C. No Conflicts. The issuance and delivery of the Shares in
accordance with the terms of this Agreement by Anthra will not constitute
a default or event of default under, or violate, conflict with, or result
in any breach of the terms, conditions, or provisions of: (i) the
corporate charter or By-laws of Anthra; (ii) the laws or regulations of
any jurisdiction or any other governmental requirements; or (iii) any
material mortgage, lien, lease, agreement, contract, instrument, order,
arbitration award, injunction, judgment or decision to which Anthra is a
party or by which it or its property is bound or materially affected.
4.3 Representations and Warranties of Schering. In connection with
the issuance of the Shares to Schering, Schering hereby makes the following
representations and warranties:
A. Accredited Investor. Schering is an "accredited investor"
within the definition set forth in Rule 501(a) promulgated under the
Securities Act of 1933. Schering understands that Anthra is relying on
such representation.
B. Securities Not Registered. Schering understands (i) that
the Shares have not been registered for sale under United States federal
or state securities laws
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 9
-9-
and that the Shares are being offered and sold to Schering pursuant to one
or more exemptions from the registration requirements of such securities
laws; (ii) that in order to satisfy such requirements Schering must be
acquiring the Shares for its own account for investment and not with a
view to distribution thereof except in accordance with applicable
securities laws and that the representations and warranties contained in
this Section 4.3 are given with the intention that Anthra may rely thereon
for purposes of claiming such exemption; and (iii) that the Shares cannot
be sold by Schering unless subsequently registered under such laws or
unless an exemption from such registration is available.
C. Shares Acquired for Investment; Limitations on Disposition.
Schering agrees that the Shares will not be sold or otherwise transferred
unless (i) a registration statement with respect thereto has become
effective under the U.S. Securities Act of 1933; or (ii) there is
presented to Anthra an opinion of counsel reasonably satisfactory to
Anthra that registration under federal and state securities laws is not
required; or (iii) pursuant to the provisions of Rule 144 promulgated
under the U.S. Securities Act of 1933.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 10
-10-
ARTICLE V
ROYALTY PAYMENTS TO SCHERING
5.1 Royalties. In partial consideration of the execution and
delivery by Schering of this Agreement, Anthra shall pay Schering, on a
quarterly basis, a royalty equal to (i) *** of worldwide Net Sales of the
Product by Anthra or its Licensees (or their sublicensees, as the case may be)
or any Purchaser, for a period of three (3) years following the commercial
launch of the Product in the United States, Germany or the United Kingdom,
whichever occurs first (the "Initial Royalty Period"), and (ii) *** of worldwide
Net Sales of the Product by Anthra or its Licensees (or their sublicensees, as
the case may be) or any Purchaser, for the four-year period immediately
following the Initial Royalty Period (the "Second Royalty Period"). Anthra
agrees to require any Purchaser to assume the royalty obligations of Anthra set
forth in this Article V.
5.2 Payment of Royalties. Royalty payments to Schering with respect
to *** shall be made to Schering ***, in U.S. dollars by wire transfer of
immediately available funds to an account at a commercial bank designated by
Schering, within *** of the end of the Contract Quarter in which such sales of
the Product occurred. Schering shall designate a commercial bank to receive
funds pursuant to this Section, at least five business days before payment is
due. Where payments are based on *** in countries other than the United States,
the amount of *** expressed in the currency of each country shall be converted
into U.S. dollars at the average exchange rate for the applicable Contract
Quarter. In determining the average exchange rate for the Contract Quarter, the
standard shall be fifty percent (50%) of the sum of (i) the rate quoted by
Reuters in New York at 1:00 p.m. on the last business day of the Contract
Quarter; plus (ii) the rate quoted by Reuters in New York at 1:00 p.m. on the
last
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 11
-11-
business day of the immediately preceding Contract Quarter.
5.3 Statement of Royalties. Each royalty payment made pursuant to
this Article V shall be accompanied by a statement showing the amounts *** and,
if applicable, its Licensees, on a country-by-country basis, during such ***,
and the amount of royalties due on such ***.
5.4 Withholding Taxes. Anthra shall pay any and all withholding
taxes or similar charges imposed by any government on any amounts due to
Schering from Anthra pursuant to this Article V (whether in respect of sales by
Anthra or its Licensees) to the proper taxing authority, and proof of payment of
such taxes or charges will be secured and sent to Schering as evidence of such
payment. All amounts paid by Anthra pursuant to this Section 5.4 shall be paid
for the account of Schering and credited against royalties due from Anthra to
Schering pursuant to Section 5.1. For the avoidance of doubt, it is hereby
agreed that until such time as an appropriate certificate of exemption is
obtained from the tax authorities, Anthra shall be entitled to deduct from any
payments due to Schering all applicable withholding taxes or similar charges
imposed by any government.
5.5 Record Keeping. Anthra shall, and shall cause its Licensees to,
keep complete and accurate books and records pertaining to the sale of the
Product in sufficient detail to
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 12
-12-
permit an independent, certified public accountant appointed by Schering to
audit and confirm the accuracy of calculations of payments due to Schering
hereunder. Such books and records shall be retained by the party in question for
at least five (5) years after the expiration or termination of this Agreement,
or for such longer period if and as required by law.
5.6 Audit of Records. At the request of Schering, Anthra shall, and
shall cause its Licensees to, permit an independent, certified public accountant
appointed by Schering and reasonably acceptable to Anthra at reasonable times
and upon reasonable notice, to examine such books and records as may be
necessary to: (i) determine, with respect to any Contract Quarter, the
correctness of any report or payment made under this Agreement; or (ii) obtain
information as to the amount payable for any such Contract Quarter in the case
of failure on the part of Anthra to report or pay pursuant to this Agreement.
The audit of records conducted pursuant to this Section 5.6 shall not occur more
frequently than once per year for Anthra, each of its Licensees and its
Affiliates and shall not go back beyond the last audit unless irregularities are
found. The results of any such audit shall be promptly made available to Anthra.
5.7 Audit Disagreement. If there is a dispute
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 13
-13-
between the parties following any audit performed pursuant to Section 5.6,
either party may refer the issue (the "Audit Disagreement") to an independent,
certified public accountant for resolution pursuant to Section 5.8.
5.8 Independent Expert Review. In the event an Audit Disagreement is
submitted for resolution by either party pursuant to this Article, the parties
shall comply with the following procedures:
(a) The party submitting the Audit Disagreement for resolution
shall provide written Notice to the other party that it is invoking the
procedures of this Section.
(b) Within fifteen business days of the giving of such Notice,
the parties shall select a recognized international accounting firm to act as an
independent expert to resolve the Audit Disagreement.
(c) The Audit Disagreement submitted for resolution shall be
described by the parties to the independent expert, which description may be in
written or oral form, within twenty business days of the selection of such
independent expert.
(d) The independent expert shall render a decision on the
matter as soon as practicable.
(e) The decision of the independent expert
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 14
-14-
shall be final and shall not be subject to arbitration under Section 8.5. The
parties hereto shall comply with such decision in all respects.
(f) All fees and expenses of the independent expert, including
any third party support staff or other costs incurred with respect to carrying
out the procedure specified above at the direction of the independent expert,
shall be borne by the losing party, unless the decision of the independent
expert allocates such fees and expenses differently.
ARTICLE VI
CONFIDENTIALITY
6.1 Confidential Information Relating to D&L Agreement. For a period
of five (5) years from the date hereof, Schering shall keep completely
confidential and shall not publish or otherwise disclose and shall not use
directly or indirectly for any purpose any information furnished to Schering by
Anthra pursuant to the D&L Agreement or otherwise relating to any transaction in
connection with the D&L Agreement, except to the extent that Schering can
establish by competent proof that such information falls within the terms of
Section 6.3 (a)-(d) hereof.
6.2 Transfer of Information in Connection with D&L
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 15
-15-
Agreement. Schering shall (i) transfer to Anthra, within thirty (30) days of the
date hereof, all data, files and other materials in the possession or under the
control of Schering relating to the Product or (ii) provide to Anthra, within
thirty (30) days of the date hereof, a certificate signed by an officer of
Schering stating that all such materials have been destroyed.
6.3 Confidential Information. Except to the extent permitted by this
Agreement or as otherwise agreed by the parties in writing, the parties agree
that, at all times during the term of this Agreement and for a five (5) year
period following termination or expiration hereof, the party receiving
information (the "Receiving Party") shall keep completely confidential, shall
not publish or otherwise disclose and shall not use directly or indirectly for
any purpose any information furnished to it by the other party (the "Disclosing
Party") pursuant to this Agreement or otherwise relating to any transaction
contemplated hereby, except to the extent that the Receiving Party can establish
by competent proof that such information:
(a) was already known to the Receiving Party, other than under
an obligation of confidentiality, at the time of disclosure by the Disclosing
Party;
(b) was part of the public domain at the time
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 16
-16-
of its disclosure by the Disclosing Party;
(c) became part of the public domain after its disclosure by
the Disclosing Party, other than through any act or omission of the Receiving
Party in breach of this Agreement; or
(d) was disclosed to the Receiving Party by a third party who
had no obligation not to disclose such information to others.
ARTICLE VII
TERM AND TERMINATION
7.1 Term. The term of this Agreement shall commence as of the date
on which Anthra shall receive the payment set forth in Article III hereof, and
shall expire at the end of the Second Royalty Period.
7.2 Termination for Material Breach. This Agreement shall be subject
to early termination by either party in the event of a material breach hereof by
the other party with respect to its obligations under this Agreement, which
breach is not cured within sixty (60) days (or, in the case of a payment
default, ten (10) business days) following written Notice thereof by the
non-breaching party; provided, however, that Anthra shall be required to pay
Schering all royalties that may accrue pursuant to Section 5.1 hereof through
the date of expiration or the earlier termination of the Agreement.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 17
-17-
7.3 Termination for Other Events. Schering may terminate this
Agreement if, at any time, Anthra shall file in any court or agency pursuant to
any statute or regulation of any state or country, a petition in bankruptcy or
insolvency or for reorganization or for an arrangement or for the appointment of
a receiver or trustee of Anthra or of its assets, or if Anthra proposes a
written agreement of composition or extension of its debts, or if Anthra shall
be served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed within sixty (60) days
after the filing thereof, or if Anthra shall propose or be a party to any
dissolution or liquidation, or if Anthra shall make an assignment for the
benefit of its creditors.
7.4 Effect of Expiration or Termination. The expiration of the term
hereof, or any early termination of this Agreement, shall be without prejudice
to any rights or obligations of the parties that may have accrued prior to such
expiration or termination. Termination of this Agreement in accordance with the
provisions hereof shall not limit remedies which may otherwise be available in
law or equity. The rights and obligations of the parties under Article II hereof
and this Article VII shall survive expiration or termination of this Agreement.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 18
-18-
ARTICLE VIII
GENERAL PROVISIONS
8.1 Notice. All notices, requests, reports, statements and other
communications to either party (each a "Notice") shall be in writing, in the
English language, shall refer specifically to this Agreement and shall be hand
delivered or sent by express courier service, carriage costs prepaid, or by
facsimile to the respective addresses specified below (or to such other address
as may be specified by Notice to the other party):
If to Anthra:
Anthra Pharmaceuticals, Inc.
19 Carson Road
Princeton, N.J. 08540 USA
Fax: (609) 924-3875
Attention: Michael C. Walker
If to Schering:
Schering AG
13342 Berlin
Germany
Fax: 49-30-468-4086
Attention: Head, Legal Department
Any Notice delivered by facsimile or similar means shall be
confirmed by a hard copy delivered as soon as practicable. The effective date of
any Notice shall be: (a) the date of the addressee's receipt, if delivered by
hand or express courier; (b) the date of receipt if received by
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 19
-19-
5:00 p.m. local time on a business day or, if not, the first business day after
receipt, if sent by facsimile.
8.2 Further Assurances. Each party shall duly execute and deliver,
or cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such assignments, agreements, documents and instruments, as may be
necessary or as the other party may reasonably request in connection with this
Agreement or to carry out more effectively the provisions and purposes hereof,
or to better assure and confirm unto such other party its rights and remedies
under, this Agreement.
8.3 Successors and Assigns. The terms and provisions hereof shall
inure to the benefit of, and be binding upon, Anthra, Schering and their
respective successors and permitted assigns; provided, however, that, except as
expressly provided herein, neither party may, without the prior written consent
of the other party, assign or otherwise transfer any of its rights and
interests, or delegate any of its obligations, hereunder. Any attempt to assign
or delegate any portion of this Agreement in violation of this Section 8.3 shall
be null and void.
8.4 Governing Law. This Agreement shall be governed by, construed,
and enforced in accordance with the
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 20
-20-
laws of the State of Delaware, U.S.A., without regard to principles of conflicts
of law.
8.5 Arbitration. Except as set forth in Section 5.8 hereof, any
disputes arising under this Agreement shall be resolved by arbitration in
accordance with the Rules of Conciliation and Arbitration of the International
Chamber of Commerce to be held in New York, New York. All proceedings are to be
conducted in the English language. The parties shall appoint an arbitrator by
mutual agreement. If the parties cannot agree on the appointment of an
arbitrator within thirty (30) days after receipt of a demand for arbitration,
each party shall appoint one arbitrator, and the two arbitrators shall appoint a
third arbitrator. If the party-appointed arbitrators cannot agree on the third
arbitrator, the third arbitrator shall be appointed by the President of the
International Chamber of Commerce. Any fees and expenses payable with respect to
the arbitration shall be borne by the party losing the case. All arbitration
rulings and awards shall be final and binding on the parties and shall be
enforceable in accordance with the Convention on the Recognition and Enforcement
of Foreign Arbitral Awards.
8.6 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, then, to the
fullest extent permitted by
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 21
-21-
applicable law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intent of the parties as nearly as may be possible, (b) such invalidity,
illegality or unenforceability shall not affect the validity, legality or
enforceability of such provision in any other jurisdiction, and (c) the parties
agree to use their best efforts to negotiate a provision, in replacement of the
provision held invalid, illegal or unenforceable, that is consistent with
applicable law and accomplishes, as nearly as possible, the original intention
of the parties with respect thereto. To the fullest extent permitted by
applicable law, each party hereby waives any provision of law that would render
any provision hereof prohibited or unenforceable in any respect.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which,
taken together, shall constitute one and the same instrument.
8.8 Captions. The captions of this Agreement are for convenience of
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision contained in this
Agreement.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 22
-22-
8.9 Entire Agreement. This Agreement constitutes, on and as of the
date hereof, the entire agreement of the parties with respect to the subject
matter hereof, and all prior or contemporaneous understandings or agreements,
whether written or oral, between the parties with respect to such subject
matter, including without limitation the D&L Agreement, are hereby superseded in
their entireties. This Agreement shall not be amended in any respect whatsoever
except by a further agreement, in writing, fully executed by each of the
parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date first above written.
ANTHRA PHARMACEUTICALS, INC. SCHERING AG
By: /s/ Michael C. Walker By: /s/ Dr. Erlen
-------------------------- --------------------------------
Name: Michael C. Walker Name: Dr. Erlen
Title: President Title: Member of the Board
of Executive Directors
By: /s/ Dr. J-F Kapp
--------------------------------
Name: Dr. J-F. Kapp
Title: Head of Strategic
Business Unit Therapeutics
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule
406 under the Securities Act.
EXHIBIT 10.9
EXCLUSIVE LICENSE AGREEMENT
by and between
ANTHRA PHARMACEUTICALS, INC.
and
PRODESFARMA, S.A.
Dated as of April 17, 1997
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS............................................................. 2
ARTICLE II
PRODUCT DEVELOPMENT..................................................... 6
2.1 Clinical Studies............................................. 6
2.2 Registrations and Approvals.................................. 7
2.3 Pricing and Reimbursement.................................... 7
ARTICLE III
SUPPLY OF THE PRODUCT................................................... 8
3.1 Anthra Obligation............................................ 8
3.2 Good Faith Forecasts......................................... 8
3.3 Firm Forecasts............................................... 9
3.4 Purchase Orders.............................................. 9
3.5 Delivery..................................................... 10
3.6 Inability to Supply.......................................... 10
3.7 Warranty..................................................... 11
3.8 Price........................................................ 11
3.9 Specifications Amendments.................................... 12
3.10 Records...................................................... 12
ARTICLE IV
MARKETING AND SALE OF THE PRODUCT....................................... 12
4.1 Prodesfarma Obligation....................................... 12
4.2 Compliance................................................... 13
4.3 Trademarks................................................... 13
4.4 Price of the Product......................................... 13
4.5 Marketing Materials.......................................... 14
4.6 Product Liability Insurance.................................. 14
4.7 Competition.................................................. 14
ARTICLE V
LICENSE GRANTS.......................................................... 15
5.1 Grants....................................................... 15
5.2 Sublicenses.................................................. 15
ARTICLE VI
LICENSE FEES............................................................ 16
6.1 License Fees................................................. 16
6.2 Payment of License Fees...................................... 16
6.3 Royalties.................................................... 17
6.4 Withholding Taxes............................................ 17
1
<PAGE> 3
Page
----
ARTICLE VII
EXECUTIVE MANAGEMENT COMMITTEE.......................................... 17
7.1 Formation of the EMC......................................... 17
7.2 Authority of the EMC......................................... 18
7.3 Procedural Rules of the EMC.................................. 19
ARTICLE VIII
REPORTING............................................................... 20
8.1 Reporting by Parties......................................... 20
8.2 Record Keeping............................................... 20
8.3 Audit of Records............................................. 20
ARTICLE IX
ADVERSE EVENT AND OTHER INFORMATION EXCHANGE............................ 21
9.1 Notification................................................. 21
9.2 Material Communications...................................... 21
ARTICLE X
PRODUCT RECALL.......................................................... 22
10.1 Notification and Recall...................................... 22
10.2 Recall Expenses.............................................. 23
ARTICLE XI
INTELLECTUAL PROPERTY RIGHTS............................................ 23
11.1 Ownership of Licensed Know-how............................... 23
11.2 Ownership of Filings and Approvals........................... 24
11.3 Ownership of Data............................................ 24
11.4 Enforcement of Intellectual Property Rights.................. 24
11.5 Cooperation.................................................. 25
ARTICLE XII
CONFIDENTIALITY......................................................... 25
12.1 Confidential Information..................................... 25
12.2 Disclosure of Confidential Information....................... 26
12.3 Use of Names................................................. 27
ARTICLE XIII
WARRANTIES; INDEMNITIES................................................. 27
13.1 Representations and Warranties............................... 27
13.2 Warranties of Anthra......................................... 28
13.3 Indemnification of Prodesfarma............................... 29
13.4 Indemnification of Anthra.................................... 29
13.5 Indemnification Procedure.................................... 29
2
<PAGE> 4
ARTICLE XIV
TERM AND TERMINATION.................................................... 31
14.1 Term........................................................ 31
14.2 Termination for Material Breach............................. 32
14.3 Termination for Breach of Investment Agreement.............. 32
14.4 Unilateral Termination by Prodesfarma or Anthra............. 33
14.5 Termination for Other Events................................ 33
14.6 Effect of Expiration or Termination......................... 34
14.7 Survival of Licenses and Royalty Obligations;
Assignment of Registrations and Trademarks.................. 35
ARTICLE XV
GENERAL PROVISIONS...................................................... 36
15.1 Force Majeure............................................... 36
15.2 Notice...................................................... 36
15.3 Further Assurances.......................................... 37
15.4 Successors and Assigns...................................... 38
15.5 Governing Law............................................... 38
15.6 Arbitration................................................. 38
15.7 Severability................................................ 39
15.8 Counterparts................................................ 40
15.9 Captions.................................................... 40
15.10 Independent Contractors..................................... 40
15.11 Entire Agreement............................................ 41
ANNEX A................................................................. 42
ANNEX B................................................................. 44
ANNEX C................................................................. 45
3
<PAGE> 5
THIS EXCLUSIVE LICENSE AGREEMENT (this "Agreement"), is made as of
April 17, 1997, by and between Anthra Pharmaceuticals, Inc., a corporation
organized under the laws of the State of Delaware, U.S.A, having its principal
business office at 19 Carson Road, Princeton, N.J. 08540, U.S.A. ("Anthra"), and
Prodesfarma, S.A., a corporation organized under the laws of Spain, having its
principal business office at Calle del Pont Reixat 5, 08960 Sant Just Desvern,
Barcelona, Spain ("Prodesfarma"),
WITNESSETH:
WHEREAS, Anthra has developed certain proprietary know-how and data
with respect to N-Trifluoroacetyladriamycin-14 valerate, a doxorubicin
derivative ("AD 32"),
WHEREAS, Anthra intends to secure the regulatory approvals required
in order to promote, market and sell AD 32 in Spain and Portugal (collectively,
the "Territory"),
WHEREAS, Prodesfarma has considerable experience in the promotion,
marketing and sale of pharmaceutical products in the Territory, and has in place
a large and experienced marketing staff that can expedite the distribution of AD
32 in the Territory, and
WHEREAS, Prodesfarma desires to obtain an exclusive license from
Anthra to promote, market and sell AD 32 in the
*** confidential treatment requested.
<PAGE> 6
2
Territory, and Anthra desires to grant such a license, on the terms set forth
herein;
WHEREAS, as an inducement to Anthra to enter into this Agreement,
Prodesfarma has entered into that certain Series D Convertible Preferred Stock
Purchase Agreement of even date herewith;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 "AD 32" shall have the meaning set forth in the preamble hereto.
1.2 "Affiliate" of a person shall mean any corporation, partnership
or other entity that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such person.
"Control" and, with correlative meanings, the terms "controlled by" and "under
common control with" shall mean the power to direct or cause the direction of
the management or policies of a person, whether through the ownership of voting
securities, by contract, resolution, regulation or otherwise.
1.3 "Anthra" shall mean Anthra Pharmaceuticals, Inc. and its
Affiliates.
1.4 "Approval" shall mean any approval, including
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 7
3
price and reimbursement approvals, granted by the appropriate regulatory
authority in (or valid with respect to) any country in the Territory for the
lawful Marketing of the Product.
1.5 "Disclosing Party" shall have the meaning set forth in Section
12.1.
1.6 "EMC" shall mean the Executive Management Committee established
pursuant to Article VII.
1.7 "EU" shall mean the European Union, as constituted from time to
time.
1.8 "FDA" shall mean the United States Food and Drug Administration.
1.9 "FDA Approval" shall have the meaning set forth in Section
6.1(b).
1.10 "Indications" shall mean all indications for human use.
1.11 "Investment Agreement" shall have the meaning set forth in
Section 14.3.
1.12 "Licensed Know-how" shall mean all technical knowledge,
expertise, skill, practice, proprietary rights, inventions, formulae, trade
secrets, analytical methodology, processes, preclinical, clinical, stability and
other data, toxicological information and all other experience in tangible or
intangible form relating to AD 32 or the Product in which Anthra
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 8
4
has an ownership or licensable interest and which is in the possession or under
the control of Anthra as of the date of this Agreement or which Anthra may
develop or acquire hereafter pursuant to this Agreement. "Licensed Know-how"
shall be deemed to include any and all improvements to AD 32, the Product or the
Licensed Know-how that Anthra may develop during the term of this Agreement.
1.13 "Losses" shall have the meaning set forth in Section 13.3.
1.14 "Market" or "Marketing" shall mean all programs and activities
relating to the promotion and sale of the Product in the Territory including but
not limited to labeling, advertising, studies, seminars, symposia, training and
education, detailing, selling, contracting for sale of and distributing the
Product.
1.15 "Net Sales" shall mean, ***
1.16 "Notice" shall have the meaning set forth in Section 15.2.
1.17 "Pricing" shall have the meaning set forth in Section 2.3.
1.18 "Prodesfarma" shall mean Prodesfarma, S.A. and its Affiliates.
1.19 "Product" shall mean AD 32, in finished dosage
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 9
5
form, including all forms of application and administration and for all
Indications, whether or not in combination with any other pharmacologically
active ingredient.
1.20 "Product Specifications" shall mean the specifications and
quality control testing procedures for the Product set forth in Annex A hereto,
as amended from time to time in the sole discretion of Anthra.
1.21 "Receiving Party" shall have the meaning set forth in Section
12.1.
1.22 "Registration" shall mean a filing with an appropriate
authority within any country in the Territory for the purpose of obtaining legal
and regulatory approval for the Marketing of the Product in such country.
1.23 "Remedies" shall have the meaning set forth in Section 11.4.
1.24 "Sublicensee" shall have the meaning set forth in Section 5.2.
1.25 "Territory" shall mean, collectively, Spain and Portugal.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 10
6
ARTICLE II
PRODUCT DEVELOPMENT
2.1 Clinical Studies. Anthra shall perform, directly or indirectly,
all clinical studies required in connection with the submission of Registrations
as to at least two Indications for the Product in the Territory, as listed in
the clinical plan set forth in Annex B hereto. Anthra shall be responsible for
all communications, both before and after Approval of each such Registration,
with regulatory authorities inside and outside the Territory in connection with
such studies, documents, filings and approvals as may be required in such
Territory.
2.2 Registrations and Approvals. Anthra agrees to file the
Registrations and, subject to Section 2.3, to use commercially reasonable
efforts to obtain the Approvals for the Territory. All such Registrations and
Approvals shall be filed in the name of Anthra; provided, however, that Anthra
shall take all necessary steps, pursuant to applicable Spanish, Portuguese
and/or EU law or regulation, to cause Prodesfarma to be recorded as the
distributor of the Product in the Territory, either by means of the initial
Registration or a supplemental application that cross-references the
Registration and identifies Prodesfarma as the distributor of the Product in the
Territory, subject to Prodesfarma's timely provision to Anthra of such
information
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 11
7
(including, without limitation, trademarks) of Prodesfarma as Anthra may
reasonably require in connection with such recordation.
2.3 Pricing and Reimbursement. Upon the grant of the Registration
with respect to a country in the Territory, Prodesfarma shall have sole
responsibility and authority to communicate with the appropriate regulatory
authorities for the purpose of securing any necessary approvals with respect to
the commercial pricing of the Product, subject to Section 4.4, and determining
the reimbursement pricing of the Product in connection with any
government-sponsored or government-funded health insurance program available in
such country (the "Pricing").
ARTICLE III
SUPPLY OF THE PRODUCT
3.1 Anthra Obligation. Subject to the terms and conditions of this
Agreement, Anthra agrees to use its commercially reasonable efforts to supply
Prodesfarma with its requirements of the Product, and Prodesfarma agrees to
purchase its requirements of the Product, for resale in the Territory pursuant
to this Agreement.
3.2 Good Faith Forecasts. No later than *** after Anthra files its
initial Registration for the Product in the EU,
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 12
8
Prodesfarma shall provide Anthra with a forecast estimating Prodesfarma's ***
requirements of the Product (and the desired delivery dates therefor) for the
succeeding *** period. Thereafter, on or before the first day of *** of each
year during the term hereof, Prodesfarma shall provide Anthra with an updated
forecast estimating Prodesfarma's *** requirements of the Product (and the
desired delivery dates therefor) for the succeeding *** period. Prodesfarma
shall prepare such estimates in good faith; provided, however, that, subject to
Section 3.3, such estimates shall not be binding on either party.
3.3 Firm Forecasts. Prodesfarma shall provide Anthra with a firm
forecast of Prodesfarma's requirements of the Product (and the desired delivery
dates therefor) (i) for the *** period beginning on ***, not later than *** of
the preceding year, and (ii) for the *** period beginning on ***, not later than
*** of such year. Prodesfarma may amend any firm forecast (i) ***, upon written
notice to Anthra, if the net change in the quantity of the forecasted
requirements of the Product is *** or less, or (ii) upon *** prior written
notice to Anthra, if such change exceeds ***. Except as provided in the
preceding sentence, Prodesfarma shall be obligated to purchase, and Anthra shall
be obligated to sell, such quantities of the Product as are set forth in the
firm forecast, on the delivery schedule set forth
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 13
9
therein.
3.4 Purchase Orders. Prodesfarma shall issue to Anthra firm purchase
orders for each delivery, not later than *** prior to the forecasted delivery
date. The quantities ordered shall be consistent with the firm forecast for the
relevant period given by Prodesfarma pursuant to Section 3.3 (and, if
applicable, as amended pursuant to Section 3.3). In the event that the terms of
any such purchase order are not consistent with this Agreement, the terms of
this Agreement shall prevail.
3.5 Delivery. Delivery of each order of Product shall be made *** at
a facility to be designated by Anthra. Anthra shall arrange for *** of the
Product to a destination designated by Prodesfarma and by a common carrier
designated by Prodesfarma. Prodesfarma shall carry out all customs formalities
necessary for the import clearance of the shipment and obtain, at its own risk
and expense, any import license or other governmental authorization required in
connection with its importation. *** Anthra shall promptly invoice Prodesfarma
for all Product shipped. Invoices shall be accompanied by a *** and a *** for
each invoiced lot of Product.
3.6 Inability to Supply. In the event that Anthra shall have reason
to believe that it will be unable to supply Prodesfarma with the full quantity
of the Product forecasted to
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 14
10
be ordered or actually ordered by Prodesfarma in a timely manner, Anthra shall
promptly notify Prodesfarma thereof. Prodesfarma and Anthra shall promptly meet
to discuss how to supply Prodesfarma's requirements in a timely manner.
Following such discussions, Prodesfarma may enter ***.
3.7 Warranty. Anthra warrants that, at the time of delivery of the
Product to Prodesfarma, the Product will (i) have been manufactured, stored and
shipped in accordance with applicable GMPs and all other applicable laws, rules,
regulations or requirements of regulatory authorities relating to the Territory,
(ii) have been manufactured in accordance with the Product Specifications, and
(iii) not be adulterated or misbranded under the Federal Food, Drug, and
Cosmetic Act, as amended, and or under any other applicable laws, rules,
regulations or requirements of regulatory authorities in or relating to the
Territory.
3.8 Price. The parties hereby agree that the supply price for the
Product, ***. Payment shall be made in United States dollars. Terms of payment
shall be net *** from the later of date of receipt of invoice and date of
delivery of the invoiced Product.
3.9 Specifications Amendments. Anthra reserves the right to amend
and/or supplement the Product Specifications
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 15
11
unilaterally for the purpose of complying with GMPs or applicable Registrations,
incorporating improvements, or for any other reasonable business purpose,
subject to the grant of any Approvals required by applicable law in the
Territory in connection with any such changes.
3.10 Records. Anthra shall maintain all records necessary to comply
with all applicable laws, rules and regulations in the Territory relating to the
manufacturing of the Product. All such records shall be maintained for such
period as may be required by law, rule or regulation; provided, however, that
all records relating to the manufacture, stability and quality control of each
batch of the Product shall be retained at least until the first anniversary of
the end of the approved shelf life for all Product from such batch.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 16
12
ARTICLE IV
MARKETING AND SALE OF THE PRODUCT
4.1 Prodesfarma Obligation. Prodesfarma shall use commercially
reasonable efforts to Market and sell the Product in the Territory and shall in
any event commence Marketing of the Product as soon as practicable in each
country in the Territory as to which an Approval has been granted and, where
applicable, Pricing of the Product has been granted by the appropriate
governmental authority. Prodesfarma shall bear all costs and expenses arising
out of or relating to the Marketing, distribution and sale of the Product. All
Product sales in the Territory shall be made by, and for the account of,
Prodesfarma or its Affiliates or Sublicensees, as the case may be.
4.2 Compliance. Prodesfarma shall comply with all applicable laws,
regulations and Approvals in conducting the Marketing and sale of the Product in
the Territory, including without limitation all requirements as to pre-Marketing
approval of Product labelling.
4.3 Trademarks. Prodesfarma shall be responsible for the selection,
registration and maintenance of all trademarks that it or its agents employ in
connection with the Marketing of the Product. Except as provided in Section
14.7, Anthra shall not acquire or assert any right, title, and interest in and
to
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 17
13
any such trademark.
4.4 Price of the Product. Subject to applicable governmental
regulations, Prodesfarma shall use commercially reasonable efforts to obtain the
best in-market price for the Product in each country in the Territory under the
prevailing marketing conditions; provided, however, that nothing in this Section
4.4 shall be deemed to restrict the freedom of Prodesfarma to determine prices
for the Product in the Territory. Prodesfarma shall keep Anthra informed of its
efforts in this regard in response to Anthra's written requests from time to
time.
4.5 Marketing Materials. Prodesfarma shall develop, at its sole
expense, appropriate Marketing and promotional materials for the Product in the
Territory for its use and for use by its Sublicensees. Prodesfarma agrees to
provide Anthra with a sample copy of each such item, together with an English
translation thereof, before making use thereof, and agrees to use such item only
after receiving the prior written approval of Anthra. Prodesfarma shall not, and
shall its Sublicensees not to, use any materials not approved by Anthra, for the
purpose of Marketing the Product.
4.6 Product Liability Insurance. Prodesfarma shall maintain, with an
insurance carrier reasonably acceptable to
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 18
14
Anthra, at the sole expense of Prodesfarma, product liability insurance relating
to the Product that is comparable in type and amount to the insurance it
maintains with respect to its most similar other pharmaceutical products that
are Marketed, distributed and sold in the Territory.
4.7 Competition. Prodesfarma agrees that, during the term of this
Agreement, it shall not, and shall not permit any of its Affiliates or
Sublicensees to, develop, Market or sell in the Territory any anthracycline
(other than AD32) for intracavitary use that competes with the Product, for any
Indication for which the Product shall have received labelling approval in the
Territory. The parties acknowledge that all restrictions contained in this
Section 4.7 are reasonable, valid and necessary for the adequate protection of
the Product business.
ARTICLE V
LICENSE GRANTS
5.1 Grants. Subject to the terms and conditions of this Agreement,
including without limitation Section 6.1, Anthra hereby grants to Prodesfarma an
exclusive license in the Territory under the Licensed Know-how to Market, sell,
distribute, and have Marketed, sold, and distributed the Product for all
Indications; provided, however, that if Net Sales of the Product in the
Territory fail in any two consecutive years to
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 19
15
meet the minimum annual sales level for such year specified in Annex C hereto
(collectively, the "Minimums") (or a pro rata portion thereof in the event of a
partial year), then such license shall automatically become non-exclusive; and
provided, further, that if (i) a third party shall lawfully commence Marketing a
generic version of the Product in the Territory or (ii) the Approval for the
peri-TURB and ovarian indications of the Product shall not have been granted in
the Territory by December 31, 2001, then the parties agree to review and make
appropriate revisions to the Minimums.
5.2 Sublicenses. Prodesfarma shall have the right to grant to third
parties (each, a "Sublicensee") sublicenses under the licenses granted in
Section 5.1, subject to the prior written consent of Anthra, which shall not be
unreasonably withheld.
ARTICLE VI
LICENSE FEES
6.1 License Fees. In consideration of the licenses granted in
Article V, Prodesfarma shall pay Anthra license fees as follows:
(a) a single payment of Two Hundred Thousand U.S. Dollars
(U.S. $200,000) upon the signing of this Agreement;
(b) ***
6.2 Payment of License Fees. All license fees due from Prodesfarma
under this Agreement shall be paid in U.S. Dollars by wire transfer of
immediately available funds to an account at a commercial bank designated by
Anthra at least five business days before payment is due.
6.3 Royalties.***.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 20
16
6.4 Withholding Taxes. Prodesfarma shall pay any and all withholding
taxes or similar charges imposed by any government in the Territory on any
amounts due to Anthra from Prodesfarma pursuant to this Article VI to the proper
taxing authority, and proof of payment of such taxes or charges will be secured
and sent to Anthra as evidence of such payment. All amounts paid by Prodesfarma
pursuant to this Section 6.4 shall be paid for the account of Anthra and
deducted from the amounts due from Prodesfarma to Anthra pursuant to Section
6.1.
ARTICLE VII
EXECUTIVE MANAGEMENT COMMITTEE
7.1 Formation of the EMC. In order to facilitate the exchange of
information between the parties relating to their activities pursuant to this
Agreement, the parties hereby establish an executive management committee (the
"EMC") comprised of four individuals. Prodesfarma and Anthra shall each appoint
two members of the EMC. Each member of the EMC shall be an employee or member of
the Board of Directors of the party that appointed such member. Initial
appointments shall be made within fourteen (14) days of the date of this
Agreement. A member of the EMC may be removed at any time, with or without
cause, by the party that originally appointed such member. A member of the EMC
shall serve until a successor is named by the party that
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 21
17
appointed such member.
7.2 Authority of the EMC. The EMC shall (a) monitor and review the
progress of Product development activities conducted by Anthra pursuant to this
Agreement (including, but not limited to, all clinical studies and Registrations
related thereto), (b) monitor and review the progress of all Product Marketing
and sales activities conducted by Prodesfarma pursuant to this Agreement, and
(c) take such other actions as the parties may mutually agree, except that the
EMC may not take any action that would conflict with any provision of this
Agreement. It is not intended that the EMC have any power or authority to direct
the conduct of the affairs or the decision-making of either party hereto. Each
party to this Agreement shall retain the rights, powers, and discretion granted
to it under this Agreement, and no such rights, powers, or discretion shall be
delegated to or vested in the EMC unless such delegation or vesting of rights is
expressly provided for in this Agreement or the parties expressly so agree in
writing. The EMC shall not have the power to amend or modify this Agreement,
which may only be amended or modified as provided in Section 15.11.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 22
18
7.3 Procedural Rules of the EMC.
(a) The EMC shall adopt such standing rules as shall be
necessary for its work.
(b) A quorum of the EMC shall consist of two members, provided
that at least one member appointed by each party is present. Members of the EMC
may attend a meeting either in person or by telephone conference call.
Representation by proxy shall not be allowed.
(c) The EMC may take action (1) by consensus of the members
present at a meeting at which a quorum exists, or (2) by written resolutions
approved in writing by all of the members.
(d) The EMC shall have a chairperson and a secretary. The
first chairperson shall be a member of the EMC designated by Anthra. Each
chairperson shall serve a one-year term, and the office shall alternate between
members appointed by Anthra and members appointed by Prodesfarma. The first
secretary shall be a member of the EMC designated by Prodesfarma. Each secretary
shall serve a one-year term, and the office shall alternate between members
appointed by Prodesfarma and members appointed by Anthra.
(e) The EMC shall meet semi-annually or more frequently as
mutually agreed upon by the members, at times and
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 23
19
places mutually agreed upon. Thirty calendar days' prior written Notice of any
such meeting shall be provided to the members, unless such Notice is waived in
writing by the members.
ARTICLE VIII
REPORTING
8.1 Reporting by Parties. The parties hereto shall use their
commercially reasonable efforts to keep each other informed of their activities
pursuant to this Agreement, including without limitation material developments
relating to the performance of their respective obligations under this
Agreement.
8.2 Record Keeping. Prodesfarma shall, and shall cause its
Sublicensees to, keep complete and accurate books and records pertaining to the
use and sale of the Product, including the names and addresses and purchase
order details for each customer to which it sells the Product. Such books and
records shall be retained by for at least five (5) years after the expiration or
termination of this Agreement, or for such longer period if and as required by
applicable law.
8.3 Audit of Records. At the request of Anthra, Prodesfarma shall,
and shall cause its Sublicensees to, permit Anthra and its representatives, at
reasonable times and upon reasonable notice, to examine the books and records
maintained
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 24
20
pursuant to Section 8.2.
