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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (Fee Required)
For fiscal year ended September 30, 1995 or
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/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the transition period from to
Commission file number 0-15190
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ONCOGENE SCIENCE, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3159796
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
106 Charles Lindbergh Blvd., Uniondale, N.Y. 11553
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(Address of Principal Executive Offices) (Zip Code)
516-222-0023
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(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
NONE NONE
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
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(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
As of November 30, 1995, the aggregate market value of the
Registrant's voting stock held by non-affiliates was $108,209,294. For
purposes of this calculation, shares of Common Stock held by directors,
officers and stockholders whose ownership exceeds five percent of the Common
Stock outstanding at November 30, 1995 were excluded. Exclusion of shares held
by any person should not be construed to indicate that such person possesses
the power, direct or indirect, to direct or cause the direction of the
management or policies of the registrant, or that such person is controlled by
or under common control with the registrant.
As of November 30, 1995 there were 17,689,042 shares of the
Registrant's $.01 par value common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement to be filed not later
than 120 days after September 30, 1995 in connection with the Registrant's 1996
Annual Meeting of stockholders are incorporated by reference into Part III of
this report.
Total Number of Pages: Exhibit Index at Page:
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PART I
ITEM 1. BUSINESS
GENERAL
Oncogene Science, Inc.(the "Company") is a biopharmaceutical company
engaged in the discovery and development of drugs for the treatment of cancer,
cardiovascular disease, and other human diseases associated with abnormalities
of cell growth and control. By virtue of its development and automation of
human cell-based, high throughput drug screens and its novel approach to
identifying lead compounds as clinical development candidates through
cell-based gene transcription screens, the Company is recognized as a world
leader in drug discovery technology. The Company's objective is to be a
leading fully-integrated drug discovery company whose collaborative partners
and pipeline of novel pharmaceutical products provides a high probability of
achieving long-term, profitable growth.
The Company's principal approach to the development of therapeutics is the
identification of compounds that act at the level of gene transcription. Gene
transcription is the process by which genes signal cells to produce or stop
producing particular cellular