ARTICLE IX
ADVERSE EVENT AND OTHER INFORMATION EXCHANGE
9.1 Notification. Each party shall provide prompt Notice to the
other party of information in or coming into its possession or control
concerning side effects, injury, toxicity or sensitivity reaction associated
with commercial and clinical uses, studies, investigations or tests of the
Product (animal or human), whether or not determined to be attributable to the
Product, and whether arising out of clinical studies or Marketing and sale of
the Product. Further, each party shall notify the other's responsible drug
safety department by telephone or facsimile within three (3) business days, to
be followed by a written confirmation within ten (10) business days, after such
party first becomes aware of a circumstance that might necessitate a recall,
expedited notification of relevant regulatory authorities or significant change
in the label of the Product. Information concerning other complaints and other
adverse reactions regarding the Product shall be exchanged between the parties
in writing promptly, but in any event not less frequently than semi-annually.
Each party shall make such reports as are necessary to comply with laws and
regulations applicable to it, at its sole expense.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 25
21
9.2 Material Communications. Each party shall, within five (5)
business days, provide Notice to the other party of any material communications
with any governmental agency concerning the Product that occurs after the filing
of the Registration for the Product in the Territory, including, without
limitation, adverse drug reaction reports. Copies of all such material
communications shall be attached to the Notice sent pursuant to this Section
9.2. A translation of the material communication into English shall be sent
within ten (10) business days after the original Notice. Notwithstanding the
foregoing, in the event of a communication or directive from a regulatory
authority commencing or threatening seizure of Product or other removal from the
market of an approved Product, the party receiving such information shall
transmit such information to the other party within one business day.
ARTICLE X
PRODUCT RECALL
10.1 Notification and Recall. In the event that any governmental
agency or authority issues or requests a recall or takes similar action in
connection with the Product, or in the event either party determines that an
event, incident or circumstance has occurred which may result in the need for a
recall or market withdrawal, the party notified of or wishing to
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 26
22
call such recall or similar action shall, within twenty-four (24) hours, advise
the other party thereof by telephone or facsimile, after which the parties shall
promptly discuss an appropriate course of action; provided, however, that either
party may initiate a recall or market withdrawal thereafter if it deems such
action necessary or appropriate.
10.2 Recall Expenses. Each of the parties hereto shall bear the
expenses of any recall resulting from breach of its respective obligations
hereunder. Such expenses of recall shall include, without limitation, the
expenses of notification and destruction or return of the recalled Product and
the sum paid for the recalled Product.
ARTICLE XI
INTELLECTUAL PROPERTY RIGHTS
11.1 Ownership of Licensed Know-how. Except as otherwise expressly
provided in Section 5.1, all right, title to, and interest in the Licensed
Know-how shall remain in Anthra. Anthra shall have the sole right to file for,
obtain, maintain, register and extend patent protection for the Licensed
Know-how, and to control the prosecution of applications therefor. If, after a
written request from Prodesfarma, Anthra decides not to file for, obtain,
maintain, register or extend patent protection for the Licensed Know-how,
Prodesfarma shall have the right, at
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 27
23
its own expense, to take any such action in the name of Anthra. For the
avoidance of doubt, nothing in this Section 11.1 shall be construed to require
Prodesfarma to assign to Anthra the rights to any improvements to the Licensed
Know-How that Prodesfarma may develop in the Territory; provided, however, that
if, during the term of this Agreement, Prodesfarma or any of its Affiliates or
Sublicensees develops any such improvements, Prodesfarma shall so notify Anthra
and shall grant, or shall cause such Affiliate or Sublicensee, as the case may
be, to grant to Anthra a royalty-free, world-wide, perpetual, non-exclusive
license to use such improvements.
11.2 Ownership of Filings and Approvals. Anthra shall own all
rights, title and interest in (a) all Registrations and other submissions to
governmental authorities made pursuant to this Agreement, and (b) all Approvals
made or granted with respect to the Product in the Territory.
11.3 Ownership of Data. Anthra shall own all rights, title and
interest to the preclinical and clinical data arising out of its activities
pursuant to this Agreement.
11.4 Enforcement of Intellectual Property Rights. In the event of
any infringement by a third party of any intellectual property rights relating
to the Product in the Territory, Anthra shall have the first right (but not the
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 28
24
obligation) to pursue any and all injunctive, compensatory and other remedies
and reliefs (collectively, "Remedies") against such third party. Should Anthra
determine not to pursue Remedies within 180 days after Notice from Prodesfarma
requesting Anthra to do so, then Prodesfarma shall have the right (but not the
obligation) to pursue Remedies against such third party. The party pursuing
Remedies shall bear its own costs and expenses relating to such pursuit. Any
damages or other amounts collected shall be distributed, first, to the party
that pursued Remedies to cover its costs and expenses and, second, to the other
party to cover its costs and expenses, if any, relating to the pursuit of such
Remedies; any remaining amount shall be distributed to the party that pursued
the Remedies.
11.5 Cooperation. In the event of any infringement by a third party
of any intellectual property right owned by a party hereto, each party shall, at
its own cost and expense, use all reasonable efforts to assist and cooperate
with the other party in connection with the latter's pursuit of Remedies against
the infringing party.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 29
25
ARTICLE XII
CONFIDENTIALITY
12.1 Confidential Information. Except to the extent permitted by
this Agreement or as otherwise agreed by the parties in writing, the parties
agree that, at all times during the term of this Agreement and for a five (5)
year period following termination or expiration hereof, the party receiving
information (the "Receiving Party") shall keep completely confidential, shall
not publish or otherwise disclose and shall not use directly or indirectly for
any purpose any information furnished to it by the other party (the "Disclosing
Party") pursuant to this Agreement or otherwise relating to any transaction
contemplated hereby, including information heretofore furnished to it, except to
the extent that the Receiving Party can establish by competent proof that such
information:
(a) was already known to the Receiving Party, other than under
an obligation of confidentiality, at the time of disclosure by the Disclosing
Party;
(b) was part of the public domain at the time of its
disclosure by the Disclosing Party;
(c) became part of the public domain after its disclosure by
the Disclosing Party, other than through any act or omission of the Receiving
Party in breach of this Agreement; or
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 30
26
(d) was disclosed to the Receiving Party by a third party who
had no obligation not to disclose such information to others.
12.2 Disclosure of Confidential Information. Each party may disclose
the other's information to the extent that such disclosure is reasonably
necessary in filing or prosecuting patent applications, pursuing or defending
litigation, or complying with applicable governmental regulations, provided that
if a Receiving Party intends to make any such disclosure, it shall give
reasonable advance written Notice to the Disclosing Party of such intention.
Furthermore, nothing in this Article XII shall be construed to preclude either
party from disclosing such information to such third parties as may be necessary
in connection with the development and commercialization of the Product as
contemplated by this Agreement, including, without limitation, subcontracting
and sublicensing transactions in connection therewith, provided that the
Receiving Party in question shall in each case obtain from the proposed third
party recipient a written confidentiality undertaking containing confidentiality
obligations no less onerous than those set forth in this Article XII.
Notwithstanding anything in this Article XII to the contrary, Prodesfarma shall
have the right to disclose preclinical and clinical data and results relating to
the Product
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 31
27
to qualified medical professionals for the limited purposes of advertising and
promoting the Product and conducting medical education initiatives reasonably
designed to increase Net Sales.
12.3 Use of Names. Neither party to this Agreement shall use the
name of the other in any public announcement, press release or other public
document without the written consent of such other party.
ARTICLE XIII
WARRANTIES; INDEMNITIES
13.1 Representations and Warranties. Each party represents and
warrants to the other party as follows: (i) it has full corporate power and
authority and has taken all corporate action necessary to enter into and perform
this Agreement; (ii) the execution and performance by it of its obligations
hereunder will not constitute a breach of, or conflict with, any other agreement
or arrangement, whether written or oral, by which it is bound; and (iii) this
Agreement is its legal, valid and binding obligation, enforceable in accordance
with the terms and conditions hereof.
13.2 Warranties of Anthra. Anthra warrants to Prodesfarma that (i)
Anthra has the right, power and authority to grant the license set forth in
Section 5.1, (ii) Anthra has informed Prodesfarma of all information in Anthra's
possession or
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 32
28
control as of the date hereof concerning the side effects, injury, toxicity, and
sensitivity reaction and incidents or severity thereof, associated with any
clinical use, studies, investigations or tests conducted with the Product, (iii)
Anthra has conducted or has caused its contractors or consultants to conduct,
and will in the future conduct, the preclinical and clinical studies of the
Product in accordance with known or published standards of the FDA, (iv) Anthra
has employed and will in the future employ individuals of appropriate education,
knowledge, and experience to conduct or oversee the conduct of the clinical and
preclinical studies of the Product, (v) the Product as delivered to Prodesfarma
will meet the Specifications and will be in good, usable and merchantable
condition, and (vi) the exercise by Prodesfarma of its rights under this
Agreement will not infringe any intellectual property rights of any third party,
including without limitation any patent right. EXCEPT AS SET FORTH IN THE
PRECEDING SENTENCE AND IN SECTION 3.7, ANTHRA HEREBY DISCLAIMS ANY AND ALL
WARRANTIES WITH RESPECT TO THE LICENSED KNOW-HOW OR THE PRODUCT, INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
13.3 Indemnification of Prodesfarma. Anthra shall indemnify
Prodesfarma, its Affiliates and their respective
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 33
29
directors, officers, employees and agents, and defend and save each of them
harmless, from and against any and all suits, investigations, claims, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) (collectively, "Losses") arising from or occurring
as a result of (i) any defect of the Product (including without limitation any
claim for inherent defects), except to the extent that such Losses result from
the storage or handling of the Product by Prodesfarma, or (ii) the breach by
Anthra of its warranty in Section 13.2(vi).
13.4 Indemnification of Anthra. Prodesfarma shall indemnify Anthra,
its Affiliates and their respective directors, officers, employees and agents,
and defend and save each of them harmless, from and against any and all Losses
arising from or occurring as a result of the storage, handling or promotion of
the Product by Prodesfarma.
13.5 Indemnification Procedure. (a) Each indemnified party agrees to
give the indemnifying party prompt written Notice of any Losses or discovery of
fact upon which such indemnified party intends to base a request for
indemnification under Section 13.3 or 13.4.
(b) Each party shall furnish promptly to the other copies of
all papers and official documents received in
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 34
30
respect of any Losses. The indemnified party shall cooperate with the
indemnifying party in providing witnesses and records necessary in the defense
against any Losses.
(c) With respect to any Losses relating solely to the payment
of money damages and which will not result in the indemnified party's becoming
subject to injunctive or other relief or otherwise adversely affecting the
business of the indemnified party in any manner, and as to which the
indemnifying party shall have acknowledged in writing the obligation to
indemnify the indemnified party hereunder, the indemnifying party shall have the
sole right to defend, settle or otherwise dispose of such claim, on such terms
as the indemnifying party, in its sole discretion, shall deem appropriate.
(d) The indemnifying party shall obtain the written consent of
the indemnified party, which shall not be unreasonably withheld, prior to
ceasing to defend, settling or otherwise disposing of any Losses if as a result
thereof the indemnified party would become subject to injunctive or other
equitable relief or any remedy other than the payment of money by the
indemnifying party.
(e) The indemnifying party shall not be liable for any
settlement or other disposition of a Loss by the indemnified party which is
reached without the written consent of
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 35
31
the indemnifying party.
(f) Except as provided above, the costs and expenses,
including fees and disbursements of counsel, incurred by any indemnified party
in connection with any claim shall be reimbursed on a calendar quarter basis by
the indemnifying party, without prejudice to the indemnifying party's right to
contest the indemnified party's right to indemnification and subject to refund
in the event the indemnifying party is ultimately held not to be obligated to
indemnify the indemnified party.
(g) The obligations of the parties pursuant to this Article
XIII shall survive the expiration or termination of this Agreement.
ARTICLE XIV
TERM AND TERMINATION
14.1 Term. The term of this Agreement shall commence as of the date
hereof and shall have an initial term of ten years from the date of the first
commercial sale of the product in Spain (the "Initial Term"). Thereafter this
Agreement shall be automatically extended for successive two-year terms, unless
Prodesfarma shall give Anthra written Notice at least six months prior to the
end of the then-current term that Prodesfarma objects to further extension
hereof. At the end of the Initial Term, the parties agree to discuss changes to
the supply price set forth in Section 3.8 in light of then-prevailing
competitive conditions. If the parties shall be unable to reach mutual
agreement within ninety (90) days after the end of the Initial Term as to
whether the price should be changed and, if so, what it should be, then (i)
Article III shall be of no further force and effect, (ii) Prodesfarma may
purchase its requirements of the Product from a third party, and (iii)
Prodesfarma shall pay Anthra a royalty of ***
14.2 Termination for Material Breach. This Agreement shall be
subject to early termination by either party in the event of a material breach
hereof by the other party with respect to its obligations, which breach is not
cured within sixty (60) days (or, in the case of a payment default, ten (10)
business days) following written Notice thereof by the non-breaching party.
14.3 Termination for Breach of Investment Agreement.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 36
32
This Agreement shall be subject to early termination (a) by Anthra, in the event
of a material breach by Prodesfarma of that certain Series D Convertible
Preferred Stock Purchase Agreement by and between Anthra and Prodesfarma
executed of even date herewith (the "Investment Agreement"), or (b) by
Prodesfarma, in the event of a material breach of the Investment Agreement by
Anthra, provided such breach has not been cured within sixty (60) days (or, in
the case of a payment default, ten (10) days) following written Notice thereof
by Anthra (in the case of Section 14.3(a)), or by Prodesfarma (in the case of
Section 14.3(b)).
14.4 Unilateral Termination by Prodesfarma or Anthra.
(a) Prodesfarma shall have the right to terminate this
Agreement in its entirety, upon thirty days' prior written Notice to Anthra, if
Anthra shall not have completed the analysis and reporting of the data from
studies A9301, A9302, and A9304 to the extent required for inclusion in the New
Drug Application for the Product in the United States and in the Registration
for the Product in the Territory, by December 31, 1997.
(b) Anthra shall have the right to terminate this Agreement
with respect to any country if, on the second anniversary of the grant of
Approval in such country, Prodesfarma shall have failed to launch the Product in
such country.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 37
33
14.5 Termination for Other Events. Either party may terminate this
Agreement if, at any time, the other party shall file in any court or agency
pursuant to any statute or regulation of any state or country, a petition in
bankruptcy or insolvency or for reorganization or for an arrangement or for the
appointment of a receiver or trustee of that party or of its assets, or if the
other party proposes a written agreement of composition or extension of its
debts, or if the other party shall be served with an involuntary petition
against it, filed in any insolvency proceeding, and such petition shall not be
dismissed within sixty (60) days after the filing thereof, or if the other party
shall propose or be a party to any dissolution or liquidation, or if the other
party shall make an assignment for the benefit of its creditors.
14.6 Effect of Expiration or Termination. The expiration of the term
hereof, or any early termination of this Agreement, in either case whether as a
whole or as to a single country, shall be without prejudice to any rights or
obligations of the parties that may have accrued prior to such expiration or
termination. Termination of this Agreement in accordance with the provisions
hereof shall not limit remedies which may otherwise be available in law or
equity.
Prodesfarma agrees to cooperate with Anthra in
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 38
34
transferring to Anthra or a third party, as Anthra may direct, within thirty
(30) days of the expiration or termination hereof, all data, files and other
materials in the possession or under the control of Prodesfarma, relating to the
Product, except to the extent that Prodesfarma requires such data, files and
materials for the purpose of exercising any rights under this Agreement that may
survive such termination or expiration. The rights and obligations of the
parties under this Article XIV shall survive expiration or termination of this
Agreement.
14.7 Survival of Licenses and Royalty Obligations; Assignment of
Registrations and Trademarks. In the event of the termination of this Agreement
by Prodesfarma pursuant to Sections 14.2, 14.3, or 14.5, the license granted to
Prodesfarma in Section 5.1 shall remain in full force and effect through the
tenth anniversary of the first commercial sale of the Product in Spain.
In the event of the termination of this Agreement by Anthra pursuant
to this Article XIV, or the complete or partial termination of this Agreement by
Prodesfarma pursuant to Section 14.4, no license granted to Prodesfarma in
Section 5.1 shall survive such termination; provided, however, that in the event
of the termination of this Agreement by Prodesfarma pursuant to Section
14.4(a)(ii), Anthra shall promptly repay to Prodesfarma
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 39
35
any payment made by Prodesfarma pursuant to Section 6.1(a).
In the event of the complete or partial termination of this
Agreement by Anthra pursuant to Section 14.2, 14.3, 14.4, or 14.5, Prodesfarma
shall promptly, but not later than thirty (30) days after such termination, at
its own expense assign and transfer to Anthra, or any third party designated by
Anthra, any trademarks then or previously used by Prodesfarma or any of its
Affiliates or agents in Marketing, distributing or selling the Product in the
Territory or the relevant country, as the case may be.
ARTICLE XV
GENERAL PROVISIONS
15.1 Force Majeure. If the performance of this Agreement or of any
obligation hereunder, except for the payment of any amounts hereunder, is
prevented, restricted or interfered with by reason of any cause beyond the
reasonable control of the affected party, such party, upon prompt written Notice
to the other party, shall be excused from such performance to the extent of the
aforementioned prevention, restriction or interference, provided that the party
so affected shall use its best efforts to avoid or remove such causes of
nonperformance and shall continue performance hereunder with the utmost dispatch
whenever such causes are removed.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 40
36
15.2 Notice. All notices, requests, reports, statements and other
communications to either party (each a "Notice") shall be in writing, in the
English language, shall refer specifically to this Agreement and shall be hand
delivered or sent by express courier service, carriage costs prepaid, or by
facsimile to the respective addresses specified below (or to such other address
as may be specified by Notice to the other party):
If to Anthra:
Anthra Pharmaceuticals, Inc.
19 Carson Road
Princeton, N.J. 08540 USA
Fax: (609) 924-3875
Attention: Michael C. Walker
If to Prodesfarma:
Prodesfarma, S.A.
Calle del Pont Reixat 5,
08960 Sant Just Desvern,
Barcelona, Spain
Fax: ______________
Attention: _______
Any Notice delivered by facsimile or similar means shall be
confirmed by a hard copy delivered as soon as practicable. The effective date of
any Notice shall be: (a) the date of the addressee's receipt, if delivered by
hand or express courier; (b) the date of receipt if received by 5:00 p.m. local
time on a business day or, if not, the first business day after receipt, if sent
by facsimile.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 41
37
15.3 Further Assurances. Each party shall duly execute and deliver,
or cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such assignments, agreements, documents and instruments, as may be
necessary or as the other party may reasonably request in connection with this
Agreement or to carry out more effectively the provisions and purposes hereof,
or to better assure and confirm unto such other party its rights and remedies
under, this Agreement.
15.4 Successors and Assigns. The terms and provisions hereof shall
inure to the benefit of, and be binding upon, Anthra, Prodesfarma and their
respective successors and permitted assigns. Except as expressly provided
herein, neither party may, without the prior written consent of the other party,
assign or otherwise transfer any of its rights and interests, or delegate any of
its obligations, hereunder; provided, however, that either party may assign its
rights and delegate its duties hereunder to an Affiliate thereof without
obtaining such consent; and provided, further, that Prodesfarma may assign all
of its rights, and delegate all of its obligations, hereunder to Almirall, S.A.,
in connection with a merger between Prodesfarma and Almirall, S.A., without the
prior consent of Anthra. Any attempt to assign
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 42
38
or delegate any portion of this Agreement in violation of this Section 15.4
shall be null and void.
15.5 Governing Law. This Agreement shall be governed by, construed,
and enforced in accordance with the laws of Spain, without regard to principles
of conflicts of law.
15.6 Arbitration. Any disputes arising under this Agreement shall be
resolved by arbitration in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of Commerce. The proceedings shall be
held in New York, New York if the request for arbitration is submitted by
Prodesfarma and in Barcelona, Spain if submitted by Anthra. All proceedings
shall be conducted in the English language. The parties shall appoint an
arbitrator by mutual agreement. If the parties cannot agree on the appointment
of an arbitrator within thirty (30) days after receipt of a demand for
arbitration, each party shall appoint one arbitrator, and the two arbitrators
shall appoint a third arbitrator. If the party-appointed arbitrators cannot
agree on the third arbitrator, the third arbitrator shall be appointed by the
President of the International Chamber of Commerce. Any fees and expenses
payable with respect to the arbitration shall be borne by the party losing the
case. All arbitration rulings and awards shall be final and binding on the
parties and shall be enforceable in accordance with the
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 43
39
Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
15.7 Severability. If any provision hereof, other than the
requirements to pay license fees pursuant to Article VI, should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, then, to the
fullest extent permitted by applicable law, (a) all other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intent of the parties as nearly as
may be possible, (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction, and (c) the parties agree to use their best efforts to negotiate a
provision, in replacement of the provision held invalid, illegal or
unenforceable, that is consistent with applicable law and accomplishes, as
nearly as possible, the original intention of the parties with respect thereto.
To the fullest extent permitted by applicable law, each party hereby waives any
provision of law that would render any provision hereof prohibited or
unenforceable in any respect.
15.8 Counterparts. This Agreement shall be executed in two
counterparts, each of which shall be deemed to be an original, and all of which,
taken together, shall constitute one
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 44
40
and the same instrument.
15.9 Captions. The captions of this Agreement are for convenience of
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision contained in this
Agreement.
15.10 Independent Contractors. The status of the parties under this
Agreement shall be that of independent contractors. No party shall have the
right to enter into any agreements on behalf of the other party, nor shall it
represent to any person that it has any such right or authority. Nothing in this
Agreement shall be construed as establishing a partnership or joint venture
relationship between the parties hereto.
15.11 Entire Agreement. This Agreement constitutes, on and as of the
date hereof, the entire agreement of the parties with respect to the subject
matter hereof, and all prior or contemporaneous understandings or agreements,
whether written or oral, between the parties with respect to such subject matter
are hereby superseded in their entireties. This Agreement shall not be amended
in any respect whatsoever except by a further agreement, in writing, fully
executed by each of the parties.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 45
41
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date first above written.
ANTHRA PHARMACEUTICALS, INC. PRODESFARMA, S.A.
By: /s/ Michael C. Walker By: /s/ Antonio Vilacasas
----------------------------- -----------------------------
Name: Michael C. Walker Name: Antonio Vilacasas
Title: President Title: President
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 46
ANNEX A
SPECIFICATIONS
***
<PAGE> 47
SPECIFICATIONS
***
<PAGE> 48
ANNEX B
PIVOTAL CLINICAL PLAN
INTRACAVITARY AD 32: SUMMARY OF CLINICAL STUDIES
<TABLE>
<CAPTION>
STUDY ROUTE INDICATION STATUS
<S> <C> <C> <C>
A9301/A9302: Phase II/III IVe Refractory CIS Closed to accrual for
Safety & Efficacy NDA, complete follow-up
4Q96
A9303: Phase II/III Safety & IVe CIS, BCG-intolerant/ Closed to accrual for
Efficacy contraindicated NDA, complete follow-up
4Q96
A9601: Phase III Randomized IVe Multiple papillary tumors Initiating 3Q96,
Peri-TURB expected to close 4Q98
A9304: Phase II Safety & IVe Residual papillary bladder cancer Ongoing, will close
Efficacy (Europe) 2Q97
A9261: Phase II Safety & IVe Residual papillary bladder cancer Initiating 3Q96
Efficacy (Europe)
A9623: Phase II/III Safety & IVe Multiple papillary tumors Initiating 1Q97,
</TABLE>
<PAGE> 49
<TABLE>
<S> <C> <C> <C>
Efficacy (Europe) expected to close 1Q98
A9503: Phase III randomized IP Advanced refractory ovarian cancer Ongoing, expected to
AD 32 vs. Altretamine close 3Q98
A622: Phase III Randomized IP Platinum refractory ovarian cancer Initiating 2Q97,
(Europe) AD 32 vs. Standard expected to close 2Q99
Treatment
</TABLE>
<PAGE> 50
ANNEX C
Minimum Annual Sales in the Territory
Calendar Year After Launch (U.S. $)
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3 Year 4 Year 5
------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
250,000 500,000 1,000,000 1,500,000 1,800,000
</TABLE>
<TABLE>
<CAPTION>
Year 6 Year 7 Year 8 Year 9 Year 10
------ ------ ------ ------ -------
<S> <C> <C> <C> <C>
2,100,000 2,400,000 2,400,000 2,400,000 2,400,000
</TABLE>
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.11
DEVELOPMENT AGREEMENT
by and between
ANTHRA PHARMACEUTICALS, INC.
and
MEDEVA CALIFORNIA INC.
Dated as of July 15, 1997
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS.................................................................. 2
ARTICLE II
OWNERSHIP INTEREST; PRODUCT DEVELOPMENT...................................... 8
2.1 Grant of Interest........................................ 8
2.2 Right to Payments........................................ 9
2.3 Transfer of Interests.................................... 9
2.4 Purchase Option.......................................... 9
2.5 Clinical Studies......................................... 10
2.6 NDA Filings.............................................. 11
2.7 Performance.............................................. 12
2.8 Communications with FDA.................................. 12
2.9 Ovarian Indication....................................... 13
2.10 Development Expenses..................................... 13
2.11 Further Funds............................................ 14
2.12 Continued Development.................................... 15
ARTICLE III
SUPPLY OF THE PRODUCT........................................................ 16
3.1 General.................................................. 16
3.2 Inventory of AD 32....................................... 17
3.3 Good Faith Forecasts..................................... 21
3.4 Issuance of Purchase Orders.............................. 21
3.5 Acceptance of Purchase Orders............................ 22
3.6 Delivery................................................. 22
3.7 Contract Manufacturing................................... 22
3.8 Inability to Supply...................................... 24
3.9 Alternate Supply......................................... 26
3.10 Warranty................................................. 27
3.11 Price ................................................... 27
3.12 Property Insurance....................................... 28
3.13 Records ................................................. 29
ARTICLE IV
QUALITY CONTROL ............................................................. 29
4.1 Product Specifications Amendments........................ 29
4.2 Nonconformance........................................... 30
4.3 Manufacturing Process.................................... 32
4.4 Inspection............................................... 32
4.5 Safety Procedures........................................ 33
4.6 Government Inspection.................................... 33
<PAGE> 3
Page
----
ARTICLE V
LICENSE GRANTS .............................................................. 34
5.1 Grants................................................... 34
5.2 Sublicenses.............................................. 35
5.3 Other Countries.......................................... 35
5.4 Trademarks............................................... 36
5.5 Technical Assistance..................................... 37
ARTICLE VI
MARKETING AND SALE OF THE PRODUCT
UNDER THE LICENSING ARRANGEMENT.............................................. 37
6.1 General.................................................. 37
6.2 Compliance............................................... 38
6.3 Trademarks............................................... 38
6.4 Price of the Product..................................... 38
6.5 Marketing Materials...................................... 39
6.6 Product Liability Insurance.............................. 39
6.7 Competition.............................................. 39
6.8 Co-Promotion............................................. 40
6.9 Activities Outside the Territory......................... 41
ARTICLE VII
DEVELOPMENT FEES, LICENSE FEES AND ROYALTIES................................. 41
7.1 Development Fees......................................... 41
7.2 License Fees............................................. 43
7.3 Royalties................................................ 44
7.4 Payment.................................................. 45
7.5 Equity Interest.......................................... 46
7.6 Withholding Taxes........................................ 46
ARTICLE VIII
EXECUTIVE MANAGEMENT COMMITTEE............................................... 47
8.1 Formation of the EMC..................................... 47
8.2 Authority of the EMC..................................... 47
8.3 Procedural Rules of the EMC.............................. 48
ARTICLE IX
REPORTING ................................................................... 49
9.1 Reporting by Parties..................................... 49
9.2 Record Keeping........................................... 50
9.3 Audit of Records......................................... 50
ARTICLE X
ADVERSE EVENT AND OTHER INFORMATION EXCHANGE................................. 51
10.1 Notification............................................. 51
10.2 Material Communications.................................. 52
<PAGE> 4
Page
----
ARTICLE XI
PRODUCT RECALL .............................................................. 53
11.1 Notification and Recall.................................. 53
11.2 Recall Expenses.......................................... 54
ARTICLE XII
INTELLECTUAL PROPERTY RIGHTS................................................. 55
12.1 Ownership of Product Know-how............................ 55
12.2 Ownership of Filings and Approvals....................... 56
12.3 Ownership of Data........................................ 56
12.4 Enforcement of Intellectual Property
Rights................................................... 56
12.5 Offset for Infringement.................................. 60
ARTICLE XIII
CONFIDENTIALITY ............................................................. 61
13.1 Confidential Information................................. 61
13.2 Certain Definitions...................................... 62
13.3 Disclosure of Confidential Information --
Internal................................................. 63
13.4 Disclosure of Confidential Information --
Third Parties............................................ 63
13.5 Care and Return of Confidential
Information.............................................. 65
13.6 Use of Names............................................. 66
ARTICLE XIV
WARRANTIES; INDEMNITIES...................................................... 66
14.1 Representations and Warranties........................... 66
14.2 Warranties of Anthra..................................... 67
14.3 Warranties of Medeva..................................... 70
14.4 Indemnification of Medeva................................ 71
14.5 Indemnification of Anthra................................ 72
14.6 Indemnification Procedure................................ 72
14.7 Limitation of Liability.................................. 75
ARTICLE XV
TERM AND TERMINATION......................................................... 75
15.1 Term .................................................... 75
15.2 Termination for Material Breach.......................... 76
15.3 Established Material Breach.............................. 76
15.4 Non-Binding, Non-Admissible Arbitration
Decision................................................. 77
15.5 Termination for Other Events............................. 78
15.6 Partial Termination by Medeva............................ 79
15.7 Effect of Expiration or Termination...................... 79
15.8 Survival of Rights and Obligations....................... 80
<PAGE> 5
Page
----
ARTICLE XVI
GENERAL PROVISIONS .......................................................... 81
16.1 Force Majeure............................................ 81
16.2 Notice .................................................. 81
16.3 Further Assurances....................................... 82
16.4 Successors and Assigns................................... 83
16.5 Governing Law............................................ 83
16.6 Attorney's Fees.......................................... 84
16.7 Severability............................................. 84
16.8 Waiver .................................................. 85
16.9 Counterparts............................................. 85
16.10 Captions................................................. 85
16.11 Independent Contractors.................................. 86
16.12 Entire Agreement......................................... 86
ANNEX A ..................................................................... 88
ANNEX B ..................................................................... 89
ANNEX C ..................................................................... 90
ANNEX D ..................................................................... 91
ANNEX E ..................................................................... 92
<PAGE> 6
THIS DEVELOPMENT AGREEMENT (this "Agreement"), made as of July 15,
1997, by and between Anthra Pharmaceuticals, Inc., a corporation organized under
the laws of the State of Delaware ("Anthra"), and Medeva California Inc., a
corporation organized under the laws of California ("Medeva"),
WITNESSETH:
WHEREAS, Anthra has developed certain proprietary know-how and data
with respect to N-Trifluoroacetyladriamycin-14 valerate, a doxorubicin
derivative ("AD 32"), as further described in Annex A hereto,
WHEREAS, Anthra intends to continue the development of, and secure
the regulatory approvals required in order to manufacture, promote, market and
sell AD 32 in the United States, including its territories, possessions and
commonwealths (the "Territory"),
WHEREAS, Medeva has considerable expertise in the development,
promotion, marketing and sale of pharmaceutical products in the Territory, and
has in place a large and experienced marketing staff that can expedite the
distribution of AD 32 in the Territory,
WHEREAS, Medeva and Anthra desire to enter into a co-ownership
arrangement with respect to the Product Know-how, as defined below, on the terms
set forth herein, and
WHEREAS, Anthra desires to grant Medeva an exclusive license in the
Territory with respect to the Product Know-how, on the terms set forth herein;
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 7
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 "AD 32" shall have the meaning set forth in the preamble hereto.
1.2 "Affiliate" of a person shall mean any corporation, partnership
or other entity that directly, or indirectly through one or more intermediaries,
Controls, is controlled by or is under common control with such person.
1.3 "Anthra" shall mean Anthra Pharmaceuticals, Inc.
1.4 "Anthra Patent Rights" shall mean all patents and patent
applications (which for purposes of this Agreement shall be deemed to include
certificates of invention, applications for certificates of invention, and
utility models) throughout the world, covering or relating to the Product,
including any substitutions, extensions, reissues, reexaminations, renewals,
divisions, continuations, or continuations-in-part, which Anthra owns or
controls and under which Anthra has the right to grant sublicenses to Medeva,
during the term of this Agreement.
1.5 "Arbitration Decision" shall have the meaning set forth in
Section 15.3.
1.6 "Arbitration Panel" shall have the meaning set forth in Section
15.3.
1.7 "CIS Approval" shall have the meaning set forth
*** CONFIDENTIAL TREATMENT REQUESTED.
2
<PAGE> 8
in Section 7.1(c).
1.8 "CIS Indication" shall mean the indication for refractory
bladder carcinoma in situ.
1.9 "Calendar Quarter" shall mean a three-month period starting on
January 1, April 1, July 1, or October 1 of any calendar year.
1.10 "Collateral" shall have the meaning set forth in Section
3.2(c).
1.11 "Control" and, with correlative meanings, the terms "controlled
by" and "under common control with" shall mean the power to direct or cause the
direction of the management or policies of a person, whether through the
ownership of voting securities, by contract, resolution, regulation or
otherwise.
1.12 "Development Activities" shall have the meaning set forth in
Section 2.5.
1.13 "Disclosing Party" shall have the meaning set forth in Section
13.1.
1.14 "EMC" shall mean the Executive Management Committee to be
established pursuant to Section 8.1.
1.15 "Established Material Breach" shall have the meaning set forth
in Section 15.3.
1.16 "FDA" shall mean the United States Food and Drug Administration
and any successor agency having substantially the same functions.
*** CONFIDENTIAL TREATMENT REQUESTED.
3
<PAGE> 9
1.17 "GMP" shall mean current Good Manufacturing Practices in effect
from time to time during the term of this Agreement.
1.18 "Improvement" shall mean any modification to a product, or any
discovery, technology, device or formulation, including, without limitation, any
enhancement in the presentation, means of delivery, dosage or packaging, of a
product, or any discovery or development of a new indication for a product.
1.19 "Inventory" shall have the meaning set forth in Section 3.2(c).
1.20 "Launch" shall mean the first commercial sale of the Product in
the Territory.
1.21 "Losses" shall have the meaning set forth in Section 14.4.
1.22 "Market" or "Marketing" shall mean all programs and activities
relating to the marketing and promotion of the Product in the Territory,
including but not limited to labeling, advertising, marketing studies, seminars,
symposia, training and education, and detailing.
1.23 "Medeva" shall mean Medeva California Inc.
1.24 "NDA" shall mean a New Drug Application or Supplemental New
Drug Application made in accordance with applicable regulations and requirements
of the FDA in effect from time to time.
*** CONFIDENTIAL TREATMENT REQUESTED.
4
<PAGE> 10
1.25 "Negotiation Period" shall have the meaning set forth in
Section 2.5.
1.26 "Net Sales" shall mean,***
1.27 "NAFTA Area" shall mean the countries, territories and
possessions covered by the North American Free Trade Agreement.
1.28 "Notice" shall have the meaning set forth in Section 16.2.
1.29 "Other Trademarks" shall have the meaning set forth in Section
1.40.
1.30 "Ovarian Agreement" shall mean the agreement that Medeva and
Anthra, on the one hand, and Medeva on the other hand, may enter into pursuant
to Section 2.9, setting forth the terms and conditions on which Anthra will
proceed with the preparation and filing of an NDA for the Product for the
Ovarian Indication, including without limitation appropriate license grants by
Anthra and Medeva and provisions for milestone and royalty payments by Medeva.
1.31 "Ovarian Indication" shall mean the indication for ovarian
cancer.
1.32 "Papillary Approval" shall have the meaning set forth in
Section 7.1(d).
1.33 "Papillary Indication" shall mean the indication for the
adjunctive treatment of papillary bladder tumors.
1.34 "Product" shall mean AD 32, in finished dosage
*** CONFIDENTIAL TREATMENT REQUESTED.
5
<PAGE> 11
form in 200 mg vials, for administration intravesically and intraperitoneally.
1.35 "Product Know-how" shall mean all technical knowledge,
expertise, skill, practice, proprietary rights, inventions, formulae, trade
secrets, analytical methodology, processes, preclinical, clinical, stability and
other data, toxicological information and all other experience in tangible or
intangible form relating to the Product in which Anthra has an ownership or
licensable interest and which is in the possession or under the control of
Anthra as of the date of this Agreement, or which Anthra may develop, acquire or
control (pursuant to an ownership or licensable interest) hereafter pursuant to
this Agreement. "Product Know-how" shall be deemed to include any and all Anthra
Patent Rights.
1.36 "Product Specifications" shall mean the specifications and
quality control testing procedures for the Product set forth in Annex A hereto,
as amended and/or supplemented from time to time pursuant to Section 4.1.
1.37 "Receiving Party" shall have the meaning set forth in Section
13.1.
1.38 "Sublicensee" shall have the meaning set forth in Section 5.2.
1.39 "Territory" shall have the meaning set forth in the preamble.
1.40 "Trademarks" shall mean those trademarks and
*** CONFIDENTIAL TREATMENT REQUESTED.
6
<PAGE> 12
trade names designed for and used by Medeva or its Affiliates or Sublicensees in
the Marketing and sale of the Product hereunder, but shall not include any other
trademark or trade name used by Medeva in connection with its other products
(even if also used in connection with the Product), particularly any mark or
name that identifies Medeva or any of its Affiliates or Sublicensees
(collectively, the "Other Trademarks").
ARTICLE II
OWNERSHIP INTEREST; PRODUCT DEVELOPMENT
2.1 Grant of Interest. Anthra hereby grants to Medeva *** ownership
interest (the "Medeva Interest") in all of its rights, title and interest in the
Product Know-how as exploited in the Territory (the remaining ownership interest
therein, the "Anthra Interest") (collectively, the "Interests"); provided,
however, that Medeva may not exploit the Product Know-how except to the extent
expressly set forth elsewhere in this Agreement; and provided, further, that
nothing in this Article II shall restrict the rights of Anthra with respect to
the ownership of, or exploitation of Product Know-how outside the Territory.
2.2 Right to payments. Anthra agrees to pay ***.
2.3 Transfer of Interests. Neither party shall have the right to
sell, transfer, encumber or otherwise assign its Interest without the prior
written consent of the other party, except in connection with a permitted
assignment of this Agreement by such party pursuant to Section 16.4.
2.4 Purchase Option. Upon the termination or expiration of this
Agreement, Anthra shall have the option (the "Purchase Option"), exercisable
upon written notice to Medeva, to purchase the Medeva Interest for an amount
equal to the fair market value thereof at the time of exercise. Upon receipt of
written notice from Anthra and receipt of payment of the fair market value of
the Medeva Interest, Medeva shall promptly return, assign, or otherwise effect
the complete
*** CONFIDENTIAL TREATMENT REQUESTED.
7
<PAGE> 13
transfer to Anthra of the entire Medeva Interest. The fair market value of the
Medeva Interest shall be determined in good faith by the parties; provided,
however, that if the parties are unable to agree on the fair market value
thereof, then an independent appraiser, mutually acceptable to the parties,
shall determine such fair market value; and provided, further, that any such
determination by such appraiser shall be conclusive and binding on the parties.
2.5 Clinical Studies. Anthra shall perform, directly or indirectly
(i) all tests, studies and other activities necessary in connection with the
preparation and filing of an NDA for the Product for each of the CIS Indication
and the Papillary Indication, as listed in the clinical plan set forth in Annex
B hereto, (ii) for a period beginning on the date hereof and ending on the
earlier to occur of (A) the first anniversary of the date hereof (the
"Negotiation Period") and (B) an impasse in negotiations pursuant to Section
2.9(b), all tests, studies and other activities set forth in Annex B hereto
relating to the preparation and filing of an NDA for the Product for the Ovarian
Indication, (iii) such other tests and studies of the Product as may be required
from time to time by the FDA with respect to indications for the Product as to
which Anthra is obligated to file an NDA pursuant to this Agreement, whether
prior to or after the approval of such NDA, and (iv) all other
*** CONFIDENTIAL TREATMENT REQUESTED.
8
<PAGE> 14
tests and studies of the Product that Medeva deems necessary or appropriate to
have conducted with respect to any such indication after the grant by the FDA of
an "approvable letter" with respect to such indication, including without
limitation all clinical studies to support the Marketing of the Product for such
indication (collectively, the "Development Activities").
2.6 NDA Filings. Anthra agrees to prepare and file an NDA for the
Product for each of the CIS Indication and the Papillary Indication and to use
commercially reasonable efforts to obtain approval thereof. Promptly upon the
completion (and prior to the filing) of each such NDA, Anthra shall provide
Medeva with a copy of the Chemistry, Manufacturing, and Controls (CMC) section
thereof, and agrees to delay the filing of such NDA with the FDA for a period of
sixty (60) days after the date such copy was provided to Medeva, unless the EMC
shall unanimously approve the filing of such NDA prior to the end of such
period. Insofar as timely received, Medeva's reasonable views and requests shall
be taken into account prior to the submission of such NDA. All such NDAs shall
be filed in the name of Anthra, but shall be held subject to the Medeva Interest
as herein provided, and Anthra shall use commercially reasonable efforts to
maintain such NDAs after approval thereof.
2.7 Performance. Anthra shall perform, or cause to
*** CONFIDENTIAL TREATMENT REQUESTED.
9
<PAGE> 15
be performed, the Development Activities in good scientific manner, and in
compliance in all material respects with all requirements of applicable laws,
rules, regulations and guidelines.
2.8 Communications with FDA. Anthra shall be responsible for all
communications with the FDA relating to the Product, whether occurring prior to
or after the Launch of the Product; provided, however, with respect to any such
communications after the Launch, whenever practicable Anthra shall consult with
Medeva prior to such communication and shall take account of Medeva's timely and
reasonable views and requests; provided, further, that if such advance
consultation is not possible, then Anthra shall promptly thereafter advise
Medeva of the content of such communications. After the approval of the NDA for
the Product for an indication, Medeva may initiate communications with the FDA
with regard to such indication, as required by applicable law, and may respond
to inquiries initiated by the FDA; provided, however, that Medeva shall consult
with Anthra prior to such communications and shall take account of Anthra's
timely and reasonable views and requests and, if such advance consultation is
not possible, then Medeva shall promptly thereafter advise Anthra of the content
of such communications.
*** CONFIDENTIAL TREATMENT REQUESTED.
10
<PAGE> 16
2.9 Ovarian Indication.
(a) During the Negotiation Period, Anthra shall provide to
Medeva such information concerning the Development Activities relating to the
Ovarian Indication as Medeva may reasonably request from time to time to assist
it in evaluating the efficacy of the Product for the Ovarian Indication.
(b) Upon the written request of Medeva, Anthra and Medeva
shall use good faith efforts to negotiate an Ovarian Agreement, until the
earlier to occur of an impasse in negotiations or the end of the Negotiation
Period; provided, however, that each party may decide, in its sole discretion,
whether to accept any and all terms and conditions proposed by the other party
for such agreement.
(c) Anthra shall have no obligation whatsoever to undertake or
complete any development work relating to the Ovarian Indication after the
earlier to occur of (i) an impasse in negotiations pursuant to Section 2.9(b)
and (ii) the end of the Negotiation Period, in the event that the parties have
not entered into an Ovarian Agreement.
2.10 Development Expenses. Medeva shall pay to Anthra the payments
set forth in Section 7.1 to cover the development of the Product. Except as
provided in Section 7.1, Anthra shall bear all costs and expenses arising out of
or relating to the Development Activities; provided, however,
*** CONFIDENTIAL TREATMENT REQUESTED.
11
<PAGE> 17
that Medeva shall promptly reimburse Anthra for all of its direct costs and
expenses (including without limitation disbursements to third parties, central
laboratory expenses, travel expenses, and salaries and benefits for relevant
Anthra employees) arising out of or relating to any tests, studies, and other
activities with respect to the CIS or Papillary Indications for the Product that
the FDA may require or that Medeva may request Anthra to conduct, after approval
of the NDA for such indication, exclusive of any such tests, studies or
activities that at the time of approval are specified by the FDA as conditions
subsequent to such approval.
2.11 Further Funds. In the event that Anthra shall be unable to
complete the development of the Product for either the CIS Indication or the
Papillary Indication due to a lack of funds, then Anthra shall provide written
notice to Medeva estimating the amount of funds required (in addition to the
development payments made or to be made by Medeva under Section 7.1) to complete
the development of the Product for such Indication. Medeva may, in its sole
discretion, elect to advance to Anthra all or a portion of such amount, and
Anthra shall have no obligation to pay interest on the funds so advanced, or to
repay the principal amount of such advance; provided, however, that Medeva may
set off an amount (the "Advance Reimbursement Amount") equal to *** against its
license fee payment obligations pursuant to Section 7.2 and royalty payment
obligations pursuant to Section 7.3, as they accrue, subject to a cap of ***.
2.12 Continued Development. In the event that Anthra reasonably
determines at any time that the NDA for an indication for the Product is
unlikely to be approved by the FDA, then it shall so notify Medeva, whereupon
Anthra shall have no further obligation pursuant to this Article II to conduct
any Development Activities with respect to such indication for the Product. Upon
receipt of such notice, Medeva shall elect, in its sole discretion, either to
terminate this Agreement with respect to such indication for the Product, or to
continue (or contract for a third party to continue) such Development Activities
at the sole expense of Medeva. Medeva shall notify Anthra of such election
within ninety (90) days after the receipt of the notice referred to
*** CONFIDENTIAL TREATMENT REQUESTED.
12
<PAGE> 18
in the first sentence of this Section 2.12. In the event that Medeva shall
decide to continue (or have continued) such Development Activities, then (i)
Anthra shall provide Medeva with copies of such data, information and regulatory
documentation relating to the Product as Anthra shall have developed in the
performance of its Development Activities with respect to such indication, (ii)
Anthra shall grant Medeva the right to reference the relevant drug master file
of Anthra and to use such data, information and regulatory documentation, all
solely for the purpose contemplated by this Section 2.12, and (iii) ***.
ARTICLE III
SUPPLY OF THE PRODUCT
3.1 General. Subject to the terms and conditions of
*** CONFIDENTIAL TREATMENT REQUESTED.
13
<PAGE> 19
this Agreement, Anthra agrees to use its commercially reasonable efforts to
supply Medeva with its requirements of the Product, and Medeva agrees to
purchase from Anthra its requirements of the Product, for resale in the
Territory pursuant to this Agreement.
3.2 Inventory of AD 32.
(a) In order to enable Anthra to meet its obligations under
this Article III with respect to the timely supply of Product to Medeva, the
parties agree that Anthra shall purchase and maintain in inventory, from time to
time, such quantities of AD 32 as the EMC shall decide, subject to contractual
restrictions in the supply agreement(s) in effect from time to time between
Anthra and its supplier(s) of AD 32 and subject to the terms and conditions of
this Section 3.2. Such inventory shall be utilized in the manufacture of the
Product on a first-in-first-out (FIFO) basis.
(b) Medeva agrees to reimburse Anthra, by check or wire
transfer, within ten days after receipt of an invoice therefor, for *** of the
cost of each purchase made pursuant to Section 3.2(a) (each such reimbursement
amount, an "Advance"), which AD 32 shall be used exclusively to meet Anthra's
supply obligations under this Article III, except as otherwise provided in
Section 3.2(c). Anthra shall credit each Advance against the supply price
payable by Medeva pursuant to Section 3.11 for the purchase of Product
manufactured from that shipment of AD 32 in respect of which the Advance was
made;***
3.3 Good Faith Forecasts.
(a) No later than *** after Anthra files the NDA for the
Product for the CIS Indication or the Papillary Indication, whichever shall
occur first, Medeva shall provide Anthra with a good faith forecast estimating
Medeva's quarterly requirements of the Product (and the desired delivery dates
therefor) for the *** period commencing on the first day of the immediately
succeeding ***.
(b) Thereafter, not less than *** prior to the beginning of
each *** during the term hereof, Medeva shall provide Anthra with an updated
good faith forecast estimating Medeva's monthly requirements of the Product for
the *** period commencing on the first day of such ***.
3.4 Issuance of Purchase Orders. Medeva shall order a shipment of
the Product by issuing a purchase order to Anthra specifying the quantity and
desired delivery date thereof, not less than *** prior to the delivery date;
provided, however, that the aggregate quantity of Product ordered by Medeva for
delivery in any month shall not exceed
*** CONFIDENTIAL TREATMENT REQUESTED.
14
<PAGE> 20
the quantity of Product forecast to be ordered during such month, as set forth
in the latest forecast prepared by Medeva pursuant to Section 3.3 prior to the
first day of the *** in which the purchase order is issued.
3.5 Acceptance of Purchase Orders. Anthra shall accept each purchase
order issued by Medeva in conformity with Section 3.4 within *** after receipt
thereof, unless the inventory of AD 32 maintained by Anthra pursuant to Section
3.2 shall be insufficient to allow for the timely delivery of the ordered
quantity of the Product. Anthra shall give Medeva prompt written notice of the
rejection of any such purchase order specifying the basis for such rejection.
In the event that the terms of any purchase order received by Anthra
from Medeva shall be inconsistent with the terms of this Agreement, the terms of
this Agreement shall control.
3.6 Delivery. Delivery of each order of Product shall be made ***
Medeva's facility in Rochester, New York. Anthra shall arrange for *** of the
Product. *** at the time of delivery to the carrier.
3.7 Contract Manufacturing. Anthra may contract with one or more
unrelated third parties (each a "Contract Manufacturer") to manufacture AD 32 or
Product, provided that (i) Anthra permits Medeva to comment on the drafts of
each toll manufacturing agreement for AD 32 and/or Product (each a "Contract
Manufacturing Agreement") that Anthra may negotiate with a Contract Manufacturer
after the date hereof,
*** CONFIDENTIAL TREATMENT REQUESTED.
15
<PAGE> 21
(ii) Anthra provides Medeva with a true and accurate copy of each such Contract
Manufacturing Agreement, and (iii) Anthra uses commercially reasonable efforts
to cause each Contract Manufacturer to agree to execute and deliver to Medeva a
letter in the form of Annex C hereto, and to include the provisions set forth
therein in the relevant Contract Manufacturing Agreement. As to each Contract
Manufacturer that executes and delivers such a letter to Medeva, Anthra agrees
that Medeva may seek to enforce Anthra's remedies under such Contract
Manufacturing Agreement directly against such Contract Manufacturer without
first exhausting its remedies against Anthra if the Contract Manufacturer
breaches such Contract Manufacturing Agreement so as to cause Anthra to become
liable to Medeva for damages pursuant to Section 3.8 hereof; provided, however,
that if Medeva shall seek to exercise such remedies, Anthra shall remain
primarily liable and obligated to Medeva under all provisions of this Agreement.
Further, Anthra agrees to use commercially reasonable efforts to negotiate the
inclusion in each Contract Manufacturing Agreement of provisions (i) prohibiting
(A) the sublicensing by such Contract Manufacturer of any know-how, data or
technology licensed to it by Anthra and (B) the sale by such Contract
Manufacturer of (x) AD 32 for use in any product to be sold in the Territory, or
(y) Product for resale (other than by Anthra to Medeva, or by Medeva) in the
Territory, and (ii) giving Anthra the right to terminate such Contract
Manufacturing Agreement in the event of a breach of either of the provisions
described in (i) above. Notwithstanding any provision of this Agreement, Anthra
shall have no obligation under this Agreement with respect to Genchem Pharma
Ltd. as a Contract Manufacturer or the Supply Agreement between Anthra and
Genchem Pharma Ltd. as a Contract Manufacturing Agreement.
3.8 Inability to Supply.
*** CONFIDENTIAL TREATMENT REQUESTED.
16
<PAGE> 22
(a) In the event that Anthra shall fail to deliver to Medeva
at least *** of the quantity of Product specified in a purchase order accepted
by Anthra pursuant to Section 3.5 (the "Minimum Quantity"), within *** after
acceptance of such purchase order, then Anthra shall *** in the delivery to
Medeva of the Minimum Quantity; provided, however, that Anthra shall not be
required to pay *** with respect to any order; and provided, further, that no
such damages shall be payable by Anthra in the event that (i) at the time of
acceptance of such purchase order, at least fifty percent (50%) of the
then-current inventory of *** AD 32 maintained by Anthra pursuant to Section 3.2
would be needed in the manufacture of the quantity of Product specified in such
purchase order and (ii) Anthra timely fills such purchase order to the extent of
the aggregate of (A) the quantities of Product that can be manufactured from the
Inventory of AD 32 at the time of acceptance of such purchase order and (B)
Anthra's inventory, as of the delivery date specified in such purchase order, of
Product manufactured from AD 32 ***.
(b) Subject to the terms and conditions of this Agreement, in
the event that Anthra shall become obligated to pay Medeva liquidated damages
in the amount of *** with respect to an order of Product pursuant to Section
3.8(a), or Anthra shall become subject involuntarily (which proceeding shall
not be dismissed within sixty (60) days after the commencement thereof) or
voluntarily to a bankruptcy, insolvency, liquidation or other similar
proceeding, then Medeva shall have the continuing right (the "Manufacturing
Option"), in addition to all other rights granted pursuant to this Agreement,
to manufacture Product for the term of this Agreement. Medeva may exercise the
Manufacturing Option upon thirty (30) days' prior written notice to Anthra.
Upon Medeva's exercise of the Manufacturing Option, (i) Anthra shall provide
Medeva with copies of such data, information and regulatory documentation in
the possession or under the control of Anthra (and not subject to a
confidentiality obligation) relating to the Product as Medeva may reasonably
require in connection with the manufacturing of Product, and (ii) Anthra shall
grant Medeva the right to reference the relevant drug master file of Anthra and
to use such data, information and regulatory documentation, all solely for the
purpose contemplated by this Section 3.8(b).
(c) Except for its rights under Sections 11.2 and 15.2, the
rights of Medeva under this Section 3.8 shall be exclusive and in lieu of all
other remedies otherwise available by law or under this Agreement with respect
to any breach by Anthra of its obligation to supply Medeva with Product on a
timely basis pursuant to this Article III. In the event of termination of this
Agreement by Medeva pursuant to Section 15.2 for any such breach by Anthra,
Medeva shall not be entitled to any damages other than those, if any, to which
it may be entitled under Section 3.8(a). For purposes of Section 15.2, if Anthra
shall deliver to Medeva at least *** then Anthra shall not be deemed to have
breached materially its supply obligation under this Article III with respect to
such purchase order.
3.9 Alternate Supply. Anthra agrees to use commercially reasonable
efforts to cause at least *** of supply of AD 32 to become and remain
pre-qualified during the term of this Agreement.
3.10 Warranty. Anthra warrants and represents that, at the time of
delivery of the Product to Medeva, the Product (i) will have been manufactured,
filled, packaged, stored and shipped in accordance with applicable GMPs and all
other applicable laws, rules, regulations or requirements, (ii) will have been
manufactured, filled, packaged and stored in
*** CONFIDENTIAL TREATMENT REQUESTED.
17
<PAGE> 23
accordance with the Product Specifications and the applicable NDA, (iii) will
not be adulterated or misbranded under the Federal Food, Drug, and Cosmetic Act,
21 U.S.C. ss.ss. 321 et seq., as amended ("FFDCA"), or under any other
applicable laws, rules, regulations or requirements, (iv) may be introduced into
interstate commerce pursuant to the FFDCA, and (iv) will have expiration dating
not less than *** after the date of delivery thereof to Medeva, provided that
the FDA shall have approved expiration dating of the Product of not less than
***.
3.11 Price and Payment
(a) The parties hereby agree that the supply price for the
Product, ***.
(b) The supply price for each order of Product shall be
payable by Medeva ***.
3.12 Property Insurance. Anthra shall procure and maintain
throughout the term of this Agreement property insurance (in which Medeva shall
be named as an additional insured), with such types and amounts of coverage as
are customary in the industry, covering all Product intended for sale to Medeva
pursuant hereto, and all AD 32 purchased pursuant to Section 3.2, prior to such
time as the risk of loss thereof passes from Anthra to Medeva. All such
insurance policies shall require at least thirty (30) days prior written notice
to Medeva concerning cancellation thereof. Upon request, Anthra shall provide
Medeva with evidence that such insurance is in effect.
3.13 Records. Anthra shall maintain, and shall cause its Contract
Manufacturers and other agents to maintain, all
*** CONFIDENTIAL TREATMENT REQUESTED.
18
<PAGE> 24
records necessary to comply with all applicable laws, rules and regulations in
the Territory relating to the manufacturing and storage of the Product in bulk
or finished form. All such records shall be maintained for such period as may be
required by law, rule or regulation; provided, however, that all records
relating to the manufacture, stability and quality control of each batch of the
Product shall be retained at least until the first anniversary of the end of the
approved shelf life for all Product from such batch.
ARTICLE IV
QUALITY CONTROL
4.1 Product Specifications Amendments. Anthra reserves the right to
amend and/or supplement the Product Specifications unilaterally for the purpose
of complying with GMPs or other applicable laws, regulations or guidelines.
Further, Anthra may amend and/or supplement the Product Specifications in order
to incorporate Improvements or for any other reasonable business purpose,
subject to the grant of any FDA approvals required by applicable law in
connection with any such changes, with the prior written consent of Medeva,
which consent shall not be unreasonably withheld; provided, however, that
failure to agree on royalty terms with respect to any such Improvement pursuant
to Section 12.1 shall be deemed reasonable cause for withholding such consent.
4.2 Nonconformance.
*** CONFIDENTIAL TREATMENT REQUESTED.
19
<PAGE> 25
(a) In the event that Medeva determines that any shipment of
Product does not conform to the Product Specifications or the relevant Medeva
purchase order, then Medeva shall give Anthra notice thereof (including a sample
from such shipment) within fifteen days after receipt thereof, in the case of
non-conformities that may be ascertained by the exercise of reasonable diligence
(which shall not include laboratory testing or other chemical analysis, unless
required by the NDA) upon receipt thereof, and within fifteen days after
discovery thereof, in the case of other non-conformities (including, without
limitation, non-conformities relating to stability). If Medeva decides to
conduct routine laboratory testing and other chemical analysis of shipments of
Product, it shall conduct such tests and analyses within thirty (30) days after
receipt of the Product. If Anthra confirms such non-conformity, it shall
promptly so notify Medeva. If Anthra does not confirm such non-conformity, it
shall promptly so notify Medeva, and the parties shall submit the disputed
shipment for testing to an independent testing laboratory that is mutually
acceptable to the parties. The findings of the testing laboratory shall be
binding on the parties. The expenses of such testing shall be borne by Anthra if
the testing confirms the non-conformity, and otherwise by Medeva.
(b) If any Product delivered by Anthra hereunder does not
conform to the Product Specifications or
*** CONFIDENTIAL TREATMENT REQUESTED.
20
<PAGE> 26
the relevant Medeva purchase order for any reason other than the willful or
negligent acts or omissions of Medeva or its customers or agents which occur
after the date of shipment thereof by Anthra, Anthra shall credit Medeva with
the costs incurred by Medeva with respect to such non-conforming Product, which
costs shall be deemed equal to the sum of any amounts paid on account of such
Product pursuant to Section 3.11 and any and all transportation and storage
charges incurred by Medeva in connection with such Product. In addition, at
Medeva's option, (i) Anthra shall be relieved of any obligation to deliver any
Product in replacement of such non-conforming Product, or (ii) Anthra shall
replace the non-conforming Product with substitute Product that conforms to the
Product Specifications and purchase order, within ninety (90) days from the date
Medeva notifies Anthra of its election of option (ii) of this Section 4.2, in
which case Medeva shall pay to Anthra any unpaid amounts in respect of the
replacement Product in accordance with Section 3.11 following delivery of the
replacement Product. This remedy shall be in addition to any other rights that
Medeva may have hereunder or by law.
4.3 Manufacturing Process. In the event that any process event shall
occur in the manufacturing of any batch of Product, which event is likely
materially to affect the safety, efficacy or regulatory status of the Product,
then Anthra shall notify Medeva as soon as reasonably possible.
*** CONFIDENTIAL TREATMENT REQUESTED.
21
<PAGE> 27
Medeva and Anthra shall consult with each other as to the disposition of all
affected batches of the Product. Anthra agrees to report to Medeva, on an annual
basis, any atypical process events that are unlikely materially to affect the
safety, efficacy or regulatory status of the Product. Further, to the extent of
its knowledge, Anthra agrees to provide Medeva with notice of any out of process
steps which occur in the manufacture of Product. No Product may be reworked
unless the rework procedure is in conformity with FDA guidelines, except with
the prior written consent of Medeva, which consent may not be unreasonably
withheld.
4.4 Inspection. Anthra shall permit Medeva representatives to enter
Anthra's facilities and, to the extent permitted by the Contract Manufacturing
Agreements (which access Anthra agrees to use commercially reasonable efforts to
negotiate on behalf of Medeva), to enter the facilities of the Contract
Manufacturers in the company of, and separately from, Anthra representatives,
all upon reasonable prior notice and at reasonable intervals, during normal
business hours for the purpose of making quality assurance audits of those
facilities and of the procedures and processes used by Anthra and such Contract
Manufacturers in storing, manufacturing and shipping AD 32 and the Product. In
the event that Anthra shall enter into contracts with other vendors with respect
to Product to be supplied to Medeva
*** CONFIDENTIAL TREATMENT REQUESTED.
22
<PAGE> 28
pursuant hereto, or AD 32 to be used in the manufacture of such Product, then
Anthra shall use commercially reasonable efforts to negotiate, mutatis mutandis,
such rights of access for Medeva with respect to such vendors' facilities.
4.5 Safety Procedures. Anthra shall maintain and enforce safety
procedures for the handling and manufacture of the Product that comply in all
respects with Anthra's NDA and all federal, state and local occupational safety
and health requirements.
4.6 Government Inspection. Anthra agrees to advise Medeva
immediately of any proposed or announced visit or inspection, and as soon as
possible but in any case within twenty-four (24) hours (or, in the case of a
third party facility, within twenty-four (24) hours after receipt by Anthra of
notice thereof), of any unannounced visit or inspection, by any governmental or
regulatory agent of any facilities used by Anthra in the performance of its
obligations hereunder, including the processes or procedures used at such
facilities in the manufacture of Product. Anthra shall provide Medeva with a
reasonable description of each such visit or inspection promptly (but in no
event later than five (5) calendar days) thereafter, and with copies of any
letters, reports or other documents (including 483's) issued by any such agents
that relate to the Product or such facilities, processes or procedures. Medeva
shall also be
*** CONFIDENTIAL TREATMENT REQUESTED.
23
<PAGE> 29
entitled to review Anthra's responses to any such reports and communications
prior to their submission, if practicable, and, insofar as timely received,
Medeva's reasonable views and requests shall be taken into account prior to
submission of such reports and communications to the relevant agency. Anthra
shall also provide Medeva with the notice, information, documentation, and
opportunity to comment provided for above with respect to the Contract
Manufacturers, to the extent provided for in the relevant Contract Manufacturing
Agreement (which provisions Anthra shall use commercially reasonable efforts to
negotiate on behalf of Medeva). In the event that Anthra shall enter into
contracts with other vendors with respect to Product to be supplied to Medeva
pursuant hereto, or AD 32 to be used in the manufacture of such Product, then
Anthra shall use commercially reasonable efforts to negotiate, mutatis mutandis,
such rights for Medeva with respect to such vendors.
ARTICLE V
LICENSE GRANTS
5.1 Grants. Subject to the terms and conditions of this Agreement,
including without limitation Section 6.8, the parties hereby grant to Medeva an
exclusive, royalty-bearing license in the Territory under the Product Know-how
to Market, sell, distribute, and have Marketed, sold, and distributed the
Product for the CIS and Papillary Indications. Anthra agrees
*** CONFIDENTIAL TREATMENT REQUESTED.
24
<PAGE> 30
not to license any third party to Market, sell or distribute AD 32 in the
Territory, for pharmaceutical use in humans.
5.2 Sublicenses. Medeva shall have the right to grant to third
parties (each, a "Sublicensee") sublicenses under the licenses granted in
Section 5.1, subject to the prior written consent of Anthra, which shall not be
unreasonably withheld. Failure to approve or disapprove a proposed Sublicensee
within ten (10) business days after receipt by Anthra of a request for consent
from Medeva shall be deemed approval.
5.3 Other Countries. Anthra retains the right to grant licenses for
the sale, marketing and distribution of the Product in all countries outside the
Territory; provided, however, that Anthra agrees to impose on each such
licensee, to the extent permitted by applicable law, the covenants set forth in
Section 6.9, mutatis mutandis; ***.
5.4 Trademarks.
*** CONFIDENTIAL TREATMENT REQUESTED.
25
<PAGE> 31
(a) Subject to the terms and conditions of this Agreement,
Medeva hereby grants to Anthra a non-exclusive license (i) in the Territory, to
use the Trademarks to Market and have Marketed the Product for the CIS
Indication and the Papillary Indication, if Anthra shall have co-promotion
rights pursuant to Section 6.8, and (ii) outside the NAFTA Area, to use the
Trademarks to Market and have Marketed all formulations of AD 32, for all
indications. The license granted pursuant to clause (i) above is royalty-free,
and the license granted pursuant to clause (ii) shall be royalty-bearing, on
terms and conditions to be mutually agreed by the parties.
(b) Anthra shall be responsible for ensuring that all
labelling of the Products in the Territory complies with Anthra's NDA and all
applicable FDA regulations and does not cause the Product to which it relates to
be misbranded or violative of any Federal, State or local law, regulation or
rule. Subject to the preceding sentence, all such labelling shall contain one or
more Trademarks and such Other Trademarks as specified by Medeva in writing.
Nothing contained herein shall give Anthra any right to use any Other Trademark
except on the Products in the Territory as specified by Medeva in writing.
5.5 Technical Assistance. Upon the written request of Medeva, Anthra
shall provide Medeva with all information
*** CONFIDENTIAL TREATMENT REQUESTED.
26
<PAGE> 32
and reasonable technical assistance related to the Product Know-how as Medeva
may reasonably require in order to exploit the licenses granted in Sections 5.1
and 5.2.
ARTICLE VI
MARKETING AND SALE OF THE PRODUCT
UNDER THE LICENSING ARRANGEMENT
6.1 General.
(a) Subject to the grant of the license under Article V,
Medeva shall use commercially reasonable efforts to Market and sell the Product
in the Territory for the CIS Indication and Papillary Indication, as approved by
the FDA from time to time. Medeva shall commence Launch of the Product as soon
as practicable after the approval of the NDA for the Product for the CIS
Indication or the Papillary Indication, whichever shall occur first, but in no
event later than one hundred twenty (120) days after such approval, if Anthra
shall have timely supplied Medeva with all Product theretofore ordered in
accordance with Article III. All Product sales in the Territory shall be made
by, and for the account of, Medeva or its Affiliates or Sublicensees, as the
case may be. Anthra shall have no right to sell or distribute Product in the
Territory during the term of this Agreement.
(b) Subject to such exceptions as the parties may mutually
agree upon pursuant to Section 6.8, Medeva shall bear all costs and expenses
arising out of or relating to the Marketing, distribution and sale of the
Product in the
*** CONFIDENTIAL TREATMENT REQUESTED.
27
<PAGE> 33
Territory.
6.2 Compliance. Medeva shall comply with all applicable laws and
regulations in conducting the Marketing and sale of the Product in the
Territory, including without limitation all requirements as to pre-Marketing
approval of Product labelling.
6.3 Trademarks. Medeva shall be responsible for the selection,
registration and maintenance of all the Trademarks. Except as otherwise provided
in Sections 5.4 and 15.7, Anthra shall not acquire or assert any right, title,
and interest in and to any Trademark or Other Trademark.
6.4 Price of the Product. Medeva shall use commercially reasonable
efforts to obtain the best in-market price for the Product in the Territory
under the prevailing marketing conditions; provided, however, that nothing in
this Section 6.4 shall be deemed to restrict the freedom of Medeva to determine
in its sole discretion prices for the Product for approved indications in the
Territory; and provided, further, that in evaluating the best in-market price
Medeva need not make such determinations on an indication by indication basis
but may have due regard to the deleterious effects that pricing differentials
among the indications might have on any particular indication. Medeva shall keep
Anthra informed of its efforts in this regard in response to Anthra's reasonable
written requests from time to time.
*** CONFIDENTIAL TREATMENT REQUESTED.
28
<PAGE> 34
6.5 Marketing Materials. Medeva shall develop, at its sole expense,
appropriate Marketing and promotional materials for the Product for the CIS
Indication and the Papillary Indication in the Territory for use by Medeva, its
Affiliates and Sublicensees. Medeva agrees to provide Anthra with a sample copy
of each such item at least ten (10) business days before making use thereof, and
agrees to use such item only after receiving the written approval of Anthra;
provided, however, that failure by Anthra to approve or disapprove any such item
within ten (10) business days after Medeva has provided such item to Anthra
shall be deemed to be approval thereof. Medeva shall not, and shall cause its
Affiliates and Sublicensees not to, use any materials for the Marketing the
Product other than materials approved by Anthra for that purpose.
6.6 Product Liability Insurance. Medeva shall maintain, with an
insurance carrier reasonably acceptable to Anthra, at the sole expense of
Medeva, product liability insurance relating to the Product that is comparable
in type and amount to the insurance it maintains with respect to its most
similar other pharmaceutical products that are Marketed, distributed and sold in
the Territory.
6.7 Competition. Notwithstanding the exercise of the Purchase Option
under Section 2.4, each party agrees that, during the term of this Agreement and
for a period of one (1)
*** CONFIDENTIAL TREATMENT REQUESTED.
29
<PAGE> 35
year after the termination or expiration hereof, it shall not, and shall not
permit any of its Affiliates or Sublicensees to, develop, Market or sell in the
Territory any anthracycline (other than the Product, pursuant to this Agreement)
that is intended to receive, or has received, marketing approval in the
Territory for any urological indication; and provided, further, that this
Section 6.7 shall not apply to a party in the event that it shall terminate this
Agreement pursuant to Section 15.2. The parties acknowledge that all
restrictions contained in this Section 6.7 are reasonable, valid and necessary
for the adequate protection of the Product and the parties' rights therein.
6.8 Co-Promotion.***
6.9 Activities Outside the Territory. Medeva agrees that it will not
(i) seek approval, directly or indirectly, from the relevant regulatory
authorities, to (A) qualify facilities to manufacture or finish the Product
outside the Territory or (B) label or relabel the Product in a manner that would
permit it to be marketed or sold outside the Territory, or (ii) sell or export
the Product to any third party for use or resale outside the Territory, (iii) or
sell the Product to any third party that it has reason to believe intends to
resell or export the Product outside the Territory.
ARTICLE VII
DEVELOPMENT FEES, LICENSE FEES AND ROYALTIES
*** CONFIDENTIAL TREATMENT REQUESTED.
30
<PAGE> 36
7.1 Development Fees. For use in connection with, and for purposes
of the continued development of the Product, Medeva agrees to pay to Anthra the
following amounts:
(a) a single payment of Eight Million U.S. Dollars
(US$8,000,000) upon the signing of this Agreement;
(b) ***.
7.2 License Fees. In consideration of the license granted in
Article V, ***.
7.3 Royalties.
(a) Subject to Section 7.3(b), Medeva shall pay Anthra a
royalty equal to ***.
7.4 Payment. All development fees, license fees and royalties
payable by Medeva under this Article VII shall be paid in U.S. Dollars by wire
transfer of immediately available funds to *** or such other bank account as
Anthra may hereafter designate in writing not less than five (5) business days
before payment is due. Medeva shall pay all amounts owed to Anthra pursuant to
Section 7.3 on a quarterly basis within thirty (30) days following the end of
each full or partial Calendar Quarter during the term of this Agreement. Each
such payment shall be accompanied by written report, certified by an officer of
Medeva, providing a detailed breakdown of the Net Sales, and the components
thereof, for such Calendar Quarter.
7.5 Equity Interest. In the event that the FDA shall have granted
neither the CIS Approval nor the Papillary Approval by December 31, 2002, then,
in Medeva's sole discretion, Medeva shall have the right, exercisable upon
written notice in consideration of the payment made pursuant to Section 7.1(a)
and without payment of additional compensation, to acquire that number of shares
of the common stock of Anthra equal to twenty percent (20%) of the then-current
issued and outstanding voting equity securities of
*** CONFIDENTIAL TREATMENT REQUESTED.
31
<PAGE> 37
Anthra.
7.6 Withholding Taxes. Medeva shall pay any and all withholding
taxes or similar charges imposed by any government in the Territory on any
amounts due to Anthra from Medeva pursuant to this Article VII to the proper
taxing authority, and proof of payment of such taxes or charges shall be secured
and sent to Anthra as evidence of such payment. All amounts paid by Medeva
pursuant to this Section 7.6 shall be paid for the account of Anthra and
deducted from the amounts due from Medeva to Anthra pursuant to this Article.
ARTICLE VIII
EXECUTIVE MANAGEMENT COMMITTEE
8.1 Formation of the EMC. In order to facilitate the exchange of
information between the parties relating to their activities pursuant to this
Agreement, the parties agree to establish an Executive Management Committee (the
"EMC") comprised of six individuals. Medeva and Anthra shall each appoint three
members of the EMC. Each member of the EMC shall be an employee or member of the
Board of Directors of the party that appointed such member, or an Affiliate
thereof. Initial appointments shall be made within fourteen (14) days of the
date of this Agreement. A member of the EMC may be removed at any time, with or
without cause, by the party that originally appointed such member. A member of
the EMC shall serve until a successor is named by the party that appointed
*** CONFIDENTIAL TREATMENT REQUESTED.
32
<PAGE> 38
such member.
8.2 Authority of the EMC. Without limitation of the other provisions
hereof, the EMC shall (a) monitor and review the progress of the Development
Activities conducted by Anthra pursuant to this Agreement, (b) monitor and
review the progress of all Product Marketing and sales activities conducted by
Medeva and Anthra pursuant to this Agreement, (c) determine the level of
inventory of AD 32 to be maintained by Anthra pursuant to Section 3.2, (d)
determine whether Anthra may file an NDA prior to the expiration of the
sixty-day period after Anthra provides Medeva with a copy of the CMC section
thereof pursuant to Section 2.6, (e) determine whether, upon the written request
of Anthra, AD 32 purchased pursuant to Section 3.2(a) may be released from
Inventory upon repayment by Anthra to Medeva of the relevant Advance(s) pursuant
to Section 3.2(c), and (f) take such other actions as the parties may mutually
agree, except that the EMC may not take any action that would conflict with any
provision of this Agreement. Except as set forth in clause (c) of the preceding
sentence, it is not intended that the EMC have any power or authority to direct
the conduct of the affairs or the decision-making of either party hereto. Each
party to this Agreement shall retain the rights, powers, and discretion granted
to it under this Agreement, and no such rights, powers, or discretion shall be
delegated to or vested in the
*** CONFIDENTIAL TREATMENT REQUESTED.
33
<PAGE> 39
EMC unless such delegation or vesting of rights is expressly agreed to by the
parties in writing. The EMC shall not have the power to amend or modify this
Agreement, which may only be amended or modified as provided in Section 16.12.
8.3 Procedural Rules of the EMC.
(a) The EMC shall adopt such standing rules as shall be
necessary for its work.
(b) A quorum of the EMC shall consist of two members, provided
that at least one member appointed by each party is present. Members of the EMC
may attend a meeting either in person or by telephone conference call.
Representation by proxy shall not be allowed.
(c) The EMC may take action (1) by agreement of all the
members present at a meeting at which a quorum exists, or (2) by written
resolutions approved in writing by all of the members.
(d) The EMC shall have a chairperson and a secretary. The
first chairperson shall be a member of the EMC designated by Anthra. Each
chairperson shall serve a one-year term, and the office shall alternate between
a member appointed by Anthra and a member appointed by Medeva. The first
secretary shall be a member of the EMC designated by Medeva. Each secretary
shall serve a one-year term, and the office shall alternate between a member
appointed by Medeva and a member appointed by Anthra.
*** CONFIDENTIAL TREATMENT REQUESTED.
34
<PAGE> 40
(e) The EMC shall meet quarterly or more or less frequently as
mutually agreed upon by the members, at times and places to be mutually agreed
upon. Thirty (30) calendar days' prior written notice of any such meeting shall
be provided to the members, unless such notice is waived in writing by the
members.
ARTICLE IX
REPORTING
9.1 Reporting by Parties. The parties hereto shall use their
commercially reasonable efforts to keep each other informed of their activities
pursuant to this Agreement, including without limitation material developments
relating to the performance of their respective obligations under this
Agreement.
9.2 Record Keeping.
(a) Medeva shall, and shall cause its Affiliates and
Sublicensees to, keep complete and accurate books and records pertaining to the
sale and use of the Product, including the names and addresses and purchase
order details for each customer to which it sells the Product. Such books and
records shall be retained for at least one (1) year after the calendar year to
which they relate, or for such longer period if and as required by applicable
law.
(b) Anthra shall keep complete and accurate books and records
pertaining to Development Activities, to its
*** CONFIDENTIAL TREATMENT REQUESTED.
35
<PAGE> 41
purchases of AD 32 and the Product, to any co-promotion activities it shall
perform hereunder, and to any payments to Anthra in connection with the Product
Know-how, including but not limited to royalty payments. Such books and records
shall be retained for at least one (1) year after the calendar year to which
they relate, or for such longer period if and as required by Section 3.13 or
applicable law.
9.3 Audit of Records. At the request of either party, the other
party shall, and shall cause its Affiliates (and, in the case of Medeva, its
Sublicensees, and in the case of Anthra, the Contract Manufacturers, where
permitted by the relevant Contract Manufacturing Agreement (which provision
Anthra shall use commercially reasonable efforts to negotiate on behalf of
Medeva)) to, permit the requesting party and its representatives, at reasonable
times and upon reasonable notice, to examine and audit the books and records
maintained by such other party pursuant to this Article IX or Section 3.13;
provided, however, should Anthra wish to audit Medeva's reported Net Sales,
Anthra shall have the right to nominate a firm of independent certified public
accountants reasonably acceptable to Medeva to have access to the records of
Medeva during reasonable business hours for the purpose of verifying, at
Anthra's expense, Medeva's reported Net Sales of the Products. If the audit
shall establish inaccuracies in Anthra's favor of at least ten percent (10%)
from the Net
*** CONFIDENTIAL TREATMENT REQUESTED.
36
<PAGE> 42
Sales reported by Medeva, then the cost of such audit shall be reimbursed to
Anthra by Medeva. If the audit establishes that either party underpaid or
overpaid the other party any amount, the appropriate party shall promptly pay
the other the full amount of such underpayment or overpayment.
ARTICLE X
ADVERSE EVENT AND OTHER INFORMATION EXCHANGE
10.1 Notification. From and after the date of receipt by Anthra of
notice of approval of the NDA for the Product for any indication, and receipt by
Medeva of notice from Anthra of such approval, each party shall (i) provide
prompt written notice to the other party of information in or coming into its
possession or control concerning side effects, injury, toxicity or sensitivity
reaction ("Adverse Events") associated with commercial and clinical uses,
studies, investigations or tests of the Product (animal or human), whether or
not determined to be attributable to the Product, and whether arising out of
clinical studies or Marketing and sale of the Product, (ii) notify the other
party's responsible drug safety department by telephone and facsimile within
twenty-four (24) hours after such party first becomes aware of any Adverse Event
that gives cause for concern or is unexpected or that is fatal, life-threatening
(as it occurred), permanently disabling, requires (or prolongs) in-patient
hospitalization, represents a significant hazard, or
*** CONFIDENTIAL TREATMENT REQUESTED.
37
<PAGE> 43
is a cancer or a congenital anomaly or represents an overdose, or any other
circumstance that might necessitate a recall, expedited notification of the FDA
or any other relevant regulatory authorities or a significant change in the
label of the Product, including without limitation any deviation from the
specified environmental conditions for shipping or storage of Product, and (iii)
exchange information semi-annually in writing concerning other complaints, other
Adverse Events regarding the Product, and other deviations from specified
environmental conditions for shipping or storage of Product. Each party shall
make such reports as are necessary to comply with laws and regulations
applicable to it, at its sole expense.
10.2 Material Communications. Without limitation of any other
provision hereof (including Section 4.6), each party shall, within five (5)
business days, provide notice to the other party of any material communications
with any governmental agency concerning the Product in connection with any
indication for which an NDA has been filed for the Product in the Territory,
including, without limitation, Adverse Event reports and safety reports. Copies
of all such material communications shall be attached to the notice sent
pursuant to this Section 10.2. Notwithstanding the foregoing, in the event of a
communication or directive from a regulatory authority commencing or threatening
seizure of Product or
*** CONFIDENTIAL TREATMENT REQUESTED.
38
<PAGE> 44
other removal from the market of an approved Product, the party receiving such
information shall transmit such information to the other party within
twenty-four (24) hours.
ARTICLE XI
PRODUCT RECALL
11.1 Notification and Recall. In the event that any governmental
agency or authority issues or requests a recall or takes similar action in
connection with the Product, or in the event either party determines that an
event, incident or circumstance has occurred which may result in the need for a
recall or market withdrawal, the party notified of or wishing to call such
recall or similar action shall, within twenty-four (24) hours, advise the other
party thereof by telephone or facsimile, after which the parties shall promptly
discuss and work together to effect an appropriate course of action; provided,
however, that either party may initiate a recall or market withdrawal thereafter
if it deems such action necessary or appropriate. Notification to the FDA and
compliance with applicable law in conducting such recall shall be the
responsibility of Anthra.
11.2 Recall Expenses. Each of the parties hereto shall bear the full
expenses of both parties incurred in any recall resulting from breach of its
respective warranties or obligations hereunder. Such expenses of recall shall
include, without limitation, the expenses of notification and
*** CONFIDENTIAL TREATMENT REQUESTED.
39
<PAGE> 45
destruction or return of the recalled Product and the sum paid for the recalled
Product. Without limitation of the foregoing, if the failure to meet applicable
legal requirements is caused by the act or omission of Anthra, Anthra shall
further reimburse Medeva for (a) any amounts paid to Anthra by Medeva under this
Agreement (but excluding the development fees and license fees set forth in
Sections 7.1 and 7.2) for recalled Products and for all Products that cannot be
shipped by Medeva due to the condition requiring the recall and (b) all
liabilities incurred by Medeva by virtue of being unable to meet its supply
obligations to its customers because Products could not be timely shipped by
Anthra or Medeva due to the condition requiring recall. In the event, however,
that a recall is partially caused by Anthra's actions or omissions and partially
caused by Medeva's actions or omissions, then each party shall be responsible
for its proportionate share of the recall expenses based on its proportionate
share of causation.
ARTICLE XII
INTELLECTUAL PROPERTY RIGHTS
12.1 Ownership of Product Know-how. Anthra shall have the sole right
to file for, obtain, maintain, register and extend patent protection for the
Product Know-how, and to control the prosecution of applications therefor. If,
after a written request from Medeva, Anthra decides not to file for,
*** CONFIDENTIAL TREATMENT REQUESTED.
40
<PAGE> 46
obtain, maintain, register or extend patent protection for the Product Know-how
in the Territory, Medeva shall have the right, at its own expense, to take any
such action in the name of Anthra. For the avoidance of doubt, nothing in this
Section 12.1 shall be construed to require Medeva to assign to Anthra the rights
to any Improvements to AD 32, the Product or the Product Know-how that Medeva
may develop; provided, however, that if, during the term of this Agreement,
Medeva or any of its Affiliates or Sublicensees develops any such Improvements,
Medeva shall so notify Anthra and shall grant, or shall cause such Affiliate or
Sublicensee, as the case may be, to grant to Anthra (i) a royalty-free,
perpetual, non-exclusive license to use such Improvements in the Territory in
connection with the exercise of any co-promotion rights Anthra may have pursuant
to Section 6.8, and (ii) a royalty-bearing license to use such Improvements
elsewhere, and in the Territory for other purposes, on such terms and
conditions, if any, as the parties may mutually agree. Further, if during the
term of this Agreement, Anthra or any of its Affiliates develops any
Improvements to the Product or the Product Know-how, Anthra shall so notify
Medeva and shall grant, or shall cause such Affiliate to grant, to Medeva a
royalty-bearing license to use such Improvements in the Territory, on such terms
and conditions, if any, as the parties may mutually agree; provided, however,
that such license shall be royalty-
*** CONFIDENTIAL TREATMENT REQUESTED.
41
<PAGE> 47
free to the extent that such Improvement shall consist of a change in Product
Specifications made by Anthra pursuant to Section 4.1 in order to comply with
GMP's, applicable laws, regulations or guidelines.
12.2 Ownership of Filings and Approvals. Subject to the rights
granted to Medeva hereunder, Anthra shall own all rights, title and interest in
(a) all NDAs and other submissions by Anthra to governmental authorities made
pursuant to this Agreement, and (b) all approvals made or granted with respect
to the Product in the Territory.
12.3 Ownership of Data. Subject to the rights granted to Medeva
hereunder, Anthra shall own all rights, title and interest to the preclinical
and clinical data arising out of the Development Activities.
12.4 Enforcement of Intellectual Property Rights.
(a) The parties shall promptly report in writing to each other
any known or suspected activity of any kind that may constitute an infringement,
violation, unauthorized use or misappropriation of the Product Know-how in the
Territory. Within sixty (60) days after Anthra becomes, or is made, aware of any
of the foregoing, it shall decide whether or not to initiate an infringement or
other appropriate action or suit and shall advise Medeva of its decision in
writing. Failure to so notify Medeva within such sixty (60) day period shall be
deemed a decision not to
*** CONFIDENTIAL TREATMENT REQUESTED.
42
<PAGE> 48
initiate an infringement or other appropriate suit.
(b) Provided that Anthra shall have advised Medeva of its
decision to file suit within the sixty (60) day period provided in Section
12.4(a), Anthra shall have the right to institute proceedings to prevent any
such infringement, violation, unauthorized use or misappropriation or to take
all actions to defend against, and subject to the last sentence of Section
12.4(c), settle or compromise any such action or suit. Anthra shall keep Medeva
promptly informed of, and shall from time to time consult with Medeva regarding,
the status of any such suit and shall provide Medeva with copies of all
documents filed in, and all written communications relating to, such suit.
(c) Anthra shall select counsel for any suit referred to in
Section 12.4(b) and shall pay all expenses of the suit, including, without
limitation, attorneys' fees and expenses and court costs. Any damages,
settlement fees or other consideration for infringement received as a result of
such litigation shall be allocated first to reimburse Anthra for any costs and
expenses incurred in connection with such litigation and thereafter shared by
Anthra and Medeva, with Anthra receiving that proportion which corresponds to
its royalty percentage then in effect, and Medeva receiving the balance. Medeva
shall cooperate reasonably with Anthra in prosecuting such action, defending
against such action, claim
*** CONFIDENTIAL TREATMENT REQUESTED.
43
<PAGE> 49
or dispute, or otherwise asserting its rights against third parties at Anthra's
request and at Anthra's expense. Medeva shall also have the right to participate
and be represented in any such suit by its own counsel at its own expense.
Anthra shall not settle any such suit without Medeva's written consent if such
settlement would adversely affect Medeva's rights under this Agreement.
(d) If within sixty (60) days after receiving notice of a
continuing infringement or violation of any rights in the Product Know-how or of
any third party action, claim or dispute based upon or arising out of the rights
in the Product Know-how, Anthra fails to advise Medeva in writing of its
decision whether to commence a lawsuit directed towards restraining or enjoining
such infringement or violation or to take other diligent actions to cause the
cessation of or defend against, settle or compromise such action, claim or
dispute, or shall notify Medeva of its decision not to do so, then Medeva may
take such legal or other actions as it deems necessary or appropriate to prevent
or restrain such infringement or violation or to defend against, settle or
compromise such action, claim or dispute, in which event all damages or
settlement proceeds thereunder shall be allocated first to reimburse Medeva for
any costs and expenses incurred in connection with such litigation and
thereafter shared by Anthra and Medeva, with Anthra receiving that proportion
which
*** CONFIDENTIAL TREATMENT REQUESTED.
44
<PAGE> 50
corresponds to its royalty percentage then in effect, and Medeva receiving the
balance. To the extent not recovered in the manner set forth in the preceding
sentence, Medeva may set off its reasonable costs and expenses incurred in
connection therewith against future development fees, license fees and royalty
payments due Anthra under this Agreement as such development fees, license fees
and royalty payments become due (up to a maximum total credit in any calendar
year of one-quarter of such amount). Notwithstanding the foregoing, Medeva shall
not be entitled to settle any such claim or action without Anthra's written
consent if such settlement would adversely affect Anthra's rights in the Product
Know-how. Anthra agrees to cooperate reasonably in any such legal or other
action initiated by Medeva, at Medeva's request and at Medeva's cost.
(e) This subsection (e) shall apply only with respect to
infringement of the Trademarks and to the Other Trademarks. Anthra agrees to
give Medeva prompt written notice of any unlicensed use by third parties of
which Anthra has knowledge, throughout the world with respect to Other
Trademarks, and throughout the Territory with respect to the Trademarks, and
further agrees not, without Medeva's prior written consent, to bring or cause to
be brought any criminal prosecution, lawsuit or administrative action for
infringement, interference with or violation of any rights
*** CONFIDENTIAL TREATMENT REQUESTED.
45
<PAGE> 51
occurring anywhere in the world with respect to the Other Trademarks and
occurring in the Territory with respect to the Trademarks. Anthra agrees to
cooperate with Medeva, and if necessary, to be named by Medeva as a sole
complainant or co-complainant in any action against an infringer of the
Trademarks or Other Trademarks, and, notwithstanding any right of Anthra to
recover same, legal or otherwise, Anthra agrees to pay to Medeva, and hereby
waives all claims to, all damages or other monetary relief recovered in such
action by reason of a judgment or settlement whether or not such damages or
other monetary relief, or any part thereof, represent or are intended to
represent injury sustained by Anthra. In any such action against an infringer,
Medeva agrees to reimburse Anthra for all costs and expenses incurred at
Medeva's request, including attorneys' fees and expenses if Medeva has requested
Anthra to retain counsel.
12.5 Offset for Infringement. If Medeva is required, at any time
during the term of this Agreement, to pay any royalty or damages to any person
or entity as a result of a judgment, settlement or agreement relating to the
past and/or future sale of the Product in the Territory ("Third Party
Payments"), except insofar as such Third Party Payments are attributable to the
willful misconduct, negligence, or breach of this Agreement by Medeva, its
Affiliates or Sublicensees, then Medeva may offset the amount of such Third
Party Payments
*** CONFIDENTIAL TREATMENT REQUESTED.
46
<PAGE> 52
actually paid by Medeva against future development fees, license fees and
royalty payments due Anthra under this Agreement as such development fees,
license fees and royalty payments become due (up to a maximum total credit in
any calendar year of one-quarter of such amount). Should such future development
fees, license fees and royalty payments prove insufficient to cover all Third
Party Payments (as determined at the end of any calendar year during the term
hereof), Medeva may assert such further rights as it may have under Article XIV
in respect of the shortfall.
ARTICLE XIII
CONFIDENTIALITY
13.1 Confidential Information. Except to the extent permitted by
this Agreement or as otherwise agreed by the parties in writing, the parties
agree that, at all times during the term of this Agreement and for a five (5)
year period following termination or expiration hereof, the party receiving
information (the "Receiving Party") shall keep completely confidential, shall
not publish or otherwise disclose and, except as permitted hereby, shall not use
directly or indirectly for any purpose any Confidential Information (as defined
in Section 13.2) furnished to it by the other party (the "Disclosing Party")
pursuant to this Agreement or otherwise relating to any transaction contemplated
hereby, including information heretofore
*** CONFIDENTIAL TREATMENT REQUESTED.
47
<PAGE> 53
furnished to it.
13.2 Certain Definitions. For purposes of this Article XIII,
"Confidential Information" means any and all non-public, proprietary or
confidential information and data (including all documents, reports, analyses,
compilations, studies and data bases containing such information or data) of
either party hereto or its Affiliates, whether disclosed by such party to the
other prior to or after the date hereof. Confidential Information shall also
include information which is designated as confidential in writing by the
Disclosing Party, whether by letter or by the use of an appropriate stamp or
legend, prior to or at the time any such information is disclosed by the
Disclosing Party to the Receiving Party; provided further that information which
is orally or visually disclosed, or is disclosed in writing without an
appropriate letter, stamp, or legend, shall constitute Confidential Information
if the Disclosing Party, within thirty (30) days after such disclosure, delivers
to the Receiving Party a written document or documents describing the
information and referencing the place and date of such oral, visual, or written
disclosure and the names of the persons to whom such disclosure was made.
Notwithstanding anything to the contrary in this Agreement, Confidential
Information shall not include information which the Receiving Party can
establish by competent proof,
*** CONFIDENTIAL TREATMENT REQUESTED.
48
<PAGE> 54
(a) became publicly known other than through a breach of this
Agreement by the Receiving Party, its Affiliates, or their officers, employees,
agents or consultants; or
(b) was in the possession of the Receiving Party, without
obligation of confidentiality prior to the disclosure thereof, or is
subsequently disclosed to the Receiving Party by a third party who did not
receive it under any obligation of confidentiality; or
(c) was independently developed by the Receiving Party prior
to disclosure. Confidential Information shall belong to and remain the property
of the Disclosing Party.
13.3 Disclosure of Confidential Information -- Internal. The
Receiving Party shall disclose Confidential Information only to such of the
Receiving Party's or its Affiliates' or Sublicensees' officers, employees,
agents or consultants as is necessary to carry out the purposes of this
Agreement. Each party shall ensure that its, and its Affiliates' and
Sublicensees' officers, employees, agents and consultants are bound by, and take
reasonable efforts to ensure compliance with, the confidentiality terms hereof.
13.4 Disclosure of Confidential Information -- Third Parties. The
Receiving Party may disclose Confidential Information to the extent that such
disclosure is reasonably
*** CONFIDENTIAL TREATMENT REQUESTED.
49
<PAGE> 55
necessary in filing or prosecuting patent applications, pursuing or defending
litigation, or complying with applicable governmental regulations, provided that
if the Receiving Party intends to make any such disclosure, it shall give
reasonable advance written notice to the Disclosing Party of such intention.
Notwithstanding the foregoing, in the event the Receiving Party or anyone to
whom it has transmitted Confidential Information pursuant to this Agreement
becomes legally required to disclose any of the Confidential Information, the
Receiving Party shall provide the Disclosing Party with prompt notice so that it
may seek a protective order or other appropriate remedy and/or waive compliance
with the provisions of this Agreement. In the event that such protective order
or other remedy is not obtained or that compliance with the provisions of this
Agreement is waived by the Disclosing Party, the Receiving Party shall furnish
only that portion of the Confidential Information which is legally required and
shall exercise its reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded the information required to be
disclosed.
Furthermore, nothing in this Article XIII shall be construed to
preclude either party from disclosing such information to such third parties as
may be necessary in connection with the development and commercialization of the
Product as contemplated by this Agreement, including, without
*** CONFIDENTIAL TREATMENT REQUESTED.
50
<PAGE> 56
limitation, subcontracting and sublicensing transactions in connection
therewith, provided that the Receiving Party shall in each case obtain from the
proposed third party recipient a written confidentiality undertaking containing
confidentiality obligations no less onerous than those set forth in this Article
XIII. Notwithstanding anything in this Article XIII to the contrary, Medeva
shall have the right, subject to Section 6.5, to disclose preclinical and
clinical data and results relating to the Product to qualified medical
professionals for the limited purposes of Marketing the Product and conducting
medical education initiatives reasonably designed to increase Net Sales in the
Territory.
13.5 Care and Return of Confidential Information. The Receiving
Party shall keep Confidential Information belonging to the Disclosing Party in
appropriately secure locations. Upon the expiration or termination of this
Agreement, subject to Section 15.7 and 15.8, any and all Confidential
Information possessed in tangible form by a Receiving Party, its Affiliates or
Sublicensees, or its or any of their officers, employees, agents or consultants
and belonging to the Disclosing Party, shall, upon written request, be
immediately returned to the Disclosing Party (or destroyed if so requested) and
not retained by the Receiving Party, its Affiliates or Sublicensees, or any of
their officers, employees, agents or consultants, provided however
*** CONFIDENTIAL TREATMENT REQUESTED.
51
<PAGE> 57
that the Receiving Party required to return Confidential Information may keep a
copy thereof for archival purposes but only in one restricted, secure area, and
provided, further however, that any Confidential Information required to be kept
and retained with respect to FDA rules, regulations and procedures shall be
retained, stored and disposed of according to such FDA rules, regulations and
procedures.
13.6 Use of Names. Except as required for Product labelling, neither
party to this Agreement shall use the name of the other in any public
announcement, press release or other public document without the written consent
of such other party.
*** CONFIDENTIAL TREATMENT REQUESTED.
52
<PAGE> 58
ARTICLE XIV
WARRANTIES; INDEMNITIES
14.1 Representations and Warranties. Each party represents and
warrants to the other party as follows: (i) it has full corporate power and
authority and has taken all corporate action necessary to enter into and perform
this Agreement; (ii) the execution and performance by it of its obligations
hereunder will not constitute a breach of, or conflict with, any agreement or
arrangement, including without limitation its certificate of incorporation or
by-laws, whether written or oral, by which it is bound; and (iii) this Agreement
is its legal, valid and binding obligation, enforceable in accordance with the
terms and conditions hereof.
14.2 Warranties of Anthra. Anthra represents and warrants to Medeva,
in addition to the warranties set forth in Section 3.10, that: (i) the
execution, delivery and performance by Anthra of this Agreement does not
contravene or constitute any default under its certificate of incorporation or
by-laws, any applicable law or regulation or any judgment, injunction, order or
decree binding upon Anthra or to which AD 32 or the Product is subject or any
indenture, bank loan, credit or other agreement binding upon Anthra or to which
AD 32 or the Product is subject, (ii) Anthra has the right, power and authority
to grant the license set forth in Section 5.1, (iii) Anthra has conducted or has
caused its contractors
*** CONFIDENTIAL TREATMENT REQUESTED.
53
<PAGE> 59
or consultants to conduct, and will in the future conduct, the preclinical and
clinical studies of the Product in accordance with known or published standards
of the FDA, (iv) Anthra has employed and will in the future employ individuals
of appropriate education, knowledge, and experience to conduct or oversee the
conduct of the clinical and preclinical studies of the Product, (v) Anthra and
its Contract Manufacturer(s) are and will remain in compliance with all laws,
regulations, ordinances, orders, injunctions, decrees and requirements
applicable to the manufacture, supply and sale of the Product, and Anthra will
maintain in effect all governmental permits, licenses, orders, applications and
approvals necessary to manufacture, supply and sell the Product and will
manufacture and supply all Product in accordance with the same; (vi) all
labelling for Product supplied by Anthra hereunder will comply with the
applicable NDA and all applicable requirements of the FDA; (vii) Anthra
maintains and shall maintain throughout the term of this Agreement a work force
suitably qualified and trained, and facilities and equipment sufficient, to
enable Anthra to perform its obligations hereunder; (viii) to the best knowledge
of Anthra, there are not now nor have there been over the last five years any
lawsuits, arbitrations, legal or administrative or regulatory proceedings,
charges, complaints or investigations by the FDA, DEA, Department of Justice,
any state regulatory agency or any other person or
*** CONFIDENTIAL TREATMENT REQUESTED.
54
<PAGE> 60
entity threatened, commenced or pending against Anthra, or any other person,
relating to AD 32; (ix) the exercise by Medeva of its rights under the licenses
granted in Article V will not infringe any rights owned by any other person and
there is no pending or, to the best of Anthra's knowledge, threatened claim,
litigation or legal proceeding against Anthra contesting the right of Anthra to
distribute, sell or use AD 32 in the Territory; (x) Anthra will terminate any
license agreement that it may enter into with any licensee, for breach by such
licensee of the covenant included in such license agreement pursuant to Section
5.3; (xi) Anthra owns or has the sole right to use in the Territory all rights
in and to the Product Know-how (including without limitation the Anthra Patent
Rights), free and clear of any lien, claim, charge, encumbrance or rights of
third parties; (xii) Anthra has filed a request (the "Request") for designation
of AD 32 as an orphan drug product for the CIS Indication under the Orphan Drug
Act (Pub.L. 97-414) and the Orphan Drug Amendments of 1985 (Pub.L. 99-91)
(collectively, the "Orphan Drug Laws"), as partially codified pursuant to 21
U.S.C. ss.ss. 360bb et seq.; (xiii) to the best knowledge of Anthra, the CIS
Indication afflicts less than 200,000 United States citizens; (xiv) in the event
that the FDA grants the CIS Approval, AD 32 will be designated as an orphan drug
product under the Orphan Drug Laws and will enjoy a marketing exclusivity period
through the
*** CONFIDENTIAL TREATMENT REQUESTED.
55
<PAGE> 61
seventh anniversary of the CIS Approval (or such other period as may be provided
by the Orphan Drug Laws from time to time) for the Product for the CIS
Indication; (xv) prior to and during any such marketing exclusivity period,
Anthra agrees not to give its consent pursuant to 21 U.S.C. ss. 360cc (or
pursuant to any other statute or regulation) for the approval of other NDA's,
the issuance of other certifications or the issuance of other licenses (except
to Medeva or Medeva's Affiliates) for use of AD 32 in the Territory for
pharmaceutical use in humans, without the prior written consent of Medeva, which
consent shall not be unreasonably withheld; (xvi) Anthra will provide copies of
any notices received from the FDA in connection with AD 32 as an orphan drug
product, and if the FDA finds that Anthra is unable to assure availability of
sufficient quantities of AD 32 for the approved indications and provides Anthra
with a notice to such effect, then Anthra will promptly forward to Medeva a copy
of such notice and will respond to the FDA after allowing Medeva a reasonable
period (determined in light of the circumstances) to comment to Anthra on such
notice; (xvii) prior to payment of applicable taxes, Anthra will provide Medeva
with written notice of the amount of any tax credit to which Anthra is entitled
by virtue of AD 32's status as an orphan drug (as set forth in 26 U.S.C. ss.
45C); and (xvii) ***. EXCEPT AS SET FORTH IN THE PRECEDING SENTENCE AND IN
SECTION 3.10, ANTHRA
*** CONFIDENTIAL TREATMENT REQUESTED.
56
<PAGE> 62
HEREBY DISCLAIMS ANY AND ALL WARRANTIES WITH RESPECT TO THE PRODUCT KNOW-HOW, AD
32 OR THE PRODUCT, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
14.3 Warranties of Medeva. Medeva represents and warrants to Anthra
that (i) the execution, delivery and performance by Medeva of this Agreement
does not contravene or constitute any default under its certificate of
incorporation or by-laws, any applicable law or regulation or any judgment,
injunction, order or decree binding upon Medeva or any indenture, bank loan,
credit or other agreement binding upon Medeva; (ii) Medeva is and will remain in
compliance with all laws, regulations, ordinances, orders, injunctions, decrees
and requirements applicable to the Marketing and sale of the Product, and,
except as otherwise provided in this Agreement, Medeva will maintain in effect
all governmental permits, licenses, orders, applications and approvals necessary
to Market and sell the Product and will Market and sell the Product in
accordance with the same; and (iii) Medeva maintains and will maintain
throughout the term of this Agreement a work force suitably qualified and
trained, and facilities and equipment sufficient, to enable Medeva to perform
its obligations hereunder.
14.4 Indemnification of Medeva. Anthra shall indemnify Medeva, its
Affiliates and their respective
*** CONFIDENTIAL TREATMENT REQUESTED.
57
<PAGE> 63
directors, officers, employees and agents, and defend and save each of them
harmless, from and against any and all suits, losses, actions, demands,
investigations, claims, damages, liabilities, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) (collectively,
"Losses") arising from or occurring as a result of (i) any breach (or alleged
breach) by Anthra of its representations, warranties, or obligations under this
Agreement, (ii) the manufacture, use, or consumption of the Product, or the
storage of the Product prior to the date of shipment thereof to Medeva, all
except to the extent caused by the negligence or willful misconduct of Medeva or
its officers, agents, employees, Affiliates, Sublicensees or customers, or (iii)
the negligence or willful misconduct of Anthra or its officers, agents,
employees or Affiliates.
14.5 Indemnification of Anthra. Medeva shall indemnify Anthra, its
Affiliates and their respective directors, officers, employees and agents, and
defend and save each of them harmless, from and against any and all Losses
arising from or occurring as a result of (i) any breach (or alleged breach) by
Medeva of its representations, warranties, or obligations under this Agreement,
(ii) the storage or distribution of the Product after the date of shipment
thereof to Medeva, all except to the extent caused by the negligence or willful
misconduct of Anthra or its officers, agents,
*** CONFIDENTIAL TREATMENT REQUESTED.
58
<PAGE> 64
employees, or Affiliates, or (iii) the negligence or willful misconduct of
Medeva or its officers, agents, employees, Affiliates, Sublicensees or
customers.
14.6 Indemnification Procedure.
(a) Each indemnified party (the "indemnitee") agrees to give
the indemnifying party (the "indemnitor") prompt written notice of any Losses or
discovery of fact upon which such indemnified party intends to base a request
for indemnification under Section 14.4 or 14.5. Notwithstanding the foregoing,
the failure to give timely notice to the indemnitor shall not release the
indemnitor from any liability to the indemnitee to the extent the indemnitor is
not prejudiced thereby.
(b) The indemnitee shall furnish promptly to the indemnitor
copies of all papers and official documents in the indemnitee's possession or
control which relate to any Losses; provided, however, that if the indemnitee
defends or participates in the defense of any Losses, then the indemnitor shall
also provide such papers and documents to the indemnitee. The indemnitee shall
cooperate with the indemnitor in providing witnesses and records necessary in
the defense against any Losses.
(c) The indemnitor shall have the right, by prompt notice to
the indemnitee, to participate in the defense of any third party claim forming
the basis of such Losses with
*** CONFIDENTIAL TREATMENT REQUESTED.
59
<PAGE> 65
counsel reasonably satisfactory to the indemnitee, and at the sole cost of the
indemnitor so long as (i) the indemnitor shall promptly notify the indemnitee in
writing (but in no event more than 60 days after its receipt of notice of the
claim) that it will indemnify the indemnitee from and against any Losses the
indemnitee may suffer arising out of the claim and (ii) the indemnitor
diligently participates the defense of the claim.
(d) If the indemnitor participates in the defense of the claim
as provided above the indemnitee may at its option relinquish total control to
the indemnitor or participate in such joint defense with its own counsel who
shall be retained, at the indemnitee's sole cost and expense; provided, however,
that neither the indemnitee nor the indemnitor shall consent to the entry of any
judgment or enter into any settlement with respect to the claim without the
prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. If the indemnitee withholds consent in respect
of a judgment or settlement involving only the payment of money and which would
not involve any stipulation or admission of liability or result in the
indemnitee becoming subject to injunctive relief or other relief, the indemnitor
shall have the right, upon notice to the indemnitee within five (5) days of
receipt of the indemnitee's written denial of consent, to pay to the
*** CONFIDENTIAL TREATMENT REQUESTED.
60
<PAGE> 66
indemnitee the full amount of such proposed judgment or settlement, including
all interest, costs or other charges relating thereto, and shall pay all
attorneys' fees incurred to such date for which the indemnitor is obligated
under this Agreement, if any, at which time the indemnitor's rights and
obligations with respect to the claim shall cease.
(e) If the indemnitor does not so participate in the defense
of such claim, the indemnitee may conduct such defense with counsel of its
choice and at the sole cost of the indemnitor and may settle such case as it
shall determine in the exercise of its reasonable discretion.
(f) Except as provided in subsection (e) above, the indemnitor
shall not be liable for any settlement or other disposition of a Loss by the
indemnitee which is reached without the written consent of the indemnitor.
(g) Except as provided above, the costs and expenses,
including fees and disbursements of counsel, incurred by any indemnitee in
connection with any claim shall be reimbursed on a calendar quarter basis by the
indemnitor, without prejudice to the indemnitor's right to contest the
indemnitee's right to indemnification and subject to refund in the event the
indemnitor is ultimately held not to be obligated to indemnify the indemnitee.
14.7 Limitation of Liability. Except as provided in Section 3.8
hereof, Anthra shall not be liable to Medeva for
*** CONFIDENTIAL TREATMENT REQUESTED.
61
<PAGE> 67
any special, incidental, or consequential damages arising out of or related to
any failure by Anthra to supply Product to Medeva pursuant to Article III.
ARTICLE XV
TERM AND TERMINATION
15.1 Term. The term of this Agreement shall commence as of the date
hereof and, unless earlier terminated pursuant to this Article XV, shall expire
upon the later of (i) the last to expire of any Product orphan drug exclusivity
periods granted in the Territory, (ii) the last to expire of any patents from
time to time within the scope of the Product Know-how, and (iii) the twelfth
anniversary of the Launch.
15.2 Termination for Material Breach. This Agreement shall be
subject to termination by either party in the event of a material breach hereof
by the other party with respect to its obligations, which breach is not cured
within sixty (60) days (or, in the case of a payment default, ten (10) business
days) following written Notice thereof by the non-breaching party; provided,
however, this Agreement may be terminated by either party prior to a final
adjudication of the existence of such material breach under Section 16.5 only
(i) in the case of a payment default or (ii) for an "Established Material
Breach" (as defined in Section 15.3), if such Established Material Breach is not
cured within sixty (60) days following receipt of an "Arbitration Decision" (as
defined in Section 15.3).
15.3 Established Material Breach. In order to establish a material
breach (other than a payment default) entitling a party to terminate this
Agreement under the
*** CONFIDENTIAL TREATMENT REQUESTED.
62
<PAGE> 68
proviso to Section 15.2, the party alleging the occurrence of such material
breach (the "Requesting Party") shall submit the issue to an expedited,
non-binding arbitration (the "Material Breach Arbitration") before a mutually
agreed upon arbitrator, or in the event the parties cannot agree upon an
arbitrator, before a panel of three American Arbitration Association approved
arbitrators consisting of one arbitrator chosen by each party and one arbitrator
selected by the two party-chosen arbitrators, (one arbitrator or three
arbitrators, the "Arbitration Panel"). The Arbitration Panel will determine
whether the other party (the "Breaching Party") has committed the material
breach alleged by the Requesting Party, whether the Requesting Party had
committed a prior material breach that justified the subsequent breach by the
Breaching Party, and if the material breach alleged by the Requesting Party has
been committed, whether there is any other evidence which may excuse the
Breaching Party's material breach. An "Established Material Breach" shall mean a
determination (the "Arbitration Decision") by the Arbitration Panel that the
Breaching Party committed the alleged material breach, that the Requesting Party
did not commit a material breach sufficient to excuse the subsequent material
breach by the Breaching Party, and that no other sufficient reason exists to
excuse the breach by the Breaching Party (such sufficiency to be determined by
the Arbitration Panel in its sole discretion). The Arbitration
*** CONFIDENTIAL TREATMENT REQUESTED.
63
<PAGE> 69
Decision shall identify any ways by which the Established Material Breach may be
cured. For purposes of determining an Established Material Breach as
contemplated by Section 15.2, the Arbitration Decision shall be deemed final.
The rules of the American Arbitration Association shall govern any Material
Breach Arbitration.
15.4 Non-Binding, Non-Admissible Arbitration Decision.
Notwithstanding the procedure set forth under Section 15.3 and any resulting
outcome, the parties acknowledge and agree that an Arbitration Decision does not
constitute a binding decision on either party with respect to the existence (or
non-existence) of a breach of the Agreement, nor justify the subsequent
termination of the Agreement (or exercise of some other remedy). Either party
may contest the other party's actions following an Arbitration Decision by
commencing a court action pursuant to Section 16.5. The parties further
acknowledge and agree that the Arbitration Decision, the findings by the
Arbitration Panel and any testimony from the Arbitration Panel (or testimony
from any person or entity appearing before the Arbitration Panel to the extent
that such testimony relates specifically to the Arbitration Decision) shall not
be admissible either as res judicata (or collateral estoppel) or as evidence in
any court proceedings of any nature whatsoever, including without limitation
proceedings related to equitable remedies or
*** CONFIDENTIAL TREATMENT REQUESTED.
64
<PAGE> 70
damages; provided further that the fact that an Arbitration Decision was
rendered shall not be given any weight by any fact finder, judge or jury.
15.5 Termination for Other Events. Either party may terminate this
Agreement if, at any time, the other party shall file in any court or agency
pursuant to any statute or regulation of any state or country, a petition in
bankruptcy or insolvency or for reorganization or for an arrangement or for the
appointment of a receiver or trustee of that party or of its assets, or if the
other party shall be served with an involuntary petition against it, filed in
any insolvency proceeding, and such petition shall not be dismissed within sixty
(60) days after the filing thereof, or if the other party shall propose or be a
party to any dissolution or liquidation, or if the other party shall make an
assignment for the benefit of its creditors.
15.6 Partial Termination by Medeva. Medeva may terminate this
Agreement with respect to any indications for the Product pursuant to Section
2.12, by written notice to Anthra.
15.7 Effect of Expiration or Termination. The expiration or
termination of this Agreement shall be without prejudice to any rights or
obligations of the parties that may have accrued prior to such expiration or
termination. Termination of this Agreement in accordance with the
*** CONFIDENTIAL TREATMENT REQUESTED.
65
<PAGE> 71
provisions hereof shall not limit remedies which may otherwise be available in
law or equity. Medeva agrees to cooperate with Anthra in transferring to Anthra
or a third party, as Anthra may direct, within thirty (30) days of the
expiration or termination hereof, all data, files and other materials in the
possession or under the control of Medeva, relating to the Product, except to
the extent that Medeva requires such data, files and materials for the purpose
of exercising any rights under this Agreement that may survive such termination
or expiration, in which case Medeva shall provide copies thereof to Anthra or
such third party.
15.8 Survival of Rights and Obligations. The rights and obligations
of the parties under Sections 2.2 and 2.3 (only in the event that the Purchase
Option is not exercised), 2.4, 3.2(c), 3.13, 4.2, 6.7, 7.6, 9.2 and 9.3,
Articles X and XI (with respect to Product supplied by Anthra to Medeva),
Section 12.1, Article XIII, Sections 14.4, 14.5, 14.6, 15.7, 15.8, 16.2, 16.5,
16.6 and 16.7, shall survive the expiration or termination of this Agreement.
In the event of the termination of this Agreement by Medeva pursuant
to Sections 15.2 or 15.5 after the approval of the NDA for the Product for one
or more indications, the license granted to Medeva in Section 5.1 with respect
to such indications, and the royalty obligations of Medeva under Section 7.3,
shall remain in full force and effect through the
*** CONFIDENTIAL TREATMENT REQUESTED.
66
<PAGE> 72
twelfth anniversary of the Launch; provided, however, that Medeva may set off
against any such royalty payment obligations any damages that Medeva may have
incurred, in the case of a termination pursuant to Section 15.2, as a result of
the material breach by Anthra. In the event of the termination of this Agreement
by Anthra pursuant to this Article XV, no license granted to Medeva in Section
5.1 shall survive such termination.
In the event of termination of this Agreement by Anthra pursuant to
Section 15.2 or 15.5, Medeva shall promptly, but not later than thirty (30) days
after such termination, at its own expense assign and transfer, or cause to be
assigned and transferred, to Anthra, or any third party designated by Anthra,
any Trademarks then or previously used by Medeva or any of its Affiliates or
Sublicensees in Marketing, distributing or selling the Product in the Territory.
ARTICLE XVI
GENERAL PROVISIONS
16.1 Force Majeure. If a party's performance of this Agreement or of
any obligation hereunder, except for the payment of any amounts hereunder, is
prevented, restricted or interfered with by reason of any cause beyond the
reasonable control of the affected party, such party, upon prompt written Notice
to the other party, shall be excused from such
*** CONFIDENTIAL TREATMENT REQUESTED.
67
<PAGE> 73
performance to such extent, provided that the party so affected shall use its
best efforts to avoid or remove such causes of nonperformance and shall continue
performance hereunder with the utmost dispatch whenever such causes are removed.
16.2 Notice. All notices, requests, reports, statements and other
communications to either party (each a "Notice") shall be in writing, in the
English language, shall refer specifically to this Agreement and shall be hand
delivered or sent by express courier service, carriage costs prepaid, or mailed
by certified first class mail, postage prepaid and return receipt requested, or
sent by facsimile or other agreed method of written electronic communication to
the respective addresses specified below (or to such other address as may be
specified by Notice to the other party):
If to Anthra:
Anthra Pharmaceuticals, Inc.
19 Carson Road
Princeton, N.J. 08540 USA
Fax: (609) 924-3875
Attention: Michael C. Walker
If to Medeva:
Medeva California Inc.
c/o Medeva Legal Group
755 Jefferson Road
Rochester, N.Y. 14623
Fax: (716) 272-3955
Attention: Helen P. Wiley, Esq.
Any Notice delivered by facsimile or similar means
*** CONFIDENTIAL TREATMENT REQUESTED.
68
<PAGE> 74
shall be confirmed by a hard copy delivered as soon as practicable. The
effective date of any Notice shall be: (a) the date of the addressee's receipt,
if delivered by hand or express courier; (b) five (5) days after being mailed,
as evidenced by the postmark at the point of mailing, if mailed; (c) the date of
transmission if received by 5:00 p.m. local time on a business day or, if not,
the first business day after such date, if sent by facsimile or other similar
means.
16.3 Further Assurances. Each party shall duly execute and deliver,
or cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such assignments, agreements, documents and instruments, as may be
necessary or as the other party may reasonably request in connection with this
Agreement or to carry out more effectively the provisions and purposes hereof,
or to better assure and confirm unto such other party its rights and remedies
under, this Agreement.
16.4 Successors and Assigns. The terms and provisions hereof shall
inure to the benefit of, and be binding upon, Anthra, Medeva and their
respective successors and permitted assigns. Except as expressly provided
herein, neither party may, without the prior written consent of the other party,
assign or otherwise transfer any of its rights and interests, or delegate any of
its obligations, hereunder;
*** CONFIDENTIAL TREATMENT REQUESTED.
69
<PAGE> 75
provided, however, that either party may assign its rights and delegate its
duties hereunder to an Affiliate thereof without obtaining such consent,
provided that the assigning party agrees to remain primarily (and not
secondarily or derivatively) liable for the full and timely performance by such
Affiliate of all its obligations hereunder. In the event of any such transfer or
designation under this Section, the transferee or designated Affiliate must
first assume in writing and agree to be bound by the provisions of this
Agreement. Any attempt to assign or delegate any portion of this Agreement in
violation of this Section 16.4 shall be null and void.
16.5 Governing Law. This Agreement shall be governed by, construed,
and enforced in accordance with the laws of the State of New York, without
regard to the principles of conflicts of law. Each party agrees that any action
to enforce any provision of the Agreement may be commenced in a state or federal
court located in the City of New York, New York. Each party consents to the
jurisdiction and venue of any such court. The parties further acknowledge that
proper service of process on a party may be made on an agent designated by such
party located in the City of New York, New York or by certified mail.
16.6 Attorney's Fees. Without limitation of Article XIV, in the
event that either party hereto shall bring an
*** CONFIDENTIAL TREATMENT REQUESTED.
70
<PAGE> 76
action to enforce any provision of this Agreement, the prevailing party shall be
entitled to collect its reasonable attorneys' fees and out-of-pocket costs
incurred in connection therewith, as well as such party's actual damages and
such other amounts as shall be payable hereunder or under applicable law.
16.7 Severability. If any provision hereof, other than the
requirements to pay development fees, license fees and royalties pursuant to
Article VII and the license grants in Article V, should be held invalid, illegal
or unenforceable in any respect by any court of competent jurisdiction, then, to
the fullest extent permitted by applicable law, (a) all other provisions hereof
shall remain in full force and effect and shall be liberally construed in order
to carry out the intent of the parties as nearly as may be possible, (b) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction, and (c)
such court may substitute therefor lawful and enforceable provisions that so far
as possible result in the same economic effect, in the absence of which the
parties agree to use their best efforts to negotiate a provision, in replacement
of the provision held invalid, illegal or unenforceable, that is consistent with
applicable law and accomplishes, as nearly as possible, the original intention
of the parties with respect thereto. To the fullest
*** CONFIDENTIAL TREATMENT REQUESTED.
71
<PAGE> 77
extent permitted by applicable law, each party hereby waives any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
16.8 Waiver. No failure on the part of any party hereto to exercise,
and no delay in exercising, any right, privilege or power hereunder shall
operate as a waiver (or continuing waiver) or relinquishment thereof; nor shall
any single or partial exercise by any party thereto of any right, privilege or
power hereunder preclude any other or further exercise thereof, or the exercise
of any other right, privilege or power.
16.9 Counterparts. This Agreement shall be executed in two
counterparts, each of which shall be deemed to be an original, and all of which,
taken together, shall constitute one and the same instrument.
16.10 Captions. The captions of this Agreement are for convenience
of reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision contained in this
Agreement.
16.11 Independent Contractors. The status of the parties under this
Agreement shall be that of independent contractors. No party shall have the
right to enter into any agreements on behalf of the other party, nor shall it
represent to any person that it has any such right or
*** CONFIDENTIAL TREATMENT REQUESTED.
72
<PAGE> 78
authority. Nothing in this Agreement shall be construed as establishing a
partnership or joint venture relationship between the parties hereto.
16.12 Entire Agreement. This Agreement constitutes, on and as of the
date hereof, the entire agreement of the parties with respect to the subject
matter hereof, and all prior or contemporaneous understandings or agreements,
whether written or oral, between the parties with respect to such subject matter
are hereby superseded in their entireties. This Agreement shall not be amended
in any respect whatsoever except by a further agreement, in writing, fully
executed by each of the parties.
*** CONFIDENTIAL TREATMENT REQUESTED.
73
<PAGE> 79
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date first above written.
ANTHRA PHARMACEUTICALS, INC. MEDEVA CALIFORNIA INC.
By: /s/ Michael C. Walker By: /s/ A. Hyland
-------------------------- --------------------------
Name: Michael C. Walker Name: A. Hyland
Title: President Title: Controller
Medeva PLC, the ultimate parent of Medeva California Inc., hereby
unconditionally guarantees the full and prompt performance by Medeva California
Inc. of its obligations under this Agreement, including without limitation its
obligations under Article VII. Medeva PLC hereby expressly waives notice from
Anthra of Anthra's acceptance and reliance on this guarantee or of any action
taken or omitted in reliance hereon, and agrees that Anthra may enforce its
rights under this guarantee without first exhausting its remedies against Medeva
California Inc. under this Agreement. No assignment of this Agreement shall
relieve Medeva PLC of its obligations under this guarantee except as may be
expressly agreed to by Anthra in writing.
MEDEVA PLC
By: /s/ Gwatts
--------------------------
Name: Gwatts
Title: Finance Director
*** CONFIDENTIAL TREATMENT REQUESTED.
74
<PAGE> 80
ANNEX A
SPECIFICATIONS
***
<PAGE> 81
ANNEX B
PIVOTAL CLINICAL PLAN
AD 32 (N-TRIFLUOROACETYLADRIAMYCIN-14-VALERATE)
IND 37,762 - CLINICAL PLAN
<TABLE>
<CAPTION>
US NDAs/NDA
Study/Phase Route and Dose Claims Supported Status - June 1997
<S> <C> <C>
A9301, Intravesical; Refractory carcinoma in-situ Accrual for NDA complete; Ongoing
A9302, A9303 800 mg weekly x 6
Phase II - US
A9601 Intravesical; 800 mg Adjunctive treatment of Ongoing
Phase III - US immediately post-TURB patients with superficial TCC
9503 Intraperitoneal; Refractory ovarian carcinoma Ongoing
Phase III - US 600 mg/m2 monthly x 6
A9701 Intravesical; 800 mg Adjunctive treatment of IRB approved;
Phase II - US immediately post-TURB patients with superficial TCC Initiation 3Q97
A9304 Intravesical; Supportive data for US Ongoing;
Phase II - Europe 800 mg weekly x 6 intravesical claims Accrual to complete 3Q97
A9621 Intravesical; Supportive data for US Ongoing
Phase II - Europe 800 mg weekly x 6 intravesical claims
</TABLE>
<PAGE> 82
ANNEX C
Medeva California Inc.
[Insert Address]
Re: Third Party Manufacturer
Dear Ladies and Gentlemen:
This letter will serve as notice to Medeva California Inc.
("Medeva") that pursuant to Section 3.7 of the License Agreement (the
"Agreement") dated _________________, between Medeva and Anthra Pharmaceuticals,
Inc. ("Anthra"), [insert Third Party Manufacturer] (the "Contract Manufacturer")
has been engaged as a manufacturer for Anthra in connection with the manufacture
of Product (as defined in the Agreement), or such portion of the Product as
defined below:
__________________________________________________
(write N/A, if no portions are being manufactured)
A copy of the contract manufacturing agreement with Anthra is
attached hereto (the "Contract Manufacturing Agreement"). Such agreement
constitutes the entire agreement between Contract Manufacturer and Anthra, is in
full force and to our knowledge neither party is in breach of any of the terms
thereof.
Contract Manufacturer hereby acknowledges that, during the term
of the Contract Manufacturing Agreement, it will not manufacture Product for, or
sell or distribute Product to, any person or entity other than Anthra or Medeva.
Contract Manufacturer further acknowledges that in the event of a breach of the
Contract Manufacturing Agreement by Contract Manufacturer which causes Anthra to
breach its supply obligations to Medeva such that Medeva is required to offer
the Product on backorder for more than five (5) days, Medeva shall have the
right to pursue and seek to enforce Anthra's remedies (including equitable
remedies) under the Contract Manufacturing Agreement directly against Contract
Manufacturer without first exhausting its remedies against Anthra.
Contract Manufacturer acknowledges that any fees or compensation
due it pursuant to the Contract Manufacturing Agreement shall be payable by
Anthra only. Contract Manufacturer represents and warrants to Medeva that it is
not an Affiliate (as defined in the Agreement) of Anthra. Contract Manufacturer
further acknowledges that Medeva shall not have any liability to, nor be
<PAGE> 83
responsible for the payment of any amounts to, Contract Manufacturer.
Very truly yours,
___________________________________
Contract Manufacturer
By:________________________________
Name:______________________________
Title:_____________________________
Address:___________________________
___________________________________
___________________________________
Date:______________________________
<PAGE> 84
ANNEX D
MINIMUM ANNUAL NET SALES
Calendar Year After Respective Launches
(US Dollars in Millions)
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3 Year 4
------ ------ ------ -----
<S> <C> <C> <C> <C>
CIS Indication 2.00 4.00 5.47 6.48
Papillary Indication 4.80 7.20 8.57 9.91
</TABLE>
<TABLE>
<CAPTION>
Year 5 Year 6 Year 7
------ ------ ------
<S> <C> <C> <C>
CIS Indication 7.49 8.64 8.93
Papillary Indication 11.28 9.55 6.58
</TABLE>
<PAGE> 85
ANNEX E
MINIMUM ANNUAL NET SALES
Calendar Year After Respective Launches
(US Dollars in Millions)
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3 Year 4
------ ------ ------ ------
<S> <C> <C> <C> <C>
CIS Indication 2.67 5.33 7.30 8.64
Papillary Indication 6.40 9.60 11.42 13.22
</TABLE>
<TABLE>
<CAPTION>
Year 5 Year 6 Year 7
------ ------ ------
<S> <C> <C> <C>
CIS Indication 9.98 11.52 11.90
Papillary Indication 15.04 12.74 8.77
</TABLE>
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.12
SUPPLY AGREEMENT
between
ANTHRA PHARMACEUTICALS, INC.
and
GENCHEM PHARMA LTD.
DATED AS OF SEPTEMBER 11, 1997
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS............................................................. 1
ARTICLE II
SUPPLY OF VALIDATION BATCHES............................................ 4
2.1 Supply...................................................... 4
2.2 Schedule.................................................... 4
2.3 Storage..................................................... 4
2.4 Delivery.................................................... 4
2.5 Warranty.................................................... 4
2.6 Rejection................................................... 4
ARTICLE III
FILINGS AND STUDIES..................................................... 5
3.1 Drug Master File............................................ 5
3.2 Rights of Reference......................................... 5
3.3 Studies..................................................... 6
3.4 Methods Validation.......................................... 6
ARTICLE IV
COMMERCIAL SUPPLY OF AD32............................................... 6
4.1 Commercial Supply........................................... 6
4.2 Forecast and Firm Orders.................................... 6
4.3 Delivery.................................................... 7
4.4 Schedule.................................................... 8
4.5 Delay and Failure to Supply................................. 8
4.6 Rejection................................................... 8
4.7 Warranty.................................................... 9
4.8 Covenant.................................................... 9
ARTICLE V
PAYMENTS................................................................ 9
5.1 Price of Validation Batches................................. 9
5.2 Price of Commercial Supply.................................. 10
5.3 Other Payments.............................................. 10
ARTICLE VI
REGULATORY MATTERS; RECORDS............................................. 11
6.1 Health Registrations........................................ 11
6.2 Regulatory Assistance for Maintaining Filing................ 11
6.3 Sicor Approvals............................................. 11
6.4 Records and Inspection...................................... 11
6.5 Retention of Samples........................................ 12
6.6 Complaints or Adverse Experiences........................... 12
6.7 Debarment................................................... 13
<PAGE> 3
Page
----
ARTICLE VII
QUALITY CONTROL......................................................... 13
7.1 Facility Compliance and Related Matters..................... 13
7.2 Specifications Amendments................................... 13
7.3 Quality Control Program..................................... 14
7.4 Approval for Manufacturing Changes; Third Party
Manufacturing............................................... 14
7.5 Standards................................................... 14
7.6 Production Samples.......................................... 14
7.7 Batch Failure............................................... 14
7.8 Notification of Inspections................................. 15
7.9 Inspection by Anthra........................................ 15
7.10 Environmental and Other Laws and Regulations................ 15
ARTICLE VIII
INTELLECTUAL PROPERTY RIGHTS............................................ 16
ARTICLE IX
TERM AND TERMINATION.................................................... 16
9.1 Term........................................................ 16
9.2 Termination for Material Default............................ 16
9.3 Effect of Termination....................................... 17
9.4 No Waiver................................................... 17
ARTICLE X
FORCE MAJEURE........................................................... 17
ARTICLE XI
INDEMNIFICATION AND INSURANCE........................................... 18
11.1 Genchem Pharma's Indemnification Obligation................. 18
11.2 Anthra's Indemnification Obligation......................... 18
11.3 Notice of Suit.............................................. 18
11.4 Insurance................................................... 18
11.5 Notice of Claims............................................ 19
ARTICLE XII
CONFIDENTIALITY......................................................... 19
12.1 Confidentiality............................................ 19
12.2 No Publicity............................................... 20
<PAGE> 4
Page
----
ARTICLE XIII
MISCELLANEOUS........................................................... 21
13.1 Trademarks and Trade Names................................. 21
13.2 Assignment................................................. 21
13.3 Governing Law.............................................. 21
13.4 Waiver..................................................... 21
13.5 Independent Relationship................................... 21
13.6 Export Control............................................. 22
13.7 Entire Agreement; Amendment................................ 22
13.8 Notices.................................................... 22
13.9 Severability............................................... 23
13.10 Arbitration................................................ 23
13.11 Counterparts............................................... 24
Exhibit A............................................................... 25
Exhibit B............................................................... 26
<PAGE> 5
SUPPLY AGREEMENT
THIS AGREEMENT, effective as of the 11th day of September, 1997, between
Genchem Pharma Ltd., a company organized under the laws of Delaware, with its
principal offices at 9360 Towne Centre Drive, San Diego, California 92121
(hereafter called "Genchem Pharma"), and Anthra Pharmaceuticals, Inc., a
corporation organized under the laws of State of Delaware, with its principal
offices at 19 Carson Road, Princeton, N.J. 08540 U.S.A. (hereafter called
"Anthra").
PURPOSE
WHEREAS, Genchem Pharma desires to supply to Anthra certain validation
batches of AD32 (as hereinafter defined) manufactured by Sicor S.p.A., a company
organized under the laws of Italy, with its principal offices at Via Senato 19,
Milan, Italy (hereafter called "Sicor"), has caused Sicor to file a Drug Master
File (as hereinafter defined) with respect to AD32, and desires to provide
certain other support to Anthra in connection with its filing of an NDA (as
hereinafter defined) for AD32, all on the terms and conditions set forth below;
WHEREAS, Genchem Pharma desires to manufacture and supply to Anthra AD32
manufactured by Sicor in commercial quantities for use by Anthra in the
manufacture of the Product (as hereinafter defined), after the requisite
regulatory approvals for marketing and sale of the Product have been obtained;
WHEREAS, Anthra desires to purchase such validation batches of AD32 from
Genchem Pharma, to have Genchem Pharma provide such support, and to purchase
commercial quantities of AD32 from Genchem Pharma after the requisite regulatory
approvals for marketing and sale of the Product have been obtained, all on the
terms and conditions set forth below;
NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 The term "AD32" shall mean N-Trifluoroacetyl-adriamycin-14 valerate, a
doxorubicin derivative, in bulk form suitable for use in preparation of finished
dosage form.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 6
1.2 The term "Affiliate" shall mean any individual or entity directly or
indirectly controlling, controlled by or under common control with, a party to
this Agreement. For purposes hereof, the direct or indirect ownership of over
fifty percent (50%) of the outstanding voting securities of an entity, or the
right to receive over fifty percent (50%) of the profits or earnings of an
entity shall be deemed to constitute control. Such other relationship as in fact
results in actual control over the management, business and affairs of an entity
shall also be deemed to constitute control.
1.3 The term "CMC" shall mean the chemistry, manufacturing, and controls
section(s) and data contained in the Health Registrations (and, in the case of
the United States, the IND) which cover the chemical composition of AD32 and/or
the Product and its components and the control and manufacturing process for
AD32 and the Product, including any Drug Master File referenced therein.
1.4 The term "Drug Master File" shall have the meaning set forth in
Section 3.1 hereof.
1.5 The term "FDA" shall mean the U.S. Food and Drug Administration.
1.6 The term "Health Registrations" shall mean the technical, medical and
scientific licenses, registrations, authorizations and/or approvals of the
Product (including the prerequisite manufacturing approvals or authorizations
related thereto) that are required or deemed necessary by any national,
supra-national (e.g., the European Commission or the Council or the European
Union), regional, state or local regulatory agency, department, bureau or other
governmental entity in the Territory, as necessary for the manufacture,
distribution, use or sale of Product in the Territory, as they may be amended or
supplemented from time to time. With respect to the United States, the Health
Registration shall mean the NDA for the Product, as amended or supplemented from
time to time.
1.7 The term "IND" shall mean the application for an Investigational New
Drug Exemption filed with the FDA with respect to the Product.
1.8 The term "Manufacture" shall mean the manufacturing and quality
control testing (including in-process, release,
2
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 7
and stability testing) of AD32 conducted in accordance with this Agreement.
1.9 The term "Manufacturing Know-how" shall mean the Specifications, the
CMC, and all other written information on AD32 manufacturing procedures and
methods that Anthra may provide to Genchem Pharma or Sicor as of the effective
date hereof or during the term hereof.
1.10 The term "Material Change" shall mean any change to the materials,
equipment or methods of production or testing used in the Manufacture of AD32
that has a significant impact on the critical quality attributes thereof,
including without limitation the impurity profile and the physical properties
thereof.
1.11 The term "NDA" shall mean the New Drug Application to be filed with
the FDA with respect to the Product.
1.12 The term "Product" shall mean AD32, in finished dosage form.
1.13 The term "Regulatory Authority" shall mean the applicable government
regulatory authority in each country in the Territory involved in granting the
Health Registrations for the Product. Such term includes, without limitation,
the FDA and the Committee on Proprietary Medicinal Products of the European
Community and any successor thereto.
1.14 The term "Regulatory Guidelines and Requirements" shall mean the
Guidelines for Bulk Pharmaceuticals and the current good manufacturing
practices, in effect at the particular time, issued or required by the FDA and
other Regulatory Authorities in the Territory for the methods to be used in, and
the facilities and controls to be used for, the manufacture, processing, packing
and holding of drug active ingredients.
1.15 The term "Sicor Facility" shall mean Sicor's facility located at Via
Terrazzano 77, I-20017 Rho (Milan), Italy (or such other Sicor facility as
Genchem Pharma may designate subject to Anthra's prior written consent, which
consent shall not be unreasonably withheld), including all Sicor's equipment,
machinery and facilities at that location used in the Manufacturing and storage
of AD32.
1.16 The term "Specifications" shall mean the specifications and the
quality control testing procedures for
3
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 8
AD32, as set forth in Exhibit A hereto, as amended from time to time pursuant to
Section 7.2 hereof.
1.17 The term "Territory" shall mean the entire world.
1.18 The term "Validation Batches" shall mean the batches of AD32
Manufactured by Sicor for use by Anthra in satisfying Product validation
requirements in connection with applications for Health Registrations in the
United States and the European Union.
1.19 The term "Vinchem" shall mean Vinchem, Inc., a New York corporation
with its principal place of business at 301 Main St., Chatham, New Jersey 07928.
ARTICLE II
SUPPLY OF VALIDATION BATCHES
2.1 Supply. Genchem Pharma shall cause Sicor to Manufacture and supply to
Anthra, and Anthra shall purchase from Genchem Pharma, *** Validation Batches of
AD32.
2.2 Schedule. Genchem Pharma shall cause Sicor to complete the
Manufacturing (including without limitation the quality control testing) and
delivery to Anthra of all of the Validation Batches by June 30, 1997; provided,
however, that Sicor shall not be required to conduct any stability testing with
respect to the Validation Batches.
2.3 Storage. Genchem Pharma shall cause Sicor to maintain, at its own
expense, adequate and reasonably segregated storage accommodations for the
Validation Batches to be held by Sicor pending delivery to a carrier in
accordance with Section 2.4 hereof.
2.4 Delivery. Delivery of each Validation Batch shall be made on ***. Each
Validation Batch shall be shipped for final formulation to a facility in the
United States to be mutually agreed by Anthra and Vinchem. *** Upon shipment of
each Validation Batch, Genchem Pharma or its agent shall promptly invoice Anthra
therefor, and shall include in such invoice a
4
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 9
certificate of analysis for the relevant Validation Batch(es).
2.5 Warranty. Genchem Pharma warrants that, at the time of delivery of
each Validation Batch, the Validation Batch will (i) have been Manufactured in
accordance with the Regulatory Guidelines and Requirements and other laws,
rules, regulations or requirements relating to validation batches applicable in
the United States or the European Union, as the case may be, (ii) meet the
Specifications, (iii) have been Manufactured in accordance with the applicable
Manufacturing Know-how, and (iv) not be adulterated or misbranded under the
Federal Food, Drug, and Cosmetic Act, as amended.
2.6 Rejection. Genchem Pharma shall cause Sicor to include with each
shipment of a Validation Batch to Anthra a certificate of analysis thereof. In
the event that Anthra determines that any Validation Batch does not conform to
the Specifications or the CMC, Anthra shall give Sicor notice of its rejection
thereof (including a sample from the batch analyzed) within forty-five (45) days
after receipt of such Validation Batch. Genchem Pharma shall cause Sicor to
conduct an analysis of the sample within thirty (30) days after receipt of such
notice. If Sicor confirms such non-conformity, Genchem Pharma shall cause Sicor
to so notify Anthra, supply Anthra with a conforming shipment in the quantity
specified for the non-conforming shipment, at Genchem Pharma's expense, and
reimburse Anthra for any charge incurred by Anthra for shipping and/or storage,
if applicable, of the non-conforming shipment, all within ninety (90) days after
receipt of the notice of rejection from Anthra. If Sicor does not confirm such
non-conformity, Genchem Pharma shall cause Sicor promptly to so notify Anthra,
and the parties shall submit the disputed batch to an independent testing
laboratory to be mutually agreed upon by the parties (the "Testing Laboratory"),
for testing. The findings of the Testing Laboratory shall be binding on the
parties, absent manifest error. The expenses of the Testing Laboratory shall be
borne by Genchem Pharma if the testing confirms the non-conformity, and
otherwise by Anthra. If the Testing Laboratory confirms the non-conformity, then
Genchem Pharma shall cause Sicor to supply Anthra with a conforming shipment in
the quantity specified for the non-conforming shipment, at Genchem Pharma's
expense, and shall reimburse Anthra for any charges incurred by Anthra for
shipping and/or storage, if applicable, of the non-conforming shipment, all
within ninety (90) days after receipt of notice of the test results of the
Testing Laboratory. Anthra shall return all non-conforming Validation Batches to
Sicor, at Genchem Pharma's expense, upon the
5
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 10
written request of Genchem Pharma.
ARTICLE III
FILINGS AND STUDIES
3.1 Drug Master File. Sicor has prepared a Type II drug master file, as
defined by FDA regulations and guidelines, for AD32 (the "Drug Master File")
***.
3.2 Rights of Reference. Genchem Pharma shall cause Sicor to grant Anthra
the right to reference the Drug Master File in the IND and the NDA and in
analogous applications for clinical testing and Health Registrations outside the
United States. Genchem Pharma agrees, promptly upon the written request of
Anthra, to cause Sicor to file with the Regulatory Authorities designated by
Anthra from time to time AD32 drug master files prepared in accordance with
applicable local laws and regulations, and to provide Anthra with letters
evidencing such right of reference.
3.3 Studies. Genchem Pharma agrees to cause Sicor to conduct long-term
stability studies ***, using a protocol acceptable to Anthra, and to provide
Anthra with copies of the protocol and such stability data, promptly after each
becomes available to Sicor, for use by Anthra in its filings with Regulatory
Authorities. ***.
3.4 Methods Validation. Genchem Pharma shall cause Sicor to validate
Anthra's regulatory methods for ***, as set forth in the CMCs for the United
States and the European Union, and shall cause Sicor to use such assays as the
basis for all AD32 release and stability testing.
ARTICLE IV
COMMERCIAL SUPPLY OF AD32
4.1 Commercial Supply. Following the grant by the relevant Regulatory
Authorities of all the Health Registrations required for the marketing and sale
of the Product in one or more countries in the Territory, Genchem Pharma agrees
to cause Sicor to Manufacture and supply AD32 to Anthra for each such country,
on the terms and conditions set forth in this Article IV.
4.2 Forecast and Firm Orders. ***
6
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 11
4.3 Delivery. ***
4.4 Schedule. Genchem Pharma shall cause Sicor to Manufacture and ship the
AD32 according to the schedule set forth in Anthra's purchase orders.
4.5 Delay and Failure to Supply. In the event that Genchem Pharma or
Sicor, at any time during the term of this Agreement, shall have reason to
believe that it will be unable timely to supply Anthra***.
4.6 Rejection. In the event that Anthra determines that any batch of AD32
does not conform to the Specifications or the CMC, Anthra shall give Sicor
notice of its rejection thereof (including a sample from the batch analyzed)
within forty-five (45) days after receipt of such shipment of AD32. Genchem
Pharma shall cause Sicor to conduct an analysis of the sample within thirty (30)
days after receipt of such notice. If Sicor confirms such non-conformity,
Genchem Pharma shall cause Sicor to so notify Anthra, supply Anthra with a
conforming shipment in the quantity specified for the non-conforming shipment,
at Genchem Pharma's expense, and reimburse Anthra for (i) any charges incurred
by Anthra for shipping and/or storage, if applicable, of the non-conforming
shipment, and (ii) any charges or penalties incurred by Anthra in connection
with any resulting delay in delivery of Product to its licensees, all within
ninety (90) days after receipt of the notice of rejection from Anthra. If Sicor
does not confirm such non-conformity, Genchem Pharma shall cause Sicor to
promptly so notify Anthra, and the parties shall submit the disputed batch to
the Testing Laboratory for testing. The findings of the Testing Laboratory shall
be binding on the parties, absent manifest error. The expenses of the Testing
Laboratory shall be borne by Genchem Pharma if the testing confirms the
non-conformity, and otherwise by Anthra. If the Testing Laboratory confirms the
non-conformity, then Genchem Pharma shall cause Sicor to supply Anthra with a
conforming shipment in the quantity specified for the non-conforming shipment,
at Genchem Pharma's expense, and shall reimburse Anthra for (i) any charges
incurred by Anthra for shipping and/or storage, if applicable, of the
non-conforming shipment, and (ii) any charges or penalties incurred by Anthra in
connection with any resulting delay in delivery of Product to its licensees, all
within ninety (90) days after receipt of notice of the test results of the
Testing Laboratory. Anthra shall return all non-conforming shipments of AD32 to
Sicor, at Genchem Pharma's expense, upon the written request of Genchem Pharma.
4.7 Warranty. Genchem Pharma warrants that, at the time of delivery of
each shipment of AD32, such AD32 will (i) have
7
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 12
been Manufactured in accordance with Regulatory Guidelines and Requirements and
all other laws, rules, regulations or requirements of the Regulatory Authority
applicable in the country in which such AD32 will be Marketed and sold, (ii)
meet the Specifications, (iii) have been Manufactured in accordance with the
applicable Manufacturing Know-how, (iv) not be adulterated or misbranded under
the Federal Food, Drug, and Cosmetic Act, as amended, and (v) be in good, usable
and merchantable condition.
4.8 Covenant. Anthra undertakes to purchase from Genchem Pharma ***.
ARTICLE V
PAYMENTS
5.1 Price of Validation Batches. Anthra agrees to pay Genchem Pharma (or
Genchem Pharma's designee) One Hundred Ninety Thousand Dollars (US $190,000) for
each Validation Batch delivered to Anthra pursuant to this Agreement. Payment
for each Validation Batch shall be made by wire transfer (to an account
designated in writing by Genchem Pharma or its designee, as the case may be) in
United States dollars, upon acceptance by Anthra of such Validation Batch;
provided, however, that such Validation Batch shall be accepted or deemed
accepted and Anthra shall make payment therefor not later than forty-five (45)
days after receipt thereof, unless Anthra shall give Sicor notice of rejection
thereof pursuant to Section 2.6 hereof within such period. In the event that
Anthra shall give Sicor such notice, then Anthra shall make payment for such
Validation Batch within thirty days after receipt by Anthra of notice, if any,
from the Testing Laboratory that the Validation Batch is conforming.
5.2 Price of Commercial Supply. The parties hereby agree that the price
for commercial supply of AD32 shall be as set forth on ***. Payment for each
shipment of AD32 shall be made by wire transfer (to an account designated in
writing by Genchem Pharma or its designee, as the case may be) in United States
dollars, upon acceptance by Anthra of such shipment; provided, however, that
such shipment shall be accepted or deemed accepted and Anthra shall make payment
therefor not later than forty-five (45) days after receipt thereof, unless
Anthra shall give Sicor notice of rejection thereof pursuant to Section 4.6
hereof within such period. In the event that Anthra shall give Sicor such
notice, then Anthra shall make payment for such shipment Batch within thirty
days after receipt by Anthra of notice, if any, from the Testing
8
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 13
Laboratory that the shipment is conforming.
5.3 Other Payments. The parties acknowledge that Anthra has paid Sicor
***.
In consideration of Genchem Pharma's and Sicor's remaining obligations
with respect to the Drug Master File, Anthra shall make the following payments
to Genchem Pharma, by wire transfer (to an account designated in writing by
Genchem Pharma) in United States dollars, upon the achievement of the milestones
set forth below:
***
ARTICLE VI
REGULATORY MATTERS; RECORDS
6.1 Health Registrations. Anthra shall be responsible for the preparation
of the CMCs to be included in the applicable Health Registrations with the
applicable Regulatory Authorities. Anthra shall provide Sicor with a copy of
those sections of the CMC applicable to Sicor in order to facilitate its
Manufacture of AD32 in accordance with this Agreement and the Health
Registrations. In the event that Anthra subsequently modifies the Health
Registration(s) (or the CMC), it shall promptly notify Sicor and provide Sicor
with copies of the supplements or amendments filed.
6.2 Regulatory Assistance for Maintaining Filing. Genchem Pharma shall
cause Sicor to provide Anthra with such information and assistance as Anthra may
reasonably require for purposes of seeking and maintaining all necessary Health
Registrations for the Product, the IND, and analogous applications for clinical
testing of the Product outside the United States, including, without limitation,
providing Anthra with all reports, authorizations, certificates, methodologies,
specifications and other documentation in the possession or under the control of
Genchem Pharma or Sicor relating to the Manufacture of AD32 (or any component
thereof) needed for Anthra's filings. Anthra is hereby granted an irrevocable,
worldwide, paid-up license to use, during the term of this Agreement and for
such period thereafter as Anthra and its licensees may sell Product containing
AD32 Manufactured by Sicor, all information, data or other intellectual property
rights reflected in such documentation for the purpose of obtaining and
maintaining such applications and registrations for the Product.
9
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 14
6.3 Sicor Approvals. Except as otherwise specifically set forth herein,
Genchem Pharma shall cause Sicor to obtain and maintain all governmental
approvals of any kind whatsoever necessary to fulfill Genchem Pharma's and
Sicor's obligations hereunder.
6.4 Records and Inspection. Genchem Pharma shall cause Sicor to maintain
all records necessary to comply with (i) all applicable laws, rules and
regulations relating to the Manufacture of validation batches and supplies for
preclinical and clinical studies for the United States and, if different, the
country of manufacture of the Validation Batches, and (ii) all applicable laws,
rules and regulations in the countries of sale of the Product made from AD32
manufactured by Sicor (as notified to Genchem Pharma by Anthra from time to
time) and, if different, the country of manufacture of such AD32. Specifically,
but without limitation, Genchem Pharma shall cause Sicor to maintain all records
and samples relating to such AD32 as are reasonably necessary to comply with
Regulatory Guidelines and Requirements and other regulatory requirements in such
countries in the Territory. All such records shall be available for inspection,
audit pursuant to Section 7.9 hereof, and copying (but only to the extent that
copies of such records or parts thereof are required for the purposes of
securing Health Registrations and ensuring compliance with Regulatory Guidelines
and Requirements (and only to the extent that Sicor is not permitted to, or
fails to, submit such records or parts thereof directly to the relevant
Regulatory Authorities on behalf of Anthra), by Anthra and its representatives
and agents upon reasonable request during normal business hours. Further, all
such records shall be maintained for such period as may be required by law, rule
or regulation. In any event, Genchem Pharma shall cause Sicor to retain all
records relating to the manufacture, stability and quality control of AD32
supplied to Anthra for a period of not less than five (5) years, and prior to
destruction of any such record, Genchem Pharma shall cause Sicor to give notice
to Anthra, which shall have the right to request and retain such record.
6.5 Retention of Samples. Genchem Pharma shall cause Sicor to retain a
sufficient quantity of each batch of AD32 to perform at least full duplicate
quality control testing. Retained repository samples shall be maintained in a
suitable storage facility for a period of not less than *** after the date of
Manufacture of each batch. All such samples shall be available for inspection
and testing by Anthra upon reasonable
10
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 15
notice.
6.6 Complaints or Adverse Experiences. In the event that Genchem Pharma or
Sicor shall receive any complaints or reports of adverse drug events ("AEs")
associated with AD32 or the Product, then Genchem Pharma shall, and shall cause
Sicor to, notify Anthra within twenty-four (24) hours of the receipt thereof.
Anthra shall have primary responsibility for fielding, investigating and
responding to all Product complaints and AEs. Genchem Pharma shall cause the
Pharmaceuticals Quality Assurance Department of Sicor to cooperate with Anthra,
as appropriate and needed, to investigate such complaints or AEs and to provide
such information or assistance as is reasonably requested by Anthra in order to
support Anthra's compliance with AE, field alert and other reporting
requirements imposed by the FDA. The parties shall each report monthly on the
resolution of complaints. Genchem Pharma shall, and shall cause Sicor to,
cooperate with Anthra in investigating and responding to Product complaints or
AEs which are determined to result from AD32 Manufactured by Sicor, and shall
report to Anthra on a monthly basis. In the event that the activities described
in this paragraph result in, or may result in, extraordinary costs of
investigation or testing (other than for those expenses which are solely
manufacturing problems), Anthra and Genchem Pharma agree to negotiate whether to
incur, and how to allocate, such costs.
6.7 Debarment. Genchem Pharma represents and warrants that neither it nor
Sicor has been debarred or is subject to debarment and that it and Sicor will
not use in any capacity, in connection with the services to be performed under
this Agreement, any person who has been debarred pursuant to section 306 of the
Federal Food, Drug, and Cosmetic Act, 21 U.S.C. ss. 335a, or who is the subject
of a conviction described in such section. Genchem Pharma agrees immediately to
inform Anthra in writing if it, or Sicor, or any person who is performing
services hereunder on behalf of Genchem Pharma or Sicor is debarred or is the
subject of a conviction described in section 306, or if any action, suit, claim,
investigation, or legal or administrative proceeding is pending or, to the best
knowledge of Genchem Pharma or Sicor, is threatened, relating to the debarment
or conviction under such section 306 of Genchem Pharma, Sicor or any person
performing services hereunder.
11
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 16
ARTICLE VII
QUALITY CONTROL
7.1 Facility Compliance and Related Matters. Genchem Pharma shall cause
Sicor to maintain the Sicor Facility in compliance with all applicable laws,
rules and regulations relating to the Manufacture of the Validation Batches and
AD32, including without limitation the Regulatory Guidelines and Requirements,
and with the provisions of this Agreement, at all times during the term hereof.
Genchem Pharma shall be responsible for all costs and expenses related to the
compliance of the Sicor Facility with such laws, rules and regulations. The AD32
supplied to Anthra by Genchem Pharma pursuant to this Agreement shall be
Manufactured at the Sicor Facility.
7.2 Specifications Amendments. The Specifications and CMC shall be amended
or supplemented to comply with Regulatory Guidelines and Requirements and may be
amended or supplemented (including, without limitation, for the purpose of
incorporating improvements) from time to time by Anthra with the prior written
consent of Genchem Pharma, which shall not be unreasonably withheld.
7.3 Quality Control Program. Genchem Pharma shall cause Sicor to maintain
a quality control program consistent with the Regulatory Guidelines and
Requirements, as required by the relevant Regulatory Authorities, which program,
as amended or supplemented, Genchem Pharma shall cause Sicor to describe to
Anthra in writing from time to time.
7.4 Approval for Manufacturing Changes; Third Party Manufacturing. Genchem
Pharma agrees to cause Sicor not to make any Material Change to the materials,
equipment or methods of production or testing used in the Manufacture of AD32 to
be supplied to Anthra (and no change therein that would require changes to any
Health Registrations) without Anthra's prior written approval, which approval
shall not be unreasonably withheld or delayed; provided, however, that Sicor may
make any changes in manufacturing procedures required by Regulatory Guidelines
and Requirements or other applicable law, rule or regulation with notice to
Anthra but without such prior approval. Genchem Pharma agrees that it will not,
under any circumstances, contract out, or permit Sicor to contract out, all or
any part of the Manufacturing to a third party without prior written approval
from Anthra, which approval shall not be unreasonably withheld. Anthra shall
respond promptly to any request by Genchem Pharma or
12
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 17
Sicor for approval to subcontract.
7.5 Standards. Genchem Pharma agrees that all AD32 supplied hereunder
shall be Manufactured in accordance with the applicable Manufacturing Know-how,
Regulatory Guidelines and Requirements, and the applicable CMC, and in
compliance with all other national, supranational, state and local laws, rules,
regulations and requirements applicable in the countries in which the Product
containing such AD32 will be Marketed and sold and in effect at the time of the
Manufacture thereof.
7.6 Production Samples. Genchem Pharma shall cause Sicor to provide
Anthra's Quality Control Department with such quantities of production samples
of AD32 manufactured by Sicor and such copies of completed batch records, as are
required for the purposes of securing Health Registrations and ensuring
compliance with Regulatory Guidelines and Requirements (and only to the extent
that Sicor is not permitted to, or fails to, submit such records directly to the
relevant Regulatory Authorities on behalf of Anthra).
7.7 Batch Failure. Genchem Pharma agrees to cause Sicor to notify Anthra
within two (2) working days of discovery of any batch failure which could result
in Sicor's inability to meet Anthra's requested delivery dates, or of learning
of any failure of any batch of AD32 manufactured by Sicor for delivery to Anthra
to meet standards set forth in the Manufacturing Know-how or the Specifications.
7.8 Notification of Inspections. ***
7.9 Inspection by Anthra. Anthra shall have the right during normal
business hours (including, without limitation, during production runs after
normal business hours if reasonably requested and in connection with production
runs that commenced during the normal business hours) and with reasonable
advance notice to visit the Sicor Facility *** for the purpose of observing the
Manufacturing of AD32 to be supplied to Anthra hereunder, and to inspect for
compliance with Regulatory Guidelines and Requirements and other applicable
regulatory requirements. Notwithstanding the foregoing, Anthra shall have the
right to visit the Sicor Facility with a reasonably frequency exceeding *** in
the event of any serious Manufacturing difficulties, taking place or foreseen by
Genchem Pharma or Sicor, which could result in Sicor's inability to meet
Anthra's requested delivery dates for AD-32 supplied hereunder, or in the event
of any serious
13
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 18
regulatory compliance difficulties.
7.10 Environmental and Other Laws and Regulations. In carrying out its
obligations under this Agreement, Genchem Pharma shall cause Sicor to comply
with all applicable environmental and health and safety laws (current or as
amended or added), and shall be solely responsible for determining how to carry
out these obligations. Notwithstanding any other provision in this Agreement to
the contrary, nothing provided to Genchem Pharma or Sicor by Anthra, by way of
materials, specifications, processing information or otherwise, shall diminish
Genchem Pharma's sole responsibility for compliance with this Section 7.10.
Genchem Pharma also represents and warrants that it and Sicor have the
appropriate skills, personnel, equipment, permits, or approvals necessary to
perform their respective services under this Agreement in compliance with all
applicable environmental and health and safety laws. Genchem Pharma shall
immediately notify Anthra, in writing, of any circumstances, including the
receipt of any notice, warning, citation, finding, report or service of process
or the occurrence of any release, spill, upset, or discharge relating to the
compliance by Genchem Pharma or Sicor with this Section 7.10 or which may impose
environmental liability upon Genchem Pharma or Sicor and which relates to the
Manufacture of AD32.
ARTICLE VIII
INTELLECTUAL PROPERTY RIGHTS
Except as otherwise expressly provided in this Article VIII, each party
hereto shall own all right, title to and interest in any inventions, discoveries
or innovations, whether patentable or not, that such party or its employees or
contractors may make in performing such party's obligations hereunder
("Inventions"). Anthra hereby grants Genchem Pharma a royalty-free,
non-exclusive license (with the right to sublicense to Sicor) to use the
Manufacturing Know-how and any Inventions that Anthra may develop, for the sole
purpose of performing Genchem Pharma's obligations hereunder.
14
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 19
ARTICLE IX
TERM AND TERMINATION
9.1 Term. This Agreement shall take effect as of the date first above
written and, unless earlier terminated pursuant to Section 9.2 hereof, shall
expire upon the tenth anniversary of the grant of the first Health Registration
of the Product, except if such first Health Registration has not been granted by
the fifth anniversary hereof, in which case this Agreement shall expire upon
such fifth anniversary. The parties shall consult not less than ninety (90) days
prior to the scheduled date of expiration hereof for the purpose of discussing
the possible extension of the term hereof.
9.2 Termination for Material Default. Upon default by a party in the
performance of any material obligation in this Agreement, the non-defaulting
party may give notice in writing to the party in default and the defaulting
party shall have sixty (60) days thereafter to cure the default. Except as
qualified in the last sentence of this paragraph, if the defaulting party does
not cure or institute measures to substantially cure such default within sixty
(60) days and diligently complete the cure within an additional sixty (60) days,
the non-defaulting party may terminate this Agreement by providing notice of
intent to terminate which shall take effect ten (10) days following the receipt
by the defaulting party of such notice. Termination under this Article shall not
relieve either party of any obligation existing upon the date of termination or
relieve the defaulting party from liability for breach hereof.
9.3 Effect of Termination. Expiration or termination of the Agreement
shall not relieve the parties of any obligation accruing prior of such
expiration or termination, and Sections 2.5, 3.2, 6.2, 6.4, 6.5, 7.8, 9.3, 13.3,
and 13.8 hereof, and Articles VIII, XI and XII hereof, shall survive the
expiration of the Agreement. Any expiration or early termination hereof shall be
without prejudice to the rights of either party against the other accrued or
accruing under this Agreement prior to termination.
9.4 No Waiver. The failure of either party to terminate this Agreement by
reason of the breach of any of its provisions by the other party shall not be
construed as a waiver of the rights or remedies available for any subsequent
breach of the terms and provisions hereof.
15
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 20
ARTICLE X
FORCE MAJEURE
Neither party shall be responsible for any failure to comply with the
terms hereof where such failure is due to force majeure, which shall include,
without limitation, fire, flood, explosion, strike, labor disputes, labor
shortages, picketing, lockout, transportation embargo or failures or delays in
transportation, strikes or labor disputes affecting supplies, or acts of God,
civil riot or insurrection, acts of the government, or judicial action.
Specifically excluded from this definition are those acts of any governmental
agency, or judicial action, which could have been avoided by compliance with
such laws or regulations, publicly available and reasonably expected to be known
by either party. Upon the cessation of any cause operating to excuse performance
of either party under this Article X, this Agreement shall continue in full
force and effect unless or until otherwise terminated pursuant to this Agreement
and each party shall endeavor to resume its performance hereunder as quickly as
possible if such performance is delayed or interrupted by reason of any cause
set forth herein.
ARTICLE XI
INDEMNIFICATION AND INSURANCE
11.1 Genchem Pharma's Indemnification Obligation. Genchem Pharma agrees to
indemnify and hold Anthra, its agents and employees harmless from and against
all claims, liabilities (including product liability), costs, damages, losses,
judgments for damages or expenses (including reasonable attorney's fees) caused
by, arising out of, or resulting from Genchem Pharma's or Sicor's performance of
its obligations hereunder or from its failure to comply with this Agreement or
any laws and regulations applicable to such performance, except to the extent
caused by the negligence or willful misconduct of Anthra.
11.2 Anthra's Indemnification Obligation. Anthra agrees to indemnify and
hold Genchem Pharma, its agents and employees harmless from and against all
claims, liabilities, costs, damages, losses, judgments for damages or expenses
(including reasonable attorneys' fees) caused by, arising out of, or resulting
from Anthra's performance of its obligations hereunder or from its failure to
comply with this Agreement or any laws and regulations applicable to such
performance, except to the extent caused by the negligence or willful
16
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 21
misconduct of Genchem Pharma or Sicor.
11.3 Notice of Suit. The indemnified party agrees to give the indemnifying
party prompt notice in writing of the institution of any suit for which the
indemnified party intends to seek indemnification hereunder, and the indemnified
party agrees to permit the indemnifying party to have control and conduct of the
defense of such suit, and give the indemnifying party all needed information in
the indemnified parties possession and all authority and assistance necessary to
enable the indemnifying party to carry on the defense of such suit and any
appeal from a judgment or decree rendered therein. The indemnifying party shall
not settle or compromise any claim in any such suit or consent to entry of any
judgment relating to any such claim if such settlement, compromise or judgment
does not include the giving of a release of the indemnified party from the
liabilities thereby claimed.
11.4 Insurance. Genchem Pharma represents and warrants that during the
term hereof, it shall maintain the insurance set forth below:
(a) Comprehensive General Liability Insurance, including without
limitation product liability insurance coverage with a minimum limit of Six
Million Five Hundred Thousand Dollars (US $6,500,000) per claim, and such other
coverage as is usual and customary in the pharmaceutical industry to obtain.
(b) Such insurance shall be evidenced by a certificate of insurance,
a copy of which shall be provided by Genchem Pharma to Anthra within thirty (30)
days of execution of this Agreement. Genchem Pharma shall inform Anthra in
writing at least thirty (30) days prior to cancellation or any material change
of such insurance policy.
11.5 Notice of Claims. Each party agrees to give the other prompt written
notice of any claims made, including any claims asserted or made by any
governmental authority having jurisdiction, for which the other might be liable
under the foregoing indemnification together with the opportunity to defend,
negotiate and settle such claims.
ARTICLE XII
CONFIDENTIALITY
12.1 Confidentiality. Both Genchem Pharma and Anthra recognize that
know-how of a party disclosed to the other party pursuant to this Agreement or
developed by Sicor as a result of Manufacturing AD32 pursuant to this Agreement
is of proprietary value and is to be considered highly confidential
17
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 22
("Proprietary Information"). Genchem Pharma and Anthra agree not to use (except
in accordance with this Agreement) and not to disclose to any third party, any
Proprietary Information except with the prior written consent of the other
party, and Genchem Pharma shall cause Sicor not to use (except in accordance
with this Agreement) and not to disclose to any third party, any Proprietary
Information except with the prior written consent of Anthra. The foregoing
obligations shall survive the expiration or termination hereof for a period of
ten (10) years. These obligations shall not apply to Proprietary Information
that:
(a) is known by the receiving party at the time of its receipt, and
not through a prior disclosure by the disclosing party, as documented by written
records;
(b) is at the time of disclosure or thereafter becomes published or
otherwise part of the public domain without breach hereof by the receiving
party;
(c) is subsequently disclosed to the receiving party by a third
party who has the right to make such disclosure;
(d) is developed by the receiving party independently of Proprietary
Information or other information received from the disclosing party and such
independent development can be properly demonstrated by the receiving party;
(e) is disclosed to governmental or other regulatory agencies in
order to obtain patents or to gain approval to conduct clinical trials or to
market Product, but such disclosure may be only to the extent reasonably
necessary to obtain such patents or authorizations;
(f) is necessary to be disclosed to sublicensees, agents,
consultants, Affiliates and/or other third parties for the research and
development, manufacturing and/or marketing of Product (or for such parties to
determine their interest in performing such activities) in accordance with this
Agreement on the condition that such third parties agree to be bound by the
confidentiality obligations contained in this Agreement and that the term of
confidentiality for such third parties shall be no less than the confidentiality
term hereunder, but such disclosure may be only to the extent reasonably
necessary for such purposes; or
18
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 23
(g) is required to be disclosed by law or court order, provided that
notice is promptly delivered to the other party in order to provide an
opportunity to seek a protective order or other similar order with respect to
such Proprietary Information, but such disclosure may be only to the extent
reasonably necessary to comply with the request, whether or not a protective
order or other similar order is obtained by the other party.
Nothing herein shall be interpreted to prohibit Anthra from publishing the
results of its studies in accordance with industry practices.
12.2 No Publicity. A party may not use the name of the other party in any
publicity or advertising and, except as provided in Section 12.1 hereof, may not
issue a press release or otherwise publicize or disclose any information related
to this Agreement or the terms or conditions hereof, without the prior written
consent of the other party. The parties shall agree on a form of initial press
release that may be used by either party to describe this Agreement. Nothing in
the foregoing, however, shall prohibit a party from making such disclosures to
the extent deemed necessary under applicable federal or state securities laws or
any rule or regulation of any nationally recognized securities exchange; in such
event, however, the disclosing party shall use good faith efforts to consult
with the other party prior to such disclosure and, where applicable, shall
request confidential treatment to the extent available.
ARTICLE XIII
MISCELLANEOUS
13.1 Trademarks and Trade Names. Anthra and Genchem Pharma hereby
acknowledge that neither party has, and shall not acquire, any interest in any
of the other party's trademarks or trade names appearing on the labels or
packaging materials for the Product unless otherwise expressly agreed.
13.2 Assignment. Neither this Agreement nor any or all of the rights and
obligations of a party hereunder shall be assigned, delegated, sold,
transferred, sublicensed (except as otherwise provided herein) or otherwise
disposed of, by operation
19
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 24
of law or otherwise, to any third party other than an Affiliate of such party,
without the prior written consent of the other party, and any attempted
assignment, delegation, sale, transfer, sublicense or other disposition, by
operation of law or otherwise, hereof or of any rights or obligations hereunder
contrary to this Section 13.2 shall be a material breach hereof by the
attempting party, and shall be void and without force or effect; provided,
however, that either party may, without such consent, assign this Agreement and
its rights and obligations hereunder in connection with the transfer or sale of
all or substantially all of its assets related to the division or the subject
business, or in the event of its merger or consolidation or change in control or
similar transaction; and provided further, that Anthra may, without such
consent, assign this Agreement and its rights and obligations hereunder to any
of its licensees. This Agreement shall be binding upon, and inure to the benefit
of, each party, its Affiliates, and its permitted successors and assigns. Each
party shall be responsible for the compliance by its Affiliates with the terms
and conditions hereof.
13.3 Governing Law. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of New York, without giving
effect to conflict of law principles.
13.4 Waiver. A waiver of any breach or any provision hereof shall not be
construed as a continuing waiver of other breaches of the same or other
provisions hereof.
13.5 Independent Relationship. Nothing herein contained shall be deemed to
create an employment, agency, joint venture or partnership relationship between
the parties hereto or any of their agents or employees, or any other legal
arrangement that would impose liability upon one party for the act or failure to
act of the other party. Neither party shall have any power to enter into any
contracts or commitments or to incur any liabilities in the name of, or on
behalf of, the other party, or to bind the other party in any respect
whatsoever.
13.6 Export Control. This Agreement is made subject to any restrictions
concerning the export of products or technical information from the United
States of America which may be imposed upon or related to Genchem Pharma or
Anthra from time to time by the government of the United States of America.
Furthermore, Anthra agrees not to export, directly or indirectly, any technical
information acquired from Genchem Pharma under this Agreement or any products
using such technical information to any country for which the United States
government or any agency thereof at the time of export requires an export
license or other governmental approval,
20
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 25
without first obtaining the written consent to do so from the Department of
Commerce or other agency of the United States government when required by an
applicable statute or regulation.
13.7 Entire Agreement; Amendment. This Agreement, including the Exhibits
hereto, sets forth the complete, final and exclusive agreement and all the
covenants, promises, agreements, warranties, representations, conditions and
understandings between the parties hereto and supersedes and terminates all
prior agreements and understandings between the parties with respect to the
subject matter hereof. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings with respect to the subject matter
hereof, either oral or written, between the parties other than as set forth
herein. No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the parties unless reduced to writing and signed
by an authorized officer of each party.
13.8 Notices. Each notice required or permitted to be given or sent under
this Agreement shall be given by facsimile transmission (with confirmation copy
by registered first-class mail) or by registered or overnight courier (return
receipt requested), to the parties at the addresses and facsimile numbers
indicated below.
If to Genchem Pharma, to:
Genchem Pharma Ltd.
9360 Towne Centre Drive
San Diego, CA 92121
Attention: Mr. John W. Sayward
Facsimile: 619-453-0095
If to Vinchem, to:
Vinchem, Inc.
301 Main Street
Chatham, N.J. 07928
U.S.A.
Facsimile: 1-201-635-1459
If to Anthra, to:
Anthra Pharmaceuticals, Inc.
19 Carson Road
Princeton, N.J. 08540
21
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 26
U.S.A.
Attention: Michael C. Walker
Facsimile: 1-609-924-3875
Any such notice shall be deemed to have been received on the earlier of the date
actually received and the date five (5) days after the same was posted. Either
party may change its address or its facsimile number by giving the other party
written notice, delivered in accordance with this Section 13.8.
13.9 Severability. If any provision hereof is declared invalid or
unenforceable by a court having competent jurisdiction, it is mutually agreed
that this Agreement shall endure except for the part declared invalid or
unenforceable by order of such court. The parties shall consult and use their
best efforts to agree upon a valid and enforceable provision which shall be a
reasonable substitute for such invalid or unenforceable provision in light of
the intent of this Agreement.
13.10 Arbitration. Any disputes arising under this Agreement shall be
resolved by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association. The proceedings shall be held in the
English language in New York, New York. The parties shall appoint an arbitrator
by mutual agreement. If the parties cannot agree of the appointment of an
arbitrator within thirty (30) days after receipt of a demand for arbitration,
each party shall appoint one arbitrator, and the two arbitrators shall appoint a
third arbitrator. If the party-appointed arbitrators cannot agree on the third
arbitrator, the third arbitrator shall be appointed by the American Arbitration
Association. Any fees and expenses payable with respect to the arbitration shall
be borne by the party losing the case. All arbitral rulings and awards shall be
final and binding on the parties and shall be enforceable in accordance with the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
13.11 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 taken together shall
constitute but one and the same instrument.
22
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 27
IN WITNESS WHEREOF, Anthra and Genchem Pharma have caused this Agreement
to be executed by their duly authorized officers as of the day and year first
above written.
ANTHRA PHARMACEUTICALS, INC. GENCHEM PHARMA LTD.
By: /s/ Michael C. Walker By: /s/ Peter Macdonald
----------------------------- -----------------------------
Name: Michael C. Walker Name: Peter Macdonald
Title: President Title: President
Gensia Sicor, Inc., the parent company of Genchem Pharma Ltd., hereby guarantees
the performance by Genchem Pharma Ltd. of all of its obligations under this
Agreement.
GENSIA SICOR, INC.
By: /s/ David Hale
------------------------------
Name: David Hale
Title: President & CEO
23
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of blackout
of the text (the "Mark"). This Exhibit has been filed separately with the
Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.14
EXCLUSIVE LICENSE, SALE AND DISTRIBUTION AGREEMENT
by and between
ANTHRA PHARMACEUTICALS, INC.
and
NYCOMED PHARMA AS
Dated as of October 14, 1997
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS.................................................................. 2
ARTICLE II
PRODUCT DEVELOPMENT.......................................................... 10
2.1 Clinical Studies for Technical Approvals....................... 10
2.2 Registrations and Technical Approvals.......................... 12
2.3 Maintenance of Technical Approvals............................. 12
2.4 Pricing Approvals.............................................. 12
2.5 Expenses....................................................... 14
ARTICLE III
SUPPLY OF THE PRODUCT........................................................ 14
3.1 Obligations.................................................... 14
3.2 Delivery Terms................................................. 15
3.3 Warranty....................................................... 15
3.4 Defective Products............................................. 15
3.5 Delayed Delivery............................................... 17
3.6 Price.......................................................... 18
3.7 Payment........................................................ 19
3.8 Specifications Amendments...................................... 20
3.9 Records........................................................ 21
3.10 Manufacturing Agreement........................................ 21
3.11 Inspection Reports............................................. 21
ARTICLE IV
MARKETING AND SALE OF THE PRODUCT............................................ 22
4.1 Nycomed Obligation............................................. 22
4.2 Clinical Studies in Support of Marketing....................... 23
4.3 Compliance..................................................... 23
4.4 Use of Trademarks.............................................. 24
4.5 Resale Price of the Product.................................... 24
4.6 Marketing Materials............................................ 24
4.7 Technical and Marketing Support................................ 25
4.8 Product Liability Insurance.................................... 25
4.9 Covenant....................................................... 25
ARTICLE V
LICENSE GRANTS............................................................... 26
5.1 Grants......................................................... 26
5.2 Sublicenses.................................................... 27
5.3 China.......................................................... 27
5.4 Other Countries Outside the Territory.......................... 28
5.5 Activities Outside the Territory............................... 29
5.6 Nycomed Trademark Grant to Anthra.............................. 29
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 3
ARTICLE VI
LICENSE FEES AND OPTIONS..................................................... 30
6.1 License Fees................................................... 30
6.2 Payment of License Fees........................................ 31
6.3 Royalties...................................................... 32
6.4 Withholding Taxes.............................................. 32
6.5 Options........................................................ 32
ARTICLE VII
JOINT CONSULTATION COMMITTEE................................................. 34
7.1 Formation of the JCC........................................... 34
7.2 Authority of the JCC........................................... 35
7.3 Procedural Rules of the JCC.................................... 36
ARTICLE VIII
REPORTING.................................................................... 37
8.1 Reporting by Parties........................................... 37
8.2 Record Keeping................................................. 37
8.3 Audit of Records............................................... 38
ARTICLE IX
ADVERSE EVENT AND OTHER INFORMATION EXCHANGE................................. 38
9.1 Notification................................................... 38
9.2 Material Communications........................................ 39
ARTICLE X
PRODUCT RECALL............................................................... 39
10.1 Notification and Recall........................................ 39
10.2 Recall Expenses................................................ 40
ARTICLE XI
INTELLECTUAL PROPERTY RIGHTS................................................. 40
11.1 Ownership of Licensed Know-how................................. 40
11.2 Ownership of Product Improvements.............................. 41
11.3 Additional Developments........................................ 41
11.4 Ownership of Filings and Approvals............................. 42
11.5 Ownership of Data.............................................. 42
11.6 Enforcement of Intellectual Property Rights.................... 43
11.7 Cooperation.................................................... 43
ARTICLE XII
CONFIDENTIALITY.............................................................. 44
12.1 Confidential Information....................................... 44
12.2 Disclosure of Confidential Information......................... 45
12.3 Use of Names................................................... 46
12.4 Publications................................................... 46
ARTICLE XIII
WARRANTIES; INDEMNITIES...................................................... 46
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 4
13.1 Representations and Warranties................................. 46
13.2 Warranties of Anthra........................................... 47
13.3 Indemnification of Nycomed..................................... 48
13.4 Indemnification of Anthra...................................... 48
13.5 Indemnification Procedure...................................... 49
13.6 Limitation of Liability........................................ 50
ARTICLE XIV
TERM AND TERMINATION......................................................... 51
14.1 Term........................................................... 51
14.2 Termination for Material Breach................................ 51
14.3 Unilateral Termination by Anthra............................... 51
14.4 Termination for Other Events................................... 52
14.5 Effect of Expiration or Termination............................ 53
14.6 No Compensation................................................ 54
14.7 Survival....................................................... 54
ARTICLE XV
GENERAL PROVISIONS........................................................... 56
15.1 Force Majeure.................................................. 56
15.2 Notice......................................................... 57
15.3 Further Assurances............................................. 58
15.4 Successors and Assigns......................................... 58
15.5 Governing Law.................................................. 60
15.6 Arbitration.................................................... 60
15.7 Severability................................................... 61
15.8 Counterparts................................................... 61
15.9 Captions....................................................... 61
15.10 Independent Contractors........................................ 62
15.11 Entire Agreement............................................... 62
ANNEX A ..................................................................... 64
ANNEX B ..................................................................... 65
ANNEX C ..................................................................... 66
ANNEX D ..................................................................... 67
ANNEX E ..................................................................... 68
ANNEX F ..................................................................... 69
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 5
THIS EXCLUSIVE LICENSE, SALE AND DISTRIBUTION AGREEMENT (this
"Agreement"), made as of October 14, 1997, by and between Anthra
Pharmaceuticals, Inc., a corporation organized under the laws of the State of
Delaware, U.S.A, having its principal business office at 19 Carson Road,
Princeton, N.J. 08540, U.S.A. ("Anthra"), and Nycomed Pharma AS, a corporation
organized under the laws of Norway, having its principal business office at
Sandakerveien 78, P.O. Box 4220 - Torshov, N-0401, Oslo, Norway ("Nycomed"),
WITNESSETH:
WHEREAS, Anthra has developed certain proprietary know-how and data
with respect to N-Trifluoroacetyladriamycin-14 valerate, a doxorubicin
derivative ("AD 32"),
WHEREAS, Anthra intends to secure the regulatory approvals required
in order to promote, market, and sell the Product (as defined below) in the
Territory (as defined below),
WHEREAS, Nycomed has specialized experience in the promotion,
marketing and sale of pharmaceutical products to hospitals in the Territory, and
has in place an experienced marketing and sales staff that can expedite the
distribution of the Product in the Territory,
WHEREAS, Nycomed desires to obtain an exclusive license from Anthra
to promote, market and sell the Product in the Territory, and Anthra desires to
grant such a license, on
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 6
the terms set forth herein,
WHEREAS, Anthra and Nycomed intend to negotiate a Manufacturing
Agreement pursuant to which Nycomed would manufacture Product using AD 32
supplied by Anthra, and
WHEREAS, as an inducement to Anthra to enter into this Agreement,
Nycomed has entered into an Investment Agreement of even date herewith;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 "AD 32" shall have the meaning set forth in the preamble hereto.
1.2 "Additional Development" shall mean any dosage form or means of
delivery of the Product other than those set forth in Section 1.31, or any
indication for the Product other than the Indications.
1.3 "Affiliate" shall mean, with respect to a Person, any
corporation, partnership or other entity that directly, or indirectly through
one or more intermediaries, controls, is controlled by or is under common
control with such Person.
1.4 "Anthra" shall mean Anthra Pharmaceuticals, Inc. and its
Affiliates.
1.5 "Anthra Trademark" shall mean any Trademark owned by Anthra or
in which Anthra has a license (with right
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 7
to sublicense) from time to time during the term hereof.
1.6 "Approvals" shall mean, collectively, the Pricing Approvals and
Technical Approvals.
1.7 "Change of Control" shall mean, with respect to a Person, the
transfer of Control of such Person from one third party to another third party.
1.8 "Control" and, with correlative meanings, the terms "controlled
by" and "under common control with", shall mean the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract, resolution, regulation or
otherwise.
1.9 "Disclosing Party" shall have the meaning set forth in Section
12.1.
1.10 "EU" shall mean the European Union, as constituted from time to
time.
1.11 "Exchange Rate" shall mean, with respect to a currency other
than United States Dollars, the currency exchange rate between such currency and
United States Dollars as set forth in the Eastern edition of the Wall Street
Journal on a designated reference date.
1.12 "Indemnifiable Losses" shall have the meaning set forth in
Section 13.3(a).
1.13 "Indications" shall mean, collectively, the
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 8
Refractory TCC Indication, the Peri-TUR Indication, and the Ovarian Indication.
1.14 "Initial Term" shall have the meaning set forth in Section
14.1.
1.15 "Investment Agreement" shall mean that Investment Agreement
between Nycomed and Anthra of even date herewith.
1.16 "JCC" shall mean the Joint Consultation Committee established
pursuant to Article VII.
1.17 "Launch" shall mean the first commercial sale of the Product in
the Territory.
1.18 "Licensed Know-how" shall mean all information and materials,
including without limitation, products, devices, apparatus, technical knowledge,
expertise, skill, practice, proprietary rights, inventions, formulae, trade
secrets, analytical methodology, processes, preclinical, clinical, stability and
other data, toxicological information and all other experience and know-how in
tangible or intangible form as well as proprietary rights, whether patented,
patentable or otherwise, relating to AD 32 or the Product, (i) which are in the
possession or under the control of Anthra as of the date of this Agreement and
in which Anthra has an ownership or licensable interest, and (ii) which are
necessary to Nycomed in the exercise of its rights under the license grants in
Section 5.1.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 9
1.19 "Manufacture" shall mean the manufacturing, formulating,
packaging, labeling, warehousing and quality control testing of the Product.
1.20 "Manufacturing Agreement" shall have the meaning set forth in
Section 3.10.
1.21 "Major EU Member State" shall mean one of the United Kingdom,
France, Italy, or Germany.
1.22 "Market" or "Marketing" shall mean all programs and activities
relating to the promotion and sale of the Product in the Territory including but
not limited to advertising, studies, seminars, symposia, training and education,
detailing, selling, submission of tender bids, contracting for sale of and
distributing the Product.
1.23 "Minimum Purchase Requirement" shall mean***
1.24 "Net Sales" shall mean***
1.25 "Notice" shall have the meaning set forth in Section 15.2.
1.26 "Nycomed" shall mean Nycomed Pharma AS and its Affiliates.
1.27 "Ovarian Indication" shall mean the intraperitoneal treatment
of refractory small volume ovarian cancer in humans.
1.28 "Peri-TUR Indication" shall mean the adjunctive intravesical
treatment of superficial bladder cancer after transurethral resection of the
bladder in humans.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 10
1.29 "Person" shall mean an individual, partnership, corporation,
business trust, joint stock company, limited liability company, trust,
unincorporated association, joint venture, government (or agency there), or
other entity of similar nature.
1.30 "Pricing Approval" shall mean any and all licenses,
registrations, authorizations and/or approvals relating to the commercial
pricing of the Product, or the reimbursement pricing of the Product for any
government-sponsored or government-funded health insurance program in any
country in the Territory, that are required by any national, supra-national,
regional, state or local regulatory agency, department, bureau or other
governmental entity in the Territory, in connection with the distribution, use
or sale of the Product in any country in the Territory, as amended or
supplemented from time to time.
1.31 "Product" shall mean AD 32, in finished dosage form in 200 mg
and 800 mg vials, for administration intravesically and intraperitoneally.
1.32 "Product Improvements" shall mean all discoveries, processes,
formulae, data, improvements, know-how, trade secrets, procedures, Regulatory
Documentation, marketing studies, and inventions, patentable or otherwise, that
both (i) relate directly to AD 32 in finished dosage form and (ii) are created,
developed, or arise as a result of, or
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 11
in connection with the performance of activities pursuant to this Agreement,
other than any Additional Developments.
1.33 "Product Specifications" shall mean the specifications and
quality control testing procedures for the Product set forth in Annex A hereto,
as amended from time to time pursuant to Section 3.8.
1.34 "Product Trademark(s)" shall mean the Trademark(s) selected by
the parties pursuant to Section 4.4, for use in the Marketing of the Product in
the Territory.
1.35 "Receiving Party" shall have the meaning set forth in Section
12.1.
1.36 "Refractory TCC Indication" shall mean the intravesical
treatment of refractory superficial transition cell carcinoma in humans.
1.37 "Registration" shall mean a filing with a Regulatory Authority
in (or with respect to) any country in the Territory for the purpose of
obtaining an Approval.
1.38 "Regulatory Authority" shall mean the government regulatory
authority or authorities responsible for granting the Approvals in (or with
respect to) each country in the Territory.
1.39 "Remedies" shall have the meaning set forth in Section 11.6.
1.40 "Sublicensee" shall have the meaning set forth in Section 5.2.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 12
1.41 "Technical Approval" shall mean any and all technical, medical
and scientific licenses, registrations, authorizations and/or approvals of the
Product (including manufacturing approvals and authorizations, marketing
authorizations and labeling approvals related thereto) that are required by any
national, supra-national, regional, state or local regulatory agency,
department, bureau or other governmental entity in the Territory, for the
distribution, use or sale of the Product in any country in the Territory, as
amended or supplemented from time to time. The Technical Approvals shall not
include any Pricing Approval.
1.42 "Territory" shall mean the countries listed in Annex E hereto.
1.43 "Trademark" shall mean any trademark, trade dress, brand mark,
trade name, brand name, logo or business symbol.
ARTICLE II
PRODUCT DEVELOPMENT
2.1 Clinical Studies for Technical Approvals.
(a) Anthra shall perform, directly or indirectly, all clinical
studies required in connection with the submission of Registrations for
Technical Approvals for the Product and the Indications, as listed in the
clinical plan set forth in Annex B hereto; provided, however, that if the
parties shall mutually agree that the size of the relevant
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 13
market in a country in the Territory does not justify incurring the cost of
conducting any such study or studies required for such country, or if the
parties reach the spending caps set forth in Section 2.1(c) and fail to decide
to fund, on a mutually agreed basis, the completion of any Section 2.1(c) study
or studies with respect to any country in the Territory, then Anthra shall not
be required to conduct (or complete) such study or studies, and Anthra and
Nycomed shall be relieved of their respective obligations pursuant to Sections
2.2, 2.3 and 2.4 with respect to such country. Anthra shall be responsible for
all communications, both before and after grant of the Technical Approvals, with
Regulatory Authorities in connection with such studies, Registrations, and
Technical Approvals.
(b) Anthra shall bear the expense of all clinical studies that
it shall perform pursuant to Section 2.1(a) in connection with the submission of
Registrations for Technical Approvals in each country in the Territory, prior to
the grant of all Technical Approvals with respect to such country.
(c) With respect to any clinical studies that (i) the
Regulatory Authorities permit to be conducted after the grant of the Technical
Approvals with respect to such country and (ii) are required to be conducted as
a condition of such grant of the Technical Approvals, Nycomed agrees to
reimburse Anthra, within thirty (30) days after receipt of an invoice therefor,
for fifty percent (50%) of the aggregate direct costs and expenses of Anthra
attributable to such studies; provided, however, that the protocols for each
such clinical study shall be subject to the mutual agreement of the parties; and
provided, further, that the obligation of Nycomed to reimburse Anthra pursuant
to this Section 2.1(c) and Section 2.4(c) shall be capped at Six Hundred
Thousand U.S. Dollars (U.S. $600,000) in the aggregate; and provided, further,
that Anthra shall not have any obligation to conduct or complete any such study
or studies after it has incurred aggregate direct costs and expenses pursuant to
this Section 2.1(c) and/or Section 2.4(c) equal to One Million Two Hundred
Thousand U.S. Dollars (U.S. $1,200,000) (including amounts to be reimbursed by
Nycomed pursuant to this Section 2.1(c) and Section 2.4(c)).
2.2 Registrations and Technical Approvals. Subject to Section
2.1(a), Anthra shall file the Registrations for Technical Approvals for each
country in the Territory and shall use its commercially reasonable efforts to
obtain the
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 14
Technical Approvals. All such Registrations and Approvals shall be filed in the
name of Anthra or in the name of Anthra's designee; provided, however, that
Anthra shall take all necessary steps, to the extent permitted by applicable law
in countries comprising the Territory, and/or EU law or regulation, to cause
Nycomed to be recorded as the distributor of the Product in the Territory,
either by means of the initial Registration or a supplemental application that
cross-references the Registration and identifies Nycomed as the distributor of
the Product in the Territory, subject to Nycomed's timely provision to Anthra of
such information as Anthra may reasonably require in connection with such
recordation.
2.3 Maintenance of Technical Approvals. Except as otherwise provided
in Section 2.1(a) and 2.4, Anthra agrees to use its commercially reasonable
efforts to maintain the Technical Approvals obtained pursuant to Section 2.2,
throughout the term of this Agreement.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 15
2.4 Pricing Approvals.
(a) Subject to this Section 2.4, upon the grant of the
Technical Approvals with respect to a country in the Territory, Nycomed shall
prepare and file Registrations for all Pricing Approvals, if any, relating to
such country. Nycomed shall use its commercially reasonable efforts to obtain
and to maintain all Pricing Approvals throughout the term of this Agreement, and
shall have sole responsibility and authority to communicate with the Regulatory
Authorities with respect to the Pricing Approvals.
(b) Anthra shall conduct (or cause to be conducted) any
clinical studies which are required by the Regulatory Authorities in connection
with a Pricing Approval (or a Registration for such an Approval) for a country
in the Territory, subject to Section 2.4(c); provided, however, that the
parties shall mutually agree on the protocols for each such study; and
provided, further, that in the event that the parties shall mutually agree that
the size of the market for the Product for the Indications in such country does
not justify incurring the cost of such study or studies, then Anthra shall not
be required to conduct any studies with respect to such country pursuant to
this Section 2.4(b), and Anthra and Nycomed shall be relieved of their
respective obligations with respect to such country under Section 2.3 and
2.4(a).
(c) Nycomed agrees to reimburse Anthra, within thirty (30)
days after receipt of an invoice therefor, for fifty percent (50%) of the
aggregate direct costs and expenses of Anthra attributable to any clinical
studies conducted by Anthra pursuant to Section 2.4(b); provided, however, that
the obligation of Nycomed to reimburse Anthra pursuant to Section 2.1(c) and
this Section 2.4(c) shall be capped at Six Hundred Thousand U.S. Dollars (U.S.
$600,000) in the aggregate; and provided, further, that Anthra shall not have
any obligation to conduct or complete any such study or studies pursuant to
Section 2.4(b), and Anthra and Nycomed shall be relieved of their respective
obligations with respect to such country under Sections 2.3 and 2.4(a), after
Anthra has incurred aggregate direct costs and expenses pursuant to Section
2.1(c) and/or this Section 2.4(c) equal to One Million Two Hundred Thousand
U.S. Dollars (U.S. $1,200,000) (including amounts to be reimbursed by Nycomed
pursuant to Section 2.1(c) and this Section 2.4(c)).
2.5 Expenses. Except as otherwise expressly provided in Sections
2.1(c) and 2.4(c), each party shall be responsible for its own costs incurred in
carrying out its duties related to the development activities set forth in this
Article II.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 16
ARTICLE III
SUPPLY OF THE PRODUCT
3.1 Obligations. Subject to the terms and conditions of this
Agreement, Anthra agrees to use its commercially reasonable efforts to supply
Nycomed with its requirements of the Product, and Nycomed agrees to purchase its
requirements of the Product, for clinical studies and for commercial sale in the
Territory pursuant to this Agreement; provided, however, that Nycomed may
purchase supplies of the Product from, or cause the Product to be manufactured
by, one or more third parties in the event that Anthra shall fail to perform its
supply obligations under this Article III as a result of the filing by Anthra of
a petition in bankruptcy , or the filing of an involuntary petition against
Anthra, which petition shall not be dismissed within sixty (60) days after the
filing thereof.
3.2 Delivery Terms. The obligations of the parties with respect to
forecasting, orders and delivery of the Product are set forth in Annex F hereto.
3.3 Warranty. Anthra warrants that, at the time of delivery of the
Product to Nycomed, the Product will (i) have been manufactured, stored and
shipped in accordance with applicable GMPs and all other applicable laws, rules,
regulations or requirements of Regulatory Authorities in or relating to the
Territory, (ii) have been manufactured and delivered in accordance with the
Product Specifications, (iii)
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 17
not be adulterated or misbranded under any applicable laws, rules, regulations
or requirements of Regulatory Authorities in or relating to the Territory, and
(iv) have expiration dating, at the time of delivery, equal to at least
seventy-five percent (75%) of the shelf-life approved by the relevant Regulatory
Authority, except as otherwise provided in Section 3.5.
3.4 Defective Products.
(a) In the event that Nycomed determines that any shipment of
Product, at the time of delivery, (i) does not conform to the Product
Specifications, (ii) contains misprinted or non-conforming labelling or
packaging, or (iii) has been damaged in transit (collectively, "Defective
Products"), then Nycomed shall give Anthra notice thereof (including a sample
from such shipment) within fifteen days after receipt thereof, if such defects
may be ascertained by the exercise of reasonable diligence (which shall include
laboratory testing or other chemical analysis as necessary) upon receipt
thereof, and otherwise within fifteen days after discovery thereof. If Anthra
confirms such defect, it shall promptly so notify Nycomed. If Anthra does not
confirm such defect, it shall promptly so notify Nycomed, and the parties shall
submit the disputed shipment for testing to an independent testing laboratory
that is mutually acceptable to the parties. The findings of the testing
laboratory shall be
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 18
binding on the parties. The expenses of such testing shall be borne by Anthra if
the testing confirms the defect, and otherwise by Nycomed.
(b) If any shipment contains Defective Product, for any reason
other than the willful or negligent acts or omissions of Nycomed or its
customers or agents, Anthra shall credit Nycomed with the costs incurred by
Nycomed with respect to all such Defective Product that has not been sold (or
has been sold and returned), which costs shall be deemed equal to the sum of any
amounts paid on account of such Defective Product pursuant to Section 3.7 and
any and all transportation and storage charges incurred by Nycomed in connection
with such Defective Product. In addition, at Nycomed's option, (i) Anthra shall
be relieved of any obligation to deliver any Product in replacement of such
Defective Product, or (ii) Anthra shall replace such Defective Product as soon
as possible after Nycomed notifies Anthra of its election of option (ii) of this
Section 3.4, in which case Nycomed shall pay to Anthra any unpaid amounts in
respect of the replacement Product in accordance with Section 3.7 following
delivery of the replacement Product.
3.5 Delayed Delivery. In the event that Anthra shall fail to
deliver to Nycomed the full quantity of Product specified in a purchase order
issued by Nycomed and confirmed by Anthra pursuant to Annex F hereto, by ***
(the "Trigger Date") after the delivery date specified in such purchase order,
then the supply price (as calculated pursuant to Section 3.6 (the "Price"))
applicable to any quantities of Product delivered to Nycomed after the Trigger
Date under such purchase order shall be reduced, *** provided, further, that no
such reduction shall be made with respect to any purchase order (i) that is
confirmed by Anthra prior to January 1, 2002, or (ii) if the delay in delivery
of the Product to Nycomed shall be caused by, or result from, a delay in the
supply to Anthra of such quantities of AD 32 as Anthra shall require for use in
the Manufacture of such Product. The parties agree that Anthra, in order to
avoid incurring penalties pursuant to this Section 3.5 with respect to a
delayed shipment, may deliver to Nycomed, and Nycomed agrees to accept, ***.
3.6 Price.
(a) Subject to Sections 3.6(b) and 3.6(c), the parties hereby
agree that the supply price for the Product, per 200 mg vial, shall be the
greater of ***. The supply price for the Product, per 800 mg vial, shall be four
times the supply price per 200 mg vial, as calculated in accordance with this
Section 3.6(a).
(b) The parties agree to consult about appropriate adjustments
to the supply price for the Product with respect to a country in the Territory
in the event of significant movements in the exchange rate between such
country's local currency and U.S. Dollars during any calendar quarter.
(c) By mutual agreement of the parties, upon or after execution
of the Manufacturing Agreement, the supply price of the Product under this
Agreement may be adjusted to reflect ***.
3.7 Payment. Terms of payment by Nycomed for shipments of the
Product shall be net ***. Within ***, Nycomed shall determine the supply price
for the Product delivered during such calendar quarter, on a country-by-country
basis, using the formula set forth in the first sentence of Section 3.6. In the
event that the total amount payable to Anthra for Product delivered to Nycomed
in such quarter, calculated on the basis of such supply price and adjusted as
appropriate pursuant to Section 3.5, shall be less than sum of the payments
that Nycomed has made to Anthra for supply of the Product during such calendar
quarter, then Anthra shall credit such excess against future invoices issued to
Nycomed. In the event that such aggregate supply price shall exceed Nycomed's
payments for the Product for such calendar quarter, then Nycomed shall pay
Anthra such shortfall within forty-five (45) days after the end of such
calendar quarter.
3.8 Specifications Amendments. Anthra reserves the
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 19
right to amend and/or supplement the Product Specifications unilaterally for the
purpose of complying with GMPs or applicable Approvals, incorporating
improvements, or for any other reasonable business purpose, subject to the grant
of any Approvals required by applicable law in the Territory in connection with
any such changes; provided, however, that Anthra may not amend the Product
Specifications so as to incorporate any Additional Development therein, without
the prior written consent of Nycomed, which shall not be unreasonably withheld;
provided, however, that withholding such consent because of a disagreement
between the parties as to the appropriate rate of royalty to be paid by Nycomed
with respect to such Additional Development shall not be deemed unreasonable for
purposes of this Section 3.8.
3.9 Records. Anthra shall maintain all records necessary to comply
with all applicable laws, rules and regulations in the Territory relating to the
manufacturing of the Product. All such records shall be maintained for such
period as may be required by law, rule or regulation; provided, however, that
all records relating to the manufacture, stability and quality control of each
batch of the Product shall be retained at least until the first anniversary of
the end of the approved shelf life for all Product from such batch.
3.10 Manufacturing Agreement. Anthra and Nycomed
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 20
shall make a good faith effort, within one hundred eighty (180) days after the
date hereof, to negotiate and enter into a manufacturing agreement (the
"Manufacturing Agreement"), pursuant to which Nycomed will Manufacture Product
using AD 32 supplied to Nycomed by Anthra.
3.11 Inspection Reports. Anthra agrees to advise Nycomed, promptly
after Anthra becomes aware thereof, of any proposed or announced visit or
inspection, or any unannounced visit or inspection, by any governmental or
regulatory agent, of any Anthra facilities used in the performance of its
obligations hereunder. Further, Anthra agrees to advise Nycomed, promptly after
receipt by Anthra of notice thereof, of any proposed or announced visit or
inspection or any unannounced visit or inspection by any such agent of any third
party facility used in the manufacturing of the Product supplied to Nycomed
hereunder. Anthra shall provide Nycomed with a reasonable description of each
such visit or inspection, promptly after such visit or inspection (or promptly
after receipt of such description, in the case of third party facilities) and
with copies of any letters, reports or other documents (including 483's) issued
by any such agents that relate to the Product, promptly after receipt thereof.
ARTICLE IV
MARKETING AND SALE OF THE PRODUCT
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 21
4.1 Nycomed Obligation. Nycomed shall use its commercially
reasonable efforts to Market and sell the Product in the Territory and shall
commence Marketing of the Product as soon as practicable in each country in the
Territory as to which Technical Approvals have been granted and, where
applicable, where Pricing Approval has also been granted; provided, however,
that in any event, Nycomed shall commence active Marketing of the Product and
shall launch the Product in each country in the Territory by the later to occur
of (i) *** that such Technical Approvals (or Pricing Approval, if required),
have been granted in such country and (ii) *** delivery by Anthra to Nycomed of
the first commercial supplies of the Product. Nycomed shall bear all costs and
expenses arising out of or relating to the Marketing, distribution and sale of
the Product. All Product sales in the Territory shall be made by, and for the
account of, Nycomed or its Affiliates or Sublicensees, as the case may be.
4.2 Clinical Studies in Support of Marketing. Nycomed may conduct
(or cause to be conducted), in its sole discretion and at its own expense, any
clinical studies which are specifically designed in support of the Marketing of
the Product in the Territory. Nycomed agrees to provide Anthra with a copy of
the draft protocol for each such study and shall not commence such study prior
to receiving Anthra's prior written approval of such protocol, which approval
may
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 22
not be unreasonably withheld. *** Nycomed agrees not to invoice any third party
for such clinical supplies of the Product at a price lower than the commercial
sales price determined by Nycomed pursuant to Section 4.5.
4.3 Compliance. Nycomed shall comply with all applicable laws,
regulations and Approvals in conducting the Marketing and sale of the Product in
the Territory, including without limitation all requirements as to pre-Marketing
approval of Product labelling. Further, Nycomed agrees to comply with all
written instructions from Anthra relating to the storage, handling and
transportation of the Product, and all Product Specifications relating thereto.
4.4 Use of Trademarks.
(a) The parties shall jointly select the Trademark(s) to be
used as the Product Trademark(s), not later than December 31, 1997.
(b) Neither Nycomed nor any of its Affiliates or Sublicensees
shall market or sell the Product under any Trademark other than the Product
Trademarks. Except as provided in Sections 5.6, Anthra shall not acquire or
assert any right, title, and interest in and to any Product Trademark (other
than the Anthra Trademarks).
4.5 Resale Price of the Product. Subject to applicable governmental
regulations, Nycomed shall use commercially reasonable efforts to obtain the
best in-market
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 23
price for the Product in each country in the Territory under the prevailing
marketing conditions; provided, however, that nothing in this Section 4.5 shall
be deemed to restrict the freedom of Nycomed to determine prices for the Product
in the Territory.
4.6 Marketing Materials. Nycomed shall develop, at its sole expense,
appropriate Marketing and promotional materials for the Product in the Territory
for its use and for use by its Sublicensees. Nycomed agrees to provide to Anthra
(i) a sample copy of each such item, together with an English translation
thereof, or (ii) the text (in English) of each such item and a certification of
the accuracy of the translation of such text into the language in which such
item shall appear, as Nycomed in its sole discretion shall elect, not less than
thirty (30) days prior to making any use thereof. Anthra shall approve or
disapprove each such item, in its sole discretion. In the event that Anthra
shall fail to notify Nycomed in writing of its approval or disapproval of any
such item within ten business days after receipt thereof, such item shall be
deemed to have been approved by Anthra. Nycomed agrees to use such items only
after receiving the approval of Anthra. Nycomed shall not, and shall cause its
Sublicensees not to, use any materials not approved by Anthra, for the purpose
of Marketing the Product.
4.7 Technical and Marketing Support. Anthra shall
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 24
use commercially reasonable efforts to provide Nycomed with technical support in
connection with the training of the Nycomed sales force with regard to the
Product, and to cooperate with Nycomed in undertaking strategic marketing
activities including, without limitation, participation on speaker panels at
international symposia.
4.8 Product Liability Insurance. Nycomed shall maintain, with an
insurance carrier reasonably acceptable to Anthra, at the sole expense of
Nycomed, product liability insurance relating to the Product that is comparable
in type and amount to the insurance it maintains with respect to its most
similar other pharmaceutical products that are Marketed, distributed and sold in
the Territory.
4.9 Covenant. As an integral part of the exclusive dealing
arrangement between the parties set forth in this Agreement, each party agrees
that, during the term of this Agreement, it shall not, and shall not permit any
of its Affiliates or Sublicensees to, develop, Market or sell in the Territory
any product (other than AD 32) for intracavitary use that competes with the
Product with respect to any Indication for which the Product shall have received
labelling approval in the Territory; provided, however, that Anthra may develop,
Market or sell in the Territory anthracycline products (other than AD 32) for
intracavitary use that compete with the Product with respect to one or more
Indications for which the
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 25
Product shall have received labelling approval in the Territory. The parties
acknowledge that the provisions of this Section 4.9 are reasonable, valid and
necessary for the adequate protection of the Product business.
ARTICLE V
LICENSE GRANTS
5.1 Grants. Subject to the terms and conditions of this Agreement,
including without limitation Section 6.1, Anthra hereby grants to Nycomed (i) an
exclusive license under the Licensed Know-how to Market, sell, distribute, and
have Marketed, sold, and distributed the Product in the Territory for the
Indications, (ii) a non-exclusive license under the Licensed Know-how to develop
the Product in the Territory, solely to the extent necessary in conducting
clinical studies pursuant to Section 4.2, and (iii) subject to Section 4.4, a
non-exclusive license to use the Anthra Trademarks to Market, sell, distribute,
and have Marketed, sold and distributed the Product in the Territory for the
Indications; provided, however, that if Nycomed shall fail to purchase from
Anthra in any calendar year an aggregate quantity of Product at least equal to
the Minimum Purchase Requirement for such year, then all exclusive licenses
granted in this Section 5.1 shall automatically become non-exclusive; provided,
further, that for purposes of making the determination pursuant to the preceding
proviso, Nycomed shall be deemed to have purchased
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 26
from Anthra in any calendar year all quantities of the Product set forth in
purchase orders confirmed by Anthra pursuant to Annex F hereof which specify
delivery dates during such calendar year, regardless of whether such deliveries
are made in a timely manner.
5.2 Sublicenses. Nycomed shall have the right to grant to third
parties sublicenses under the licenses granted in Section 5.1, subject to the
prior written consent of Anthra, which shall not be unreasonably withheld (each,
a "Sublicensee").
5.3 China. Nycomed agrees to provide to Anthra in writing, not later
than April 30, 1998, forecasts of, and proposed minimum purchase levels for, Net
Sales in the People's Republic of China (the "PRC") for a three-year period
beginning with the year of Launch in the PRC, based on the assumption that
Anthra will grant Nycomed an exclusive license to Market and sell the Product in
the PRC for the Indications. In the event that (i) Anthra shall determine, in
its sole discretion, after consultation with Nycomed and due consideration of
relevant materials provided by Nycomed, that (A) such forecasts and minimum
purchase levels, in the context of a market assessment, are acceptable, (B)
Anthra's intellectual property rights in the Product will be protected to
Anthra's reasonable satisfaction, and (C) an adequate source of Product supply
can be assured in order to meet
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 27
demand in the PRC, and (ii) Nycomed agrees to bear a mutually agreed percentage
of the costs to be incurred by Anthra in obtaining and maintaining the necessary
marketing approvals in the PRC, then Nycomed shall have the option to enter into
a license agreement with Anthra relating to the development, Marketing and sale
of the Product in the PRC for the Indications, on the terms and conditions
relating to pricing set forth in this Agreement, and on other terms and
conditions similar to those set forth in this Agreement, modified as appropriate
to reflect the agreement of the parties with respect to the conditions set forth
in (i) and (ii) above; provided, however, that if the parties shall fail to
execute such license agreement by September 30, 1998, then Anthra shall have no
further obligations, and Nycomed shall have no further rights, with respect to
the PRC under this Agreement.
5.4 Other Countries Outside the Territory. Anthra agrees to notify
Nycomed promptly in the event that Anthra decides to grant any licenses with
respect to the Product for the Indications covering any countries outside the
Territory, and to discuss such opportunities with Nycomed upon the request of
Nycomed.
5.5 Activities Outside the Territory. Nycomed agrees that, to the
extent permitted by applicable law, it will not (i) seek approval, directly or
indirectly, from the relevant Regulatory Authorities, to (A) qualify facilities
to
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 28
manufacture or finish the Product outside the Territory or (B) label or relabel
the Product in a manner that would permit it to be marketed or sold outside the
Territory (other than in countries that are members of the EU), or (ii) sell or
export the Product to any third party for use or resale outside the Territory
(other than in countries that are members of the EU), or (iii) sell the Product
to any third party that it has reason to believe intends to resell or export the
Product outside the Territory (other than to countries that are members of the
EU).
5.6 Nycomed Trademark Grant to Anthra. In the event that Nycomed
shall own one or more of the Trademarks selected as Product Trademarks pursuant
to Section 4.4, then Nycomed shall promptly grant Anthra a non-exclusive,
perpetual, world-wide, royalty-free license (with the right to sublicense) to
use such Product Trademarks for Marketing and sale of the Product to the level
of distribution that, in turn, sells to patients and hospitals. Any third party
to which Anthra grants a sublicense hereunder (including without limitation
distributors and agents) to use such Product Trademarks for the purpose of
Marketing, selling and distributing the Product shall be required to pay to
Anthra, *** provided, however, that in the event of the partial or complete
termination of this Agreement, then during the period from the effective date of
such termination through the end of
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 29
the Initial Term, (i) any sublicenses granted by Anthra to use the Product
Trademarks in the Territory shall be royalty-free, if Anthra terminated this
Agreement pursuant to Section 14.2, and (ii) any sublicenses granted by Anthra
to use the Product Trademarks in any country as to which Anthra terminated this
Agreement pursuant to Section 14.3(a) shall be royalty-free.
ARTICLE VI
LICENSE FEES AND OPTIONS
6.1 License Fees. In consideration of the licenses granted in
Article V, ***.
6.2 Payment of License Fees. All license fees due from Nycomed under
Section 6.1, and all royalties due from Anthra under Section 5.6, shall be paid
in U.S. Dollars by wire transfer of immediately available funds to an account at
a commercial bank designated by Anthra or Nycomed, as the case may be, at least
five business days before payment is due.
6.3 Royalties. ***
6.4 Withholding Taxes. Nycomed shall pay any and all withholding
taxes or similar charges imposed by any government in the Territory on any
amounts due to Anthra from Nycomed pursuant to this Article VI to the proper
taxing authority, and proof of payment of such taxes or charges will be secured
and sent to Anthra as evidence of such payment. All amounts paid by Nycomed
pursuant to this Section 6.4 shall be paid for the account of Anthra and
deducted from the amounts due from Nycomed to Anthra pursuant to Section 6.1.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 30
6.5 Options. In consideration of the payments made by Nycomed
pursuant to this Article VI and the Investment Agreement of even date herewith,
Anthra shall grant to Nycomed options to purchase either Series D Convertible
Preferred Stock of Anthra (the "Series D Stock") or common stock of Anthra
("Common Stock", and together with the Series D Stock, the "Stock"), as
determined pursuant to Section 6.5(d), on the following terms and conditions:
(a) Upon receipt of the payment from Nycomed pursuant to Section
6.1(a), an option to purchase up to Thirty-Three Thousand Three
Hundred and Thirty-Three (33,333) shares of Stock at Fifteen
U.S. Dollars (U.S. $15) per share, such option to be exercised
not later than the earlier to occur of (i) the tenth day after
Nycomed receives notice that the first Major EU Member State has
granted the Technical Approvals for the Peri-TUR Indication and
(ii) twenty-four months after the date on which the first Major
EU Member State has granted the Technical Approvals for the
Refractory TCC Indication;
(b) Upon receipt of the payment from Nycomed pursuant to Section
6.1(b), an option to purchase up to Thirty-Three Thousand Three
Hundred and Thirty-Three (33,333) shares of Stock at Fifteen
U.S. Dollars (U.S. $15) per share, such option to be exercised
not later than the earlier to occur of (i) the tenth day after
Nycomed receives notice that the first major EU Member State has
granted the Technical Approvals for the Ovarian Indication and
(ii) twenty-four months after the date on which the first Major
EU Member State has granted the Technical Approvals for the
Peri-TUR Indication; and
(c) Upon receipt of the payment from Nycomed pursuant to Section
6.1(c), an option to purchase up to that number of shares of
Stock which can be purchased for One Million U.S. Dollars (U.S.
$1,000,000), at a price per share equal to (i) the prevailing
price of publicly-traded shares of Stock on the date of grant of
the option, or (ii) if such shares are not publicly-traded as of
such date, a price equal to the quotient of (A) the total market
valuation of Anthra, (i) as determined by Anthra in its sole
discretion and notified to Nycomed, or, in the event that
Nycomed shall notify Anthra that Nycomed does not accept such
valuation, (ii) as determined by an internationally-recognized
investment bank or accounting firm mutually acceptable to Anthra
and Nycomed, and (B) the number of shares of Stock outstanding
as of such date. The fees and expenses of such investment bank
or accounting firm in connection with such valuation shall be
for the account of Nycomed. Such option shall be exercised not
later than twenty-four months after the date on which Nycomed
receives notice that the first Major EU Member State has granted
the Technical Approvals for the Product for the Ovarian
Indication.
(d) In the event that shares of the Common Stock are not publicly-
traded on a national securities exchange at the time that any of
the foregoing options shall be exercised, then such option shall
be exercisable for Series D Stock, and in the event that shares
of the Common Stock are publicly-traded on such an exchange at
such time, then such option shall be exercisable for Common
Stock.
ARTICLE VII
JOINT CONSULTATION COMMITTEE
7.1 Formation of the JCC. In order to facilitate the exchange of
information between the parties relating to their activities pursuant to this
Agreement, the parties hereby establish a joint consultation committee (the
"JCC") comprised of four individuals. Nycomed and Anthra shall each appoint two
members of the JCC. Each member of the JCC shall be a senior employee or member
of the Board of Directors of the party that appointed such member. Initial
appointments shall be made within fourteen (14) days of the date of this
Agreement. A member of the JCC may be removed at any time, with or without
cause, by the party that originally appointed such member. A member of the JCC
shall serve until a successor is named by the party that appointed such member.
7.2 Authority of the JCC. The JCC shall (a) monitor and review the
progress of Product development activities conducted by Anthra pursuant to this
Agreement (including, but not limited to, all clinical studies and Registrations
related thereto), (b) monitor and review the progress of all Product Marketing
and sales activities conducted by Nycomed pursuant to this Agreement, including
without limitation, premarketing activities and clinical studies conducted
pursuant to Section 4.2, (c) discuss issues
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 31
concerning supply of the Product, (d) discuss issues concerning the market
position and competitiveness of the Product in the Territory, (d) discuss
whether, and on what basis, the parties should continue funding any clinical
studies as to which the spending caps set forth in Sections 2.1(c) and 2.4(c)
have been reached, and (f) take such other actions as the parties may mutually
agree, except that the JCC may not take any action that would conflict with any
provision of this Agreement. It is not intended that the JCC have any power or
authority to direct the conduct of the affairs or the decision-making of either
party hereto. Each party to this Agreement shall retain the rights, powers, and
discretion granted to it under this Agreement, and no such rights, powers, or
discretion shall be delegated to or vested in the JCC unless such delegation or
vesting of rights is expressly provided for in this Agreement or the parties
expressly so agree in writing. The JCC shall not have the power to amend or
modify this Agreement, which may only be amended or modified as provided in
Section 15.11.
7.3 Procedural Rules of the JCC.
(a) The JCC shall adopt such standing rules as shall be
necessary for its work.
(b) A quorum of the JCC shall consist of two members, provided
that at least one member appointed by Nycomed and at least one member appointed
by Anthra is
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 32
present. Members of the JCC may attend a meeting either in person or by
telephone conference call. Representation by proxy shall not be allowed.
(c) The JCC may take action (1) by consensus of the members
present at a meeting at which a quorum exists, or (2) by written resolutions
approved in writing by all of the members.
(d) The JCC shall have a chairperson and a secretary. The
first chairperson shall be a member of the JCC designated by Anthra. Each
chairperson shall serve a one-year term, and the office shall alternate between
members appointed by Anthra and members appointed by Nycomed. The first
secretary shall be a member of the JCC designated by Nycomed. Each secretary
shall serve a one-year term, and the office shall alternate between members
appointed by Nycomed and members appointed by Anthra.
(e) The JCC shall meet every six months or more frequently as
mutually agreed upon by the members, at times and places mutually agreed upon.
Thirty calendar days' prior written Notice of any such meeting shall be provided
to the members, unless such Notice is waived in writing by the members.
ARTICLE VIII
REPORTING
8.1 Reporting by Parties. The parties hereto shall
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 33
use their commercially reasonable efforts to keep each other informed of their
activities pursuant to this Agreement, including without limitation material
developments relating to the performance of their respective obligations under
this Agreement.
8.2 Record Keeping. Nycomed shall, and shall cause its Sublicensees
to, keep complete and accurate books and records pertaining to the internal
distribution and sale of the Product (and, in the case of Nycomed, pertaining to
any clinical studies conducted pursuant to Section 4.2), including the names and
addresses and purchase order details for each customer to which it sells the
Product (and in the case of Nycomed, the names and addresses of each Person to
which it distributes the clinical supplies of the Product pursuant to Section
4.2). Such books and records shall be retained by for at least six (6) years
after the expiration or termination of this Agreement, or for such longer period
if and as required by applicable law.
8.3 Audit of Records. At the request of Anthra, Nycomed shall, and
shall cause its Sublicensees to, permit Anthra and its representatives, at
reasonable times and upon reasonable notice, to examine the books and records
maintained pursuant to Section 8.2.
ARTICLE IX
ADVERSE EVENT AND OTHER INFORMATION EXCHANGE
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 34
9.1 Notification. Each party shall provide prompt Notice to the
other party of information in or coming into its possession or control
concerning side effects, injury, toxicity or sensitivity reaction associated
with commercial and clinical uses, studies, investigations or tests of the
Product (animal or human), whether or not determined to be attributable to the
Product, and whether arising out of clinical studies or Marketing and sale of
the Product. Further, each party shall notify the other's responsible Drug
Safety Officer by telephone or facsimile within three (3) business days (or such
shorter period as may be specified by applicable law or regulations), to be
followed by a written confirmation within ten (10) business days, after such
party first becomes aware of a circumstance that might necessitate a recall,
expedited notification of relevant regulatory authorities or significant change
in the label of the Product. Information concerning other complaints and other
adverse reactions regarding the Product shall be exchanged between the parties
in writing promptly, but in any event not less frequently than semi-annually.
Each party, at its sole expense, shall make such reports as are necessary to
comply with laws and regulations applicable to it.
9.2 Material Communications. Each party shall, within five (5)
business days, provide Notice to the other party of any material communications
with any governmental
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 35
agency concerning the Product that occurs after the filing of the Registration
for the Product in the Territory, including, without limitation, adverse drug
reaction reports. Copies of all such material communications shall be attached
to the Notice sent pursuant to this Section 9.2. A translation of the material
communication into English shall be sent within ten (10) business days after the
original Notice. Notwithstanding the foregoing, in the event of a communication
or directive from a Regulatory Authority commencing or threatening seizure of
Product or other removal from the market of an approved Product, the party
receiving such information shall transmit such information to the other party
within one business day.
ARTICLE X
PRODUCT RECALL
10.1 Notification and Recall. In the event that any governmental
agency or authority issues or requests a recall or takes similar action in
connection with the Product, or in the event either party determines that an
event, incident or circumstance has occurred which may result in the need for a
recall or market withdrawal, the party notified of or wishing to call such
recall or similar action shall, within twenty-four (24) hours, advise the other
party thereof by telephone or facsimile, after which the parties shall promptly
discuss an appropriate course of action; provided, however,
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 36
that either party may initiate a recall or market withdrawal thereafter if it
deems such action necessary or appropriate.
10.2 Recall Expenses. Each of the parties hereto (the "Responsible
Party") shall bear the expenses of any recall resulting from the breach of its
obligations hereunder. Such expenses of recall shall include, without
limitation, the expenses of notification and destruction or return of the
recalled Product and the sum paid for the recalled Product. The Responsible
Party shall reimburse the other party for any recall expenses borne by such
other party within thirty days after receipt of an invoice therefor.
ARTICLE XI
INTELLECTUAL PROPERTY RIGHTS
11.1 Ownership of Licensed Know-how. Except as otherwise expressly
provided in Section 5.1, all right and title to, and interest in the Licensed
Know-how shall remain in Anthra. Anthra shall have the sole right to file for,
obtain, maintain, register and extend patent protection for the Licensed
Know-how, and to control the prosecution of applications therefor. If, after a
written request from Nycomed, Anthra decides not to file for, obtain, maintain,
register or extend patent protection for the Licensed Know-how, Nycomed shall
have the right, at its own expense, to take any such action in the name of
Anthra.
11.2 Ownership of Product Improvements. Each party
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 37
shall own all rights, title and interest in all Product Improvements that it may
develop. If Anthra or any of its Affiliates shall develop any Product
Improvements during the term of this Agreement, it shall so notify Nycomed and
shall grant, or cause such Affiliate to grant, to Nycomed a royalty-free,
exclusive license (with right to sublicense to Sublicensees) to use such Product
Improvements in the Marketing, distribution and sale of the Product in the
Territory; provided, however, that Nycomed may use such Product Improvements in
the Manufacturing of the Product in the Territory in the event that the
Manufacturing Agreement is executed. If Nycomed or any of its Affiliates or
Sublicensees shall develop any Product Improvements during the term of this
Agreement, it shall so notify Anthra and shall grant, or cause such Affiliate or
Sublicensee to grant, to Anthra a royalty-free, exclusive license (with right to
sublicense) to use such Product Improvements in the Manufacturing, Marketing,
distribution and sale of the Product outside the Territory.
11.3 Additional Developments. Each party shall own all rights, title
and interest in all Additional Developments that it may develop. The party that
develops any such Additional Development shall notify the other party thereof
and, subject to mutual agreement on an appropriate rate of royalty and other
terms and conditions, shall grant such other party a royalty-bearing license
(with a right to sublicense to
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 38
Sublicensees) to use such Additional Development, (i) in the case of Nycomed as
licensee, in the Marketing, distribution and sale of the Product in the
Territory, provided, however, that Nycomed may use such Additional Development
in the Manufacturing of the Product in the Territory in the event that the
Manufacturing Agreement is executed; and (ii) in the case of Anthra as licensee,
in the Manufacturing, Marketing, distribution and sale of the Product outside
the Territory. In the event that an Anthra licensee other than Nycomed shall
develop an Additional Development, Anthra shall use commercially reasonable
efforts to assist Nycomed in procuring a royalty-bearing license to use such
Additional Development in the Marketing, sale or distribution of the Product in
the Territory; provided, however, that Nycomed shall bear all payment and other
obligations relating to such license.
11.4 Ownership of Filings and Approvals. As between Anthra and
Nycomed, Anthra shall own all rights, title and interest in (a) all
Registrations and other submissions to Regulatory Authorities made pursuant to
this Agreement, and (b) all Approvals made or granted with respect to the
Product in the Territory.
11.5 Ownership of Data. Except as otherwise provided in Sections
11.2 and 11.3, Anthra shall own all rights, title and interest to the
preclinical and clinical data arising out of its activities pursuant to this
Agreement
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 39
or arising out of any clinical studies conducted pursuant to Section 4.2.
11.6 Enforcement of Intellectual Property Rights. In the event of
any infringement by a third party of any intellectual property rights relating
to the Product in the Territory, Anthra shall have the first right (but not the
obligation) to pursue any and all injunctive, compensatory and other remedies
and reliefs (collectively, "Remedies") against such third party. Should Anthra
determine not to pursue Remedies within ninety (90) days after Notice from
Nycomed requesting Anthra to do so, then Nycomed shall have the right (but not
the obligation) to pursue Remedies against such third party. The party pursuing
Remedies shall bear its own costs and expenses relating to such pursuit. Any
damages or other amounts collected shall be distributed, first, to the party
that pursued Remedies to cover its costs and expenses and, second, to the other
party to cover its costs and expenses, if any, relating to the pursuit of such
Remedies; any remaining amount shall be distributed to the party that pursued
the Remedies.
11.7 Cooperation. In the event of any infringement by a third party
of any intellectual property right owned by a party hereto, each party shall, at
its own cost and expense, use all reasonable efforts to assist and cooperate
with the other party in connection with the latter's pursuit of
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 40
Remedies against the infringing party.
ARTICLE XII
CONFIDENTIALITY
12.1 Confidential Information. Except to the extent permitted by
this Agreement or as otherwise agreed by the parties in writing, the parties
agree that, at all times during the term of this Agreement and for a five (5)
year period following termination or expiration hereof, the party receiving
information (the "Receiving Party") shall keep completely confidential, shall
not publish or otherwise disclose and shall not use directly or indirectly for
any purpose any information (x) that is furnished to the Receiving Party orally
and is of a nature which is typically regarded in the industry as confidential
or proprietary, or (y) that is clearly marked to indicate its confidential
nature and is furnished to the Receiving Party in writing, by the other party
(the "Disclosing Party") pursuant to this Agreement or otherwise relating to any
transaction contemplated hereby, including information heretofore furnished to
it, except to the extent that the Receiving Party can establish by competent
proof that such information:
(a) was already known to the Receiving Party, other than under
an obligation of confidentiality, at the time of disclosure by the Disclosing
Party;
(b) was part of the public domain at the time
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 41
of its disclosure by the Disclosing Party;
(c) became part of the public domain after its disclosure by
the Disclosing Party, other than through any act or omission of the Receiving
Party in breach of this Agreement; or
(d) was disclosed to the Receiving Party by a third party who
had no obligation not to disclose such information to others.
12.2 Disclosure of Confidential Information. Each party may disclose
the other's information to the extent that such disclosure is reasonably
necessary in filing or prosecuting patent applications, pursuing or defending
litigation, or complying with applicable laws and governmental regulations,
provided that if a Receiving Party intends to make any such disclosure, it shall
give reasonable advance written Notice to the Disclosing Party of such
intention. Furthermore, nothing in this Article XII shall be construed to
preclude either party from disclosing such information to such third parties as
may be necessary in connection with the development and commercialization of the
Product as contemplated by this Agreement, including, without limitation,
subcontracting and sublicensing transactions in connection therewith, provided
that the Receiving Party in question shall in each case obtain from the proposed
third party recipient a written confidentiality undertaking containing
confidentiality
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 42
obligations no less onerous than those set forth in this Article XII.
Notwithstanding anything in this Article XII to the contrary, Nycomed shall have
the right to disclose preclinical and clinical data and results relating to the
Product to qualified health care professionals for the limited purposes of
advertising and promoting the Product and conducting medical education
initiatives reasonably designed to increase Net Sales in accordance with
accepted practices in the pharmaceutical industry.
12.3 Use of Names. Neither party to this Agreement shall use the
name of the other in any public announcement, press release or other public
document without the written consent of such other party.
12.4 Publications. Anthra agrees not to publish, without the prior
written consent of Nycomed, any of the following preclinical or clinical data
relating to the Product: pivotal clinical study protocols; appointments,
qualifications and clinical duties of investigators involved in pivotal studies;
audit certificates of pivotal studies; reasons for premature withdrawal of
patients from pivotal studies; complete lists of all adverse events occurring in
pivotal studies; or toxicology studies pertaining to the intravesical or
intraperitoneal routes of administration not previously published.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 43
ARTICLE XIII
WARRANTIES; INDEMNITIES
13.1 Representations and Warranties. Each party represents and
warrants to the other party as follows: (i) it has full corporate power and
authority and has taken all corporate action necessary to enter into and perform
this Agreement; (ii) the execution and performance by it of its obligations
hereunder will not constitute a breach of, or conflict with, any other agreement
or arrangement, whether written or oral, by which it is bound; and (iii) this
Agreement is its legal, valid and binding obligation, enforceable in accordance
with the terms and conditions hereof.
13.2 Warranties of Anthra. Anthra warrants to Nycomed that (i)
Anthra has the right, power and authority to grant the license set forth in
Section 5.1, (ii) Anthra has conducted or has caused its contractors or
consultants to conduct, and will in the future conduct, the preclinical and
clinical studies of the Product in accordance with applicable known or published
standards of the U.S. Food and Drug Administration and other Regulatory
Authorities, (iii) Anthra has employed and will in the future employ individuals
of appropriate education, knowledge, and experience to conduct or oversee the
conduct of the clinical and preclinical studies of the Product, and (iv) the
exercise by Nycomed of its rights under this Agreement will not infringe any
intellectual
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 44
property rights of any third party, including without limitation any patent
right. EXCEPT AS SET FORTH IN THE PRECEDING SENTENCE AND IN SECTION 3.3, ANTHRA
HEREBY DISCLAIMS ANY AND ALL TERMS, CONDITIONS AND WARRANTIES WITH RESPECT TO
THE LICENSED KNOW-HOW OR THE PRODUCT, INCLUDING WITHOUT LIMITATION ANY IMPLIED
TERM, CONDITION OR WARRANTY OF SATISFACTORY QUALITY OR FITNESS FOR A PARTICULAR
PURPOSE.
13.3 Indemnification of Nycomed.
(a) Anthra shall indemnify, defend and hold harmless Nycomed
and each of its subsidiaries, officers, directors, employees, shareholders and
distributors from and against any and all demands, claims, actions or causes of
action, assessments, losses, damages, liabilities, interest and penalties, costs
and expenses (including, without limitation, reasonable legal fees and
disbursements incurred in connection therewith and in successfully seeking
indemnification therefor, and any amounts or expenses required to be paid or
incurred in connection with any action, suit, proceeding, claim, appeal, demand,
assessment or judgment) (collectively, "Indemnifiable Losses") resulting from,
arising out of, imposed upon, or incurred by any person to be indemnified
hereunder by reason of any breach of representation, warranty or covenant of
Anthra under this Agreement, but in any event excluding matters for which
Nycomed is responsible under Section 13.4.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 45
(b) Anthra shall maintain product liability insurance or
self-insurance in such amounts as ordinary good business practice for its type
of business would make advisable and shall provide Nycomed with evidence of such
coverage.
13.4 Indemnification of Anthra. Nycomed shall indemnify, defend and
hold harmless Anthra and each of its subsidiaries, officers, directors,
employees, shareholders and distributors from and against any and all
Indemnifiable Losses resulting from, arising out of, imposed upon, or incurred
by any person to be indemnified hereunder by reason of (i) any breach of
representation, warranty or covenant of Nycomed under this Agreement or (ii) any
product claims, whether written or oral, made or alleged to be made by Nycomed
or its agents in the Marketing of the Product, but only to the extent that such
product claims were not provided to Nycomed by Anthra or approved in writing by
Anthra, but in any event excluding matters for which Anthra is responsible under
Section 13.3.
13.5 Indemnification Procedure. (a) All claims under Sections 13.3
and 13.4 shall be deemed to be waived unless made in writing to the indemnifying
Party within sixty (60) days after the indemnified Party became aware or should
have become aware of such claims.
(b) Each party shall furnish promptly to the
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 46
other copies of all papers and official documents received in respect of any
Losses. The indemnified party shall cooperate with the indemnifying party in
providing witnesses and records necessary in the defense against any Losses.
(c) With respect to any Losses relating solely to the payment
of money damages and which will not result in the indemnified party's becoming
subject to injunctive or other relief or otherwise adversely affecting the
business of the indemnified party in any manner, and as to which the
indemnifying party shall have acknowledged in writing the obligation to
indemnify the indemnified party hereunder, the indemnifying party shall have the
sole right to defend, settle or otherwise dispose of such claim, on such terms
as the indemnifying party, in its sole discretion, shall deem appropriate.
(d) The indemnifying party shall obtain the written consent of
the indemnified party, which shall not be unreasonably withheld, prior to
ceasing to defend, settling or otherwise disposing of any Losses if as a result
thereof the indemnified party would become subject to injunctive or other
equitable relief or any remedy other than the payment of money by the
indemnifying party.
(e) The indemnifying party shall not be liable for any
settlement or other disposition of a Loss by the indemnified party which is
reached without the written consent
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 47
of the indemnifying party.
(f) Except as provided above, the costs and expenses,
including fees and disbursements of counsel, incurred by any indemnified party
in connection with any third party claim shall be reimbursed on a calendar
quarter basis by the indemnifying party, subject to mutual agreement of the
parties that such claim is within the scope of the indemnifying party's
indemnity in Section 13.3 or 13.4, as the case may be.
(g) The obligations of the parties pursuant to this Article
XIII shall survive the expiration or termination of this Agreement.
13.6 Limitation of Liability. Notwithstanding any other provision of
this Agreement, neither party shall in any event be liable to the other party
for special, incidental, indirect or consequential damages, except in the case
of damages caused by a party's willful misconduct.
ARTICLE XIV
TERM AND TERMINATION
14.1 Term. The term of this Agreement shall commence as of the date
hereof and shall have an initial term of ten years from the date on which the
First Major EU Member State in the Territory grants the Technical Approvals for
the Product for any Indication (the "Initial Term"). Thereafter, the term hereof
shall automatically be extended for successive
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 48
periods of one year, unless either party gives written notice to the other at
least twelve months prior to the end of the then-current term that such party
objects to a further extension of the term.
14.2 Termination for Material Breach. This Agreement shall be
subject to early termination by either party in the event of a material breach
of this Agreement or the Investment Agreement by the other party with respect to
its obligations, which breach is not cured within sixty (60) days (or, in the
case of a payment default, ten (10) business days) following written notice
thereof by the non-breaching party.
14.3 Unilateral Termination by Anthra.
(a) Anthra shall have the right, at the sole discretion of
Anthra, by notice to Nycomed, with respect to any country in which Pricing
Approval is required, to (i) cause all exclusive licenses with respect to such
country granted to Nycomed in Section 5.1 to become non-exclusive or (ii)
terminate this Agreement with respect to such country, upon the satisfaction of
the following two conditions: (A) the parties do not mutually agree, pursuant to
Section 2.4(b), that the size of the market for the Product for the Indications
in such country does not justify incurring the cost of one or more clinical
studies required in connection with the Pricing Approval and (B) Nycomed shall
not have
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 49
launched the Product in such country by the second anniversary of the grant of
the Technical Approvals in such country. If Anthra shall terminate this
Agreement with respect to a country pursuant to this Section 14.3, then Anthra
***
(b) Anthra shall have the right, by notice to Nycomed, to
terminate this Agreement pursuant to Section 15.4(c).
14.4 Termination for Other Events. Either party may terminate this
Agreement if, at any time, the other party shall file in any court or agency
pursuant to any statute or regulation of any state or country, a petition in
bankruptcy or insolvency or for reorganization or for an arrangement or for the
appointment of a receiver or trustee of that party or of its assets, or if the
other party proposes a written agreement of composition or extension of its
debts, or if the other party shall be served with an involuntary petition
against it, filed in any insolvency proceeding, and such petition shall not be
dismissed within sixty (60) days after the filing thereof, or if the other party
shall propose or be a party to any dissolution or liquidation, or if the other
party shall make an assignment for the benefit of its creditors.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 50
14.5 Effect of Expiration or Termination.
(a) The expiration of the term hereof, or any early
termination of this Agreement, in either case whether as a whole or as to a
single country, shall be without prejudice to any rights or obligations of the
parties that may have accrued prior to such expiration or termination.
(b) In the event of termination of this Agreement, Anthra, in
its sole discretion, may repurchase the inventory of the Product held by Nycomed
at the time of such termination, at the price at which Nycomed purchased such
Product from Anthra pursuant to this Agreement; provided, however, that if
Anthra shall not notify Nycomed, within fourteen days after such termination, of
its intention to repurchase such inventory, then Nycomed may sell such inventory
in the Territory for a period not to exceed one year from the date of such
termination.
(c) In the event of termination of this Agreement, Anthra may
cancel, at its option, any or all purchase orders received from Nycomed prior to
the date of such termination, that provide for delivery of the Product after
such date, except if failure to fill such purchase orders would cause Nycomed to
be in breach of its supply obligations to third parties under written
agreements; provided, however, that Anthra may cancel all such purchase orders
in the event of its termination of this Agreement
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 51
pursuant to Section 14.2.
(d) Nycomed agrees to cooperate with Anthra in transferring to
Anthra or a third party, as Anthra may direct, within thirty (30) days of the
expiration or termination hereof, all data, files and other materials in the
possession or under the control of Nycomed, directly relating to the Product
(and not including general market information and the like not directly relating
to the Product), except to the extent that Nycomed requires such data, files and
materials for the purpose of exercising any rights under this Agreement that may
survive such termination or expiration.
14.6 No Compensation. In the event that either party shall terminate
this Agreement for any reason in accordance with the terms hereof, the parties
agree that, subject to the provisions of this Article XIV, and without prejudice
to any other remedies that either party may have in respect of any breach of
this Agreement, neither party shall be entitled to any compensation or like
payment from the other party as a result of such termination.
14.7 Survival. The rights and obligations of the parties under
Sections 3.7 (Payment), 3.9 (Records), 5.6 (Nycomed Grant to Anthra), 6.5
(Options) (only with respect to the deadline for exercise of any options granted
to Nycomed pursuant thereto prior to the date of termination or expiration
hereof), 8.2 (Record Keeping), 8.3 (Audit of
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 52
Records), Article IX (Adverse Event and Other Information Exchange) (only with
respect to Nycomed's obligations thereunder), Article X (Product Recall),
Sections 11.2 (Ownership of Product Improvements) (only with respect to Anthra's
rights thereunder), 11.3 (Additional Developments) (only with respect to
Anthra's rights thereunder), 12.1 (Confidential Information), 12.2 (Disclosure
of Confidential Information), 13.3 (Indemnification of Nycomed), 13.4
(Indemnification of Anthra), 13.5 (Indemnification Procedure), Article XIV (Term
and Termination), Sections 15.2 (Notice) and 15.6 (Arbitration) shall survive
the expiration or termination of this Agreement for any reason whatsoever.
In the event of the termination of this Agreement by Nycomed
pursuant to Sections 14.2 or 14.4, the licenses granted to Nycomed in Sections
5.1, 11.2 and 11.3 shall remain in full force and effect through the tenth
anniversary of the Launch of the Product. In the event of the termination of
this Agreement by Anthra pursuant to this Article XIV, no license granted to
Nycomed in this Agreement shall survive such termination.
ARTICLE XV
GENERAL PROVISIONS
15.1 Force Majeure.
(a) For purposes of this Section 15.1, "Force Majeure" shall
mean any event or condition not existing as of
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 53
the date of this Agreement, unexpected as of such date, and not reasonably
within the control of either party, which prevents in whole or in material part
the performance by such party of its obligations hereunder, and shall include,
without limitation, any act of God; fire; casualty; flood; war; strike; lockout;
failure of public utilities; injunction or any act, exercise, assertion or
requirement of governmental authority, including any law, order or regulation
permanently or temporarily prohibiting or reducing the level of research or
development; epidemic; destruction of research facilities; riots; insurrection;
inability to procure or use materials, labor, equipment, transportation or
energy sufficient to meet experimentation or manufacturing needs.
(b) Upon giving notice to the other party, a party affected by
an event of Force Majeure shall be released without any liability on its part
from the performance of the relevant obligations hereunder, except for the
obligation to pay any amounts due and owing hereunder, but only to the extent
and only for the period that its performance of such obligations is prevented by
the event of Force Majeure.
(c) During the period that the performance by a party hereto
of its obligations under this Agreement has been suspended by reason of an event
of Force Majeure, the other party may likewise suspend the performance of all or
part of its obligations hereunder to the extent that such
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 54
suspension is commercially reasonable in light of the suspension of the other
party's performance.
15.2 Notice. All notices, requests, reports, statements and other
communications to either party (each a "Notice") shall be in writing, in the
English language, shall refer specifically to this Agreement and shall be hand
delivered or sent by express courier service, carriage costs prepaid, or by
facsimile to the respective addresses specified below (or to such other address
as may be specified by Notice to the other party):
If to Anthra:
Anthra Pharmaceuticals, Inc.
19 Carson Road
Princeton, N.J. 08540 U.S.A.
Fax: (609) 924-3875
Attention: Michael C. Walker
If to Nycomed:
Nycomed Pharma AS
Sandakerveien 78
P.O. Box 4220 - Torshov
N-0401 OSLO
Norway
Fax: 0047-23-18-6000
Attention: Trond Jacobsen
Any Notice delivered by facsimile or similar means shall be
confirmed by a hard copy delivered as soon as practicable. The effective date of
any Notice shall be: (a) the date of the addressee's receipt, if delivered by
hand or express courier; (b) the date of receipt if received by 5:00 p.m. local
time on a business day or, if not, the first
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 55
business day after receipt, if sent by facsimile.
15.3 Further Assurances. Each party shall duly execute and deliver,
or cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such assignments, agreements, documents and instruments, as may be
necessary or as the other party may reasonably request in connection with this
Agreement or to carry out more effectively the provisions and purposes hereof,
or to better assure and confirm unto such other party its rights and remedies
under, this Agreement.
15.4 Successors and Assigns.
(a) The terms and provisions hereof shall inure to the benefit
of, and be binding upon, Anthra, Nycomed and their respective successors and
permitted assigns. Except in the case of an assignment or delegation to an
Affiliate, each party shall assign all of its rights and delegate all of its
duties hereunder in connection with any permitted assignment or delegation that
it may make. As a condition to the effectiveness of any such assignment, the
proposed assignee shall assume in writing and agree to be bound by the
provisions of this Agreement. Any attempt to assign or delegate any portion of
this Agreement in violation of this Section 15.4 shall be null and void.
(b) Without regard to transfers effected by
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 56
the operation of law, neither party may assign any of its rights and interests,
or delegate any of its obligations hereunder, without the prior written consent
of the other party; provided, however, that either party may assign some or all
of its rights and delegate its duties hereunder to an Affiliate thereof without
obtaining such consent, provided that the assignor agrees to remain primarily
(and not secondarily or derivatively) liable for the full and timely performance
by such Affiliate of all such assigned obligations.
(c) In the event that (i) there is a Change of Control of
Nycomed Pharma AS (or any Person that Controls Nycomed Pharma AS, directly or
indirectly), and (ii) the Person that has acquired such Control, at the time of
such Change of Control, is developing, has developed, and/or is marketing and
selling, directly or indirectly, any product for intracavitary use that competes
with the Product with respect to any Indication for which labelling approval
will be sought or has been received in the Territory, then Anthra and Nycomed
shall use their good faith efforts to execute a co-promotion agreement, within
ninety (90) days after the date of such Change of Control, on terms and
conditions customary in the industry, pursuant to which Anthra shall have the
right to co-sell (or to contract with a third party to co-sell) the Product in
the Territory for the Indications, and Nycomed
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 57
shall have the sole right to accept all purchase orders for the Product in the
Territory under such agreement, with all sales thereof for the account of
Nycomed; provided, however, that if the parties shall fail to execute such
agreement within such period, then Anthra may terminate this Agreement by
written notice to Nycomed.
15.5 Governing Law. This Agreement shall be governed and construed
by, and enforced in accordance with, the laws of England, without regard to
principles of conflicts of law thereof.
15.6 Arbitration. Any disputes arising under this Agreement shall be
resolved by arbitration in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of Commerce. The proceedings shall be
held in London, England and shall be conducted in the English language. The
parties shall appoint an arbitrator by mutual agreement. If the parties cannot
agree on the appointment of an arbitrator within thirty (30) days after receipt
of a demand for arbitration, each party shall appoint one arbitrator, and the
two arbitrators shall appoint a third arbitrator. If the party-appointed
arbitrators cannot agree on the third arbitrator, the third arbitrator shall be
appointed by the President of the International Chamber of Commerce. Any fees
and expenses payable with respect to the arbitration shall be borne by the party
losing the case (or, in case each party
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 58
shall prevail partially, such fees and expenses shall be shared by the parties
in accordance with the decision of the arbitrators). All arbitration rulings and
awards shall be final and binding on the parties and shall be enforceable in
accordance with the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards.
15.7 Severability. If any provision hereof, other than the
requirements to pay license fees pursuant to Article VI, should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, then, to the
fullest extent permitted by applicable law, (a) all other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intent of the parties as nearly as
may be possible, (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction, and (c) the parties agree to use their best efforts to negotiate a
provision, in replacement of the provision held invalid, illegal or
unenforceable, that is consistent with applicable law and accomplishes, as
nearly as possible, the original intention of the parties with respect thereto.
To the fullest extent permitted by applicable law, each party hereby waives any
provision of law that would render any provision hereof prohibited or
unenforceable in any respect.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 59
15.8 Counterparts. This Agreement shall be executed in two
counterparts, each of which shall be deemed to be an original, and all of which,
taken together, shall constitute one and the same instrument.
15.9 Captions. The captions of this Agreement are for convenience of
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision contained in this
Agreement.
15.10 Independent Contractors. The status of the parties under this
Agreement shall be that of independent contractors. No party shall have the
right to enter into any agreements on behalf of the other party, nor shall it
represent to any person that it has any such right or authority. Nothing in this
Agreement shall be construed as establishing a partnership or joint venture
relationship between the parties hereto.
15.11 Entire Agreement. This Agreement, together with the Annexes
hereto, constitutes, on and as of the date hereof, the entire agreement of the
parties with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
the parties with respect to such subject matter are hereby superseded in their
entireties. This Agreement shall not be amended in any respect whatsoever except
by a further
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 60
agreement, in writing, fully executed by each of the parties.
15.12 Null and Void. This Agreement shall automatically become null
and void and of no effect, without further action by the parties, in the event
that the Closing under the Investment Agreement shall not have occurred by
October 27, 1997 (or such later date as the parties may mutually agree in
writing).
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date first above written.
ANTHRA PHARMACEUTICALS, INC. NYCOMED PHARMA AS
By: /s/ Michael C. Walker By: /s/ Trond Jacobsen
------------------------- -------------------------
Michael C. Walker Trond Jacobsen
President President
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 61
ANNEX A
SPECIFICATIONS
***
<PAGE> 62
ANNEX B
PIVOTAL CLINICAL PLAN - ONGOING STUDIES
AD 32 (N-TRIFLUOROACETYLADRIAMYCIN-14-VALERATE)
<TABLE>
<CAPTION>
European
Study/Phase Route and Dose Claims Supported Status - August 1997
<S> <C> <C> <C>
A9301, A9302, A9303 Intravesical; Refractory transitional cell carcinoma Accrual complete;
Phase II - US 800 mg weekly x 6 Follow-up ongoing
A9304 Intravesical; Refractory transitional cell carcinoma Accrual complete;
Phase II - Europe 800 mg weekly x 6 Follow-up ongoing
A9621 Intravesical; Refractory transitional cell carcinoma Ongoing
Phase II - Europe 800 mg weekly x 6 (supportive)
A9623 Intravesical; Refractory transitional cell carcinoma Ongoing
Phase II - Europe 800 mg weekly x 6 (supportive)
A9601 Intravesical; 800 mg immediately Adjunctive treatment of patients with Ongoing
Phase III - US post-TURB superficial TCC
A9503 Intraperitoneal; Refractory ovarian carcinoma Ongoing
Phase III - US 600 mg/m2 monthly x 6
A9622 Intraperitoneal; Refractory ovarian carcinoma Initiation 4Q97
Phase III - Europe 600 mg/m2 monthly x 6
A9701 Intravesical; 800 mg Adjunctive treatment of patients with Initiation 3Q97
Phase II - US immediately post-TURB superficial TCC
</TABLE>
<PAGE> 63
ANNEX C
BASIS FOR CALCULATION OF MINIMUM PURCHASE REQUIREMENTS
(STANDARD)
Calendar Year of Launch (Year 1) and
Calendar Years after Launch (Years 2 - 5)
(no. of 200 mg vials, or equivalent in volume)
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3 Year 4 Year 5
------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
10,000 13,500 18,000 21,600 21,600
</TABLE>
<PAGE> 64
ANNEX D
BASIS FOR CALCULATION OF MINIMUM PURCHASE REQUIREMENTS
(AFTER CHANGE OF CONTROL)
Calendar Year of Launch (Year 1) and
Calendar Years after Launch (Years 2 - 5)
(no. of 200 mg vials, or equivalent in volume)
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3 Year 4 Year 5
------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
13,333 18,000 24,000 28,800 28,800
</TABLE>
<PAGE> 65
ANNEX E
TERRITORY
The following countries comprise the Territory:
United Kingdom, the Republic of Ireland, France, Italy, Germany, Austria,
Switzerland, Belgium, the Netherlands, Luxembourg, Sweden, Norway,
Finland, Denmark, Iceland, Greece, Poland, Slovakia, the Czech Republic,
Hungary, Romania, Bulgaria, Slovenia, Croatia, Bosnia-Hertzogovina,
Yugoslavia, Lithuania, Latvia, Estonia, Russia, and the Commonwealth of
Independent States.
<PAGE> 66
ANNEX F
FORECASTING, ORDERS AND DELIVERY OF PRODUCT
A. Good Faith Forecasts. No later than thirty (30) days after
Anthra files its initial Registration for the Product in the EU, Nycomed
shall provide Anthra with a forecast estimating Nycomed's quarterly
requirements of the Product (and the desired delivery dates therefor) for
the succeeding eighteen (18) month period. Thereafter, on or before the
first day of January, April, July and October of each year during the term
hereof, Nycomed shall provide Anthra with an updated forecast estimating
Nycomed's quarterly requirements of the Product (and the desired delivery
dates therefor) for the succeeding eighteen (18) month period. Nycomed
shall prepare such estimates in good faith; provided, however, that,
subject to Paragraph (B) of this Annex F, such estimates shall not be
binding on either party.
B. Firm Forecasts. Nycomed shall provide Anthra with a firm
forecast of Nycomed's requirements of the Product (and the desired
delivery dates therefor) (i) for the sixth-month period beginning on
January 1 of each calendar year, not later than September 30 of the
preceding year, and (ii) for the six-month period beginning on July 1 of
each calendar year, not later than March 31 of such year. Nycomed may
amend any firm forecast (i) at any time prior to the issuance of the
affected purchase order(s), upon written notice to Anthra, if the net
change in the quantity of the forecasted requirements of the Product is
twenty percent (20%) or less, or (ii) upon written notice to Anthra at
least ninety days prior to the issuance of the affected purchase order(s),
if the net change in the quantity of the forecasted requirements of the
Product exceeds twenty percent (20%) but does not exceed thirty percent
(30%); provided, however, that in no event may Nycomed make net changes of
more than thirty percent (30%) in the quantity of the forecasted
requirements of the Product in any firm forecast. Except as provided in
the preceding sentence, Nycomed shall be obligated to purchase, and Anthra
shall be obligated to sell, such quantities of the Product as are set
forth in the firm forecast, on the delivery schedule set forth therein.
C. Purchase Orders. Nycomed shall issue to Anthra firm
purchase orders for each delivery, not later than three (3)
<PAGE> 67
months prior to the forecasted delivery date. The quantities ordered shall
be consistent with the firm forecast for the relevant period given by
Nycomed pursuant to Paragraph (B) of this Annex F (and, if applicable, as
amended pursuant thereto). In the event that the terms of any such
purchase order are not consistent with this Agreement, the terms of this
Agreement shall prevail. The submitted purchase orders shall be in
writing, whether by mail, telecopy, telegram, electronic data interchange,
or otherwise, and shall, at a minimum, set forth the product description,
quantities, language requirements, delivery dates, shipping instructions
and shipping addresses for all the Product ordered. Anthra shall issue and
send to Nycomed a confirmation of each purchase order, within five working
days after receipt thereof, provided that such purchase order conforms to
the requirements set forth in this Annex F. No purchase order may be
amended except by mutual agreement of the parties.
D. Delivery. Delivery of each order of Product shall be made,
at the election of Nycomed, (i) C.I.F. Roskilde, Denmark or (ii) F.O.B. at
a location to be designated by Anthra (Incoterms 1990). In the case of
delivery on an F.O.B. basis, Anthra shall arrange for insurance and
transportation of the Product to a destination designated by Nycomed and
by a common carrier designated by Nycomed, at the sole expense of Nycomed,
and title to and risk of loss of the Product shall pass to Nycomed at the
time of delivery to the carrier. Nycomed shall carry out all customs
formalities necessary for the import clearance of the shipment and obtain,
at its own risk and expense, any import license or other governmental
authorization required in connection with its importation. Anthra shall
promptly invoice Nycomed for all Product shipped. Invoices shall be
accompanied by a certificate of analysis showing the conformity of the
invoiced lot of Product with the Product Specifications, together with the
following information: Product name; batch number; manufacturing date;
expiry date; batch size; amount of delivered packs; a batch report stating
that the Product has been produced and controlled in accordance with EU
GMP rules and the requirements stipulated in the relevant Technical
Approval; and a certification that the Product has been released by a
Qualified Person, as defined under applicable EU regulations. The Product
shall be delivered in finished, packed form, with labelling in compliance
with applicable regulatory requirements.
<PAGE> 1
Certain confidential portions of this Exhibit were omitted by means of
blackout of the text (the "Mark"). This Exhibit has been filed separately with
the Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 406 under the
Securities Act.
EXHIBIT 10.15
BERLEX LABORATORIES/LEIRAS/ANTHRA PHARMACEUTICALS
TERM SHEET
BONEFOS
I. PRELIMINARY
1. This Term Sheet sets out the main terms and conditions upon which Anthra
Pharmaceuticals, Inc. ("Anthra"), Leiras Oy ("Leiras") and Berlex Laboratories,
Inc. ("Berlex") will enter into negotiations for the development and marketing
of Bonefosclodronate ("Bonefos") in the United States of America ("the
Territory"). These terms are subject to completion of satisfactory due diligence
by Anthra, the negotiation of a Development Agreement, Option Agreement and
Manufacturing Agreement on terms mutually satisfactory to each of Anthra, Leiras
and Berlex (the "Definitive Agreements"), and the execution and delivery of the
Development Agreement, and except in relation to this Paragraph, Section I
Paragraph 2 (intra-group arrangements), Section II Paragraph 2.a. (payment of
$250,000) and Section IV Paragraphs 1 (exclusivity), 2 (access to information
and sites), 4 (obligations), 5 (confidentiality), 6 (costs) and 7 (governing
law) which are legally binding, the provisions of this Term Sheet do not create
any binding obligations on the parties. The term "Berlex Group" shall mean the
group companies and affiliates of Schering AG, including but not limited to
Leiras and Berlex.
II. DEVELOPMENT AGREEMENT AND OPTION AGREEMENT
The Development Agreement and Option Agreement shall be negotiated on the
basis of the following terms:
1. Subject to any applicable termination or revocation provisions, Leiras will
grant Anthra a perpetual, exclusive license to develop and market Bonefos for
the treatment of hypercalcemia (the "H-Indication") and the treatment of
osteolysis (the "O-Indication") and such other oncology indications as Anthra
may elect to develop in the Territory pursuant to the Development Agreement, all
subject to the Option Agreement.
a. Anthra will conduct clinical trials as required in order to Prepare a
New Drug Application ("NDA") or Supplemental NDA ("SNDA"', as the case may be,
for Bonefos for the H-Indication and the O-Indication (together "the
Indications") and bear all costs relating to such activities. Anthra agrees to
use its commercially reasonable efforts to secure Food and Drug Administration
("FDA") approval of an NDA or SNDA, as the case may be, for the Indications.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 2
Anthra agrees to submit to the FDA the protocol for the clinical trials for the
second Indication not later than December 31, 1998.
b. Anthra will obtain all clinical supplies of Bonefos from Leiras; ***.
c. Leiras will provide Anthra with a copy of the clinical studies which it
has conducted as described on Exhibit "A" hereto. Leiras will provide Anthra
with all data and information to which any member of the Berlex Group has
ownership or license rights or otherwise has access and can lawfully pass on to
Anthra as of the effective date of the Development Agreement, or acquires during
the term of the Development Agreement relating to the preclinical, CMC and
clinical experience regarding Bonefos. Leiras shall provide such data and
information to Anthra at no cost. Leiras represents and warrants to Anthra that
Leiras has access to all such information and documentation, and has the
authority to give and the power to perform the covenant set forth above.
2. Anthra shall pay Berlex a total of $3,750,000, non-refundable.
a. $ 250,000 upon all parties signing this Term Sheet;
b. $1,000,000 upon all parties signing the Development Agreement;
c. $2,500,000 within thirty (30) days following the pre-NDA meeting between
representatives of Anthra and the FDA; provided, however, that in no event
shall Anthra pay Berlex this amount after December 31, 1998.
3. Anthra will grant Berlex the option to acquire the exclusive right to sell,
market and distribute Bonefos in the Territory for the Indications directly or
through one or more sublicenses (subject to Anthra approval of all sublicensees
which shall not be unreasonably withheld and which shall not be required of any
member of the Berlex Group) ("the Option"); provided, however, that the Berlex
Group agrees not to discuss, negotiate, or enter into any agreement with a
prospective sublicensee with respect to the commercialization of Bonefos in the
Territory prior to exercising the Option.
a. The Option may be exercised by Berlex, *** by executing the Option
Agreement, which shall incorporate the terms and conditions set forth in this
Section II Paragraph 3. Anthra shall immediately notify Berlex of its submission
of such NDA and shall immediately notify Berlex of the acceptance of such NDA by
the FDA for filing. Anthra may, at any time after the acceptance of such NDA,
enter into negotiations with prospective licensees to sell, market and
distribute Bonefos in the Territory. Anthra may disclose such Information
relating to the clinical development of Bonefos as may be necessary to progress
such discussions subject to the recipient entering into suitable confidentiality
undertakings. In the event that the terms negotiated between Anthra and any such
licensee are more favorable than the terms offered to Berlex for the Option
under the Development Agreement, Berlex shall have a right of first refusal to
accept such more favorable terms.
b. If Berlex exercises the Option, Berlex will pay Anthra ***.
c. If Berlex exercises the Option, it shall be responsible for all
marketing, sales and distribution activities at its own expense. Berlex shall
have sole right to establish pricing Berlex shall be responsible for achieving
certain specified minimum levels of sales of Bonefos in the Territory, which
shall be equal to the product of (i) a percentage to be specified in the Option
Agreement and (ii) projected sales for Bonefos in the Territory determined by an
independent third party mutually acceptable to Berlex and Anthra, at the time of
the acceptance for filing of the NDA for the first Indication. If Berlex
exercises the Option, Berlex agrees not to market or sell in the Territory,
directly or indirectly, any bisphosphenate product (whether internally
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 3
developed or licensed from a third party) that competes with Bonefos for a
period of five years after the launch of Bonefos in the Territory.
d. If Berlex exercises the Option, Berlex may elect to develop Bonefos in
the Territory for prevention of osteolysis. If Berlex obtains an SNDA for this
indication, Berlex shall thereafter pay Anthra a royalty on Net Sales at the
following rate: ***.
4. If Berlex does not exercise the Option, Anthra shall have an exclusive,
royalty- free license to market, sell and distribute Bonefos in the Territory,
including the right to sublicense to any entity that does not market, sell or
distribute any competing product in the Territory during the term of the
Development Agreement. Anthra shall be responsible for all related activities at
its own expense. Anthra shall have sole right to establish pricing.
a. Leiras and Anthra shall enter into a Manufacturing Agreement as
described in Section III below.
b. If Anthra sublicenses its rights, to market, distribute and sell
Bonefos and the aggregate expected receipts (taking into account both lump sum
payments and royalty flows) from the sublicensee exceed the aggregate expected
receipts from Berlex pursuant to Section II Paragraph [3.b] Anthra shall pay
Berlex one-third of the excess if and to the extent that such excess is actually
received.
c. In the event that Anthra wishes to develop Bonefos in the Territory for
any additional indications, Anthra shall obtain Leiras' prior written consent
for such development on terms to be negotiated between Leiras and Anthra.
d. In the event that Berlex does not exercise the Option, Anthra shall
reimburse Leiras for Leiras' actual out-of-pocket costs incurred in conducting
CMC studies after the effective date of the Development Agreement. Such costs
shall be calculated in the manner customarily applied by Leiras in the
calculation of its research and development costs, and shall not include any
financial costs or general and administrative costs (all as more specifically
defined in the Development Agreement).
e. In the event that Berlex does not exercise the Option, *** after launch
of Bonefos in the Territory Berlex shall not (i) sell, market or distribute in
the Territory any competing bisphosphenate product that has been internally
developed by the Berlex Group, or (ii) actively solicit from any third party any
in-licensing opportunity to sell, market or distribute a competing
bisphosphenate product in the Territory.
5. Regulatory Documentation and Communications:
a. Leiras will transfer ownership of the Investigational New Drug
application ("IND") for Bonefos to Anthra as soon as possible after execution of
the Development Agreement.
b. Anthra will prepare and file an NDA, in its own name, for the
H-Indication or the O-Indication, and prepare and file an SNDA, in its own name,
for the remaining Indication.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 4
c. Leiras shall provide Anthra with a copy of any pre-clinical studies
which have been prepared by Leiras as of the effective dale of the Development
Agreement, and with respect thereto shall assist Anthra in preparing the
pre-clinical section of the NDA and SNDA. To the best knowledge of Leiras, such
studies were prepared in accordance with European Good Laboratory Practices and
also meet the requirements for the FDA Good Laboratory Practices. Anthra shall
have the opportunity to review such studies during the course of its due
diligence. In the event that Anthra reasonably determines that such studies have
not met the FDA Good Laboratory Practices requirements, or are otherwise
deficient, then Anthra shall notify Leiras of the additional preclinical studies
to be performed in connection with the preparation of the NDA or SNDA
submission, as the case may be, within thirty days after the pre-NDA meeting, or
within thirty days after such later time as the FDA may notify Anthra of
additional preclinical requirements. In the event that Leiras shall undertake
such studies, it shall use commercially reasonable efforts to complete them and
prepare and provide to Anthra if the preclinical section of such NDA or SNDA not
less than six months prior to the NDA or SNDA submission date projected by
Anthra; provided, however, that if it is not practicable to complete such work
by such date, then Leiras agrees to work diligently to complete such work as
soon thereafter as possible. If Leiras shall fail to notify Anthra in writing
that Leiras has begun work on such studies within three months after receipt of
notice from Anthra of such additional studies, then, upon written notice to
Leiras, Anthra may commission a contract research organization to conduct such
studies, in which case Anthra shall prepare the preclinical section of such NDA
or SNDA, as the case may be. In the event that Leiras conducts such additional
preclinical work and Berlex does not exercise the Option, then Anthra shall
promptly reimburse Leiras' costs, calculated in the manner reference in Section
II, Paragraph 4.d. In the event that Anthra commissions a contract research
organization to conduct such additional preclinical work, and Berlex exercises
the Option, then Berlex shall promptly reimburse Anthra for its direct expenses
in connection therewith.
d. Leiras will prepare and submit to Anthra the CMC section of the NDA and
the SNDA. As soon as reasonably practical after being notified by the FDA,
Anthra shall provide Berlex and Leiras with details of all outstanding
pre-clinical and CMC issues and the anticipated date of filing of the NDA or the
SNDA, as the case may be. Leiras shall undertake commercially reasonable efforts
to provide Anthra with the CMC section of the NDA or the SNDA, as the case may
be, six months before the anticipated filing date thereof.
e. The FDA filings will be made at Anthra's expense except as otherwise
provided in this Section II Paragraph 5.
f. In the event that Berlex exercises the Option, Anthra will transfer
ownership of the IND and the NDA to Berlex upon the grant of the marketing
authorization for the second Indication; provided, however, that Anthra shall
transfer such approvals to Berlex upon any earlier termination of the
Development Agreement by Berlex for breach by Anthra.
g. During the term of the Development Agreement, Anthra shall be the
exclusive FDA contact with respect to Bonefos until the transfer of ownership of
the NDA to Berlex, but Anthra shall in any case provide Berlex and Leiras with a
copy of all significant documentation and correspondence submitted to, or
received from, the FDA. With respect to submissions to FDA, Anthra shall be
required to submit to Berlex, on a periodic basis, summaries of its
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 5
submissions to FDA. (All clinical data submitted to Berlex shall be used solely
for the purpose of (i) complying with the regulatory obligations of the Berlex
Group, or (ii) evaluating the Option.) Further, Anthra agrees to provide Berlex
with copies of all contact reports that it prepares memorializing its
communications with the FDA relating to Bonefos. If Berlex wishes to apply for
an SNDA for Bonefos for the prevention of osteolysis prior to the transfer of
the NDA to Berlex, then all communications with the FDA regarding such SNDA
shall be conducted through Anthra.
6. Safety surveillance and adverse event reporting shall be the responsibility
of the party which owns the IND, NDA and/or SNDA, as the case may be.
7. Anthra, Leiras and Berlex will form an Executive Management Committee (EMC)
with equal numbers of Anthra, Leiras and Berlex representatives. The EMC will
meet at least once every 3 months:
a. Anthra will inform the EMC of all issues and progress regarding
development activities;
b. If Berlex exercises the Option, it will inform the EMC of pre-marketing
issues and progress. After launch, Berlex shall be obligated to inform Anthra of
marketing issues and progress only for so long as Anthra holds the NDA and/or
SNDA for Bonefos;
c. It Berlex exercises the Option and elects to develop Bonefos for the
prevention of osteolysis indication, Berlex will inform the EMC of all issues
and progress pertaining thereto.
8. Anthra and its affiliates shall own any data and patentable improvements,
developments or discoveries (collectively, "Improvements") generated by Anthra
and its affiliates arising out of, or related to, the performance by Anthra of
its obligations under the Development Agreement; provided, however, that Anthra
shall promptly grant Leiras a perpetual, exclusive, royalty-free license to use
such Improvements solely in connection with the marketing and sale of Bonefos
outside the Territory (and inside the Territory if Berlex has exercised the
Option). Anthra shall promptly assign to Leiras, without further consideration,
any such Improvements that relate directly and solely to Bonefos; provided,
however, that Leiras shall promptly grant Anthra a perpetual, exclusive,
royalty-free license to use such Improvements in connection with the marketing
and sale of Bonefos in the Territory in the event that Berlex does not exercise
the Option.
9. Leiras and its affiliates shall own any Improvements generated by Leiras and
its affiliates during the term of the Development Agreement, provided, however,
that Leiras shall grant Anthra a perpetual, exclusive, royalty-free license to
use such Improvements solely in connection with the marketing and sale of
Bonefos for oncology-related indications in the Territory in the event that
Berlex does not exercise the Option. As to other indications, the parties agree
to negotiate in good faith the terms of a license in the Territory for such
indications.
10. If Berlex does not exercise the Option, Leiras shall grant Anthra a
perpetual, exclusive, royalty-free license (with right to sublicense) to use the
trademark BONEFOS in connection with the marketing and sale of Bonefos in the
Territory, subject to such protections as Leiras may reasonably require as owner
of the trademark (to be defined more fully in the Manufacturing
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 6
Agreement); provided, however, that in the event the license granted under
Section II Paragraph 1 terminates or is revoked in accordance with the
Development Agreement, the license granted under this Paragraph shall be
terminated as of the date of termination or revocation of the license granted
under Section II Paragraph 1.
11. The Development Agreement shall have a term of 15 years and contain such
customary provisions for representations, warranties, indemnities and
termination as the parties may agree. Such indemnities shall include an
agreement by each party (the "Indemnitor") to indemnify the other party and its
officers, employees, agents, representatives and consultants (each, an
"Indemnitee"), harmless from and against all claims (whether based on death,
personal injury, or otherwise, and whether or not a proceeding is commenced
against, or names as a party thereto, any Indemnitee), losses, suits,
liabilities, settlements and expenses (including attorneys' fees) incurred or
payable by any Indemnitee arising out of or in connection with any act or
omission of the Indemnitor in the performance of its obligations under the
Definitive Agreements. The Indemnitor shall have the right to assume full
control of the defense against any such claim, suit or demand, and the
Indemnitee shall cooperate with the Indemnitor and its counsel in the evaluation
and defense thereof, subject to the right of the Indemnitee to retain its own
counsel at its own expense. The Development Agreement shall set forth the
conditions under which the Indemnitor may settle a claim without the consent of
the Indemnitee.
12. Any rights or licenses granted to Anthra shall revert to Berlex if (1)
Anthra has not filed an NDA for an Indication on or before February 15, 2002
provided that such failure is not due to any delay or failure by Leiras, or (2)
if between enrollment of the first patient into a study for an Indication, under
a protocol for which an Anthra sponsored amendment has been approved by the
Institutional Review Body for all study locations, and completion of the accrual
of patients into the last such clinical trial for such Indication, there is a
period of 3 months in which no patients are enrolled.
III. MANUFACTURING AGREEMENT
The Manufacturing Agreement shall be negotiated based on the following
terms:
1. If Berlex does not exercise the Option, Leiras and Anthra shall enter into a
Manufacturing Agreement.
2. Subject to this Section III, Paragraph 2, Leiras shall have the exclusive
rights to supply Anthra and its sublicensee(s) with finished goods. Anthra shall
be obligated to purchase its requirements of Bonefos from Leiras, subject to the
ability of Leiras to supply. During the due diligence process, Anthra and Leiras
shall discuss the issue of the preparation of a plan for the validation and
qualification of back-up sites for bulk active and finished product
manufacturing and, subject to Anthra's commitment to fund all costs associated
with the preparation and execution of such plan, will work diligently to
implement such plan prior to the approval of the NDA for the first Indication.
In the event that Leiras shall use such back-up sites for the manufacturing of
Bonefos for customers other than Anthra during the term of the Manufacturing
Agreement, then Leiras agrees to reimburse Anthra for fifty percent of such
costs.
3. Leiras will sell finished goods to Anthra, ex works at supplier's
manufacturing site, at a price equal to the higher of (i) ***, or (ii) floor
prices for Bonefos in vial and capsule
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 7
formulation to be determined by the parties in the context of the number's
in-market selling price of competing products in the Territory and the customary
margins of the parties, and to be specified in the Manufacturing Agreement.
Anthra shall pay Leiras within *** following receipt of Leiras' invoice.
4. The Manufacturing Agreement will contain such customary provisions for
representations, warranties, indemnities and termination and other matters as
the parties may agree, including the indemnity set forth in Article II section
11.
5. The Manufacturing Agreement will continue for a term of 15 years, and
thereafter unless terminated by either party on two years' notice effective at
the end of the 15 years or any year thereafter. If Leiras terminates the
Agreement then Leiras shall transfer its manufacturing technology relating to
Bonefos, as well as any licenses required for the manufacture of Bonefos for
sale in the Territory, to Anthra or a third party designated by Anthra, at a
royalty equal to *** of the Bonefos manufactured using such technology, for a
period of ten years after the date of such transfer; provided, however, that
such royalty shall be capped at a level equal to the difference between the
transfer price previously in effect for sales of Bonefos from Leiras to Anthra
and the transfer price charged by such third party". After the date that a
generic version of clodronate shall be marketed and sold in the Territory, ***;
provided, however, that Anthra shall reimburse all reasonable costs and expenses
incurred by Leiras in transferring such technology to such third party. Such
technology transfer shall be based on the assumption of use by the third party
of machinery and equipment, raw materials and reagents similar to those used by
Leiras. Leiras shall not be required to provide more than ten person-days of
technical assistance to such third party in connection with such technology
transfer.
IV. GENERAL PROVISIONS
1. In consideration of the payment by Anthra of $250,000, receipt of which
Berlex hereby acknowledges, Berlex and Leiras agree to grant Anthra a period of
exclusivity in which to negotiate the Definitive Agreements during which time
neither Berlex nor any member of the Berlex Group will discuss, negotiate or
enter into any agreement or nonbinding arrangement relating to the development
or marketing of Bonefos in the Territory. The period of exclusivity ("the
Exclusivity Period") will run for an initial period of *** from the signing of
this Term Sheet, during which time the parties shall use their commercially
reasonable efforts to negotiate in good faith, the Definitive Agreements in
conformity with Sections II and III hereof. The Exclusivity Period will
automatically be extended for *** each if good faith negotiations to conclude
the Definitive Agreements are continuing. Thereafter the Exclusivity Period
shall expire, unless extended by written agreement between the parties.
2. During the Exclusivity Period, in consideration of the payment by Anthra of
$250,000, Leiras shall provide Anthra with:
a. all relevant information to which it or any member of the Berlex Group
has ownership or license rights or otherwise has access and may lawfully
disclose to Anthra, related to pre-clinical and clinical experiences and safety
data regarding Bonefos anywhere in the world;
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 8
b. access to all CMC, pre-clinical and clinical documentation and all bulk
active manufacturing sites to which it or any member of the Berlex Group has
ownership or license rights or otherwise has access and may lawfully disclose to
Anthra, with regard to Bonefos.
Leiras represents and warrants to Anthra that Leiras has access to all
such information and documentation and bulk active manufacturing sites, and has
the authority to give and the power to perform the covenant set forth above.
3. As used herein, Net Sales shall mean ***
4. Except as expressly stated in Section I the provisions of this Term Sheet are
set forth for discussion purposes only and are not legally binding on either
party. Neither party shall be so bound unless and until Definitive Agreements in
form and substance satisfactory to each of them have been executed and
delivered.
5. All activities related to the transactions being contemplated by the parties
are subject to Confidentiality Agreement previously executed by the parties.
Neither party shall make any public announcements regarding the proposed
transactions without the written consent of the other provided that Anthra shall
be entitled to disclose information to the extent required to comply with
applicable securities laws including those relating to initial public offerings.
Leiras, Berlex or any other member of the Berlex Group shall be entitled to make
any disclosure which may be required under applicable law. The disclosing party
shall be solely responsible for the accuracy and completeness of any such
disclosure.
6. Each party shall be responsible for any costs or expenses it incurs with
respect to negotiating this Term Sheet or the Definitive Agreements.
7. This Term Sheet shall be governed by and construed in accordance with the
laws of the State of New York.
8. In the event that any party is unable to perform any obligation imposed by
the Definitive Agreements due to an event of force majeure, such party shall not
be deemed to be in breach of such contractual obligation. The Definitive
Agreements shall contain a more fully detailed force majeure provision.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 9
BERLEX LABORATORIES, INC. ANTHRA PHARMACEUTICALS, INC.
By: /s/ John Nicholson By: /s/ Michael C. Walker
-------------------------------- --------------------------------
Name: John Nicholson Name: Michael C. Walker
Title: Treasurer Title: President
LEIRAS OY
By: /s/ Bernhard Schefter By: /s/ Timo Lappaleinen
-------------------------------- --------------------------------
Name: Bernhard Schefter Name: Timo Lappaleinen
Title: President Title: VP International Marketing
<PAGE> 1
EXHIBIT 23.1
The Board of Directors and Stockholders
Anthra Pharmaceuticals, Inc.:
We consent to the use of our report included herein and to the references to
our firm under the headings "Selected Financial Data" and "Experts" in the
prospectus.
/s/ KPMG PEAT MARWICK LLP
Princeton, New Jersey
May 20, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT
The undersigned, on behalf of MedProbe, Inc. ("MedProbe"), hereby consents
to the use by Anthra Pharmaceuticals, Inc. of certain disease incidence
information of MedProbe in a registration statement filed or to be filed with
the Securities and Exchange Commission.
MEDPROBE, INC.
By: /s/ Mitchell Gersovitz
---------------------------
Name: Mitchell Gersovitz
Title: CEO
Date: May 20, 1998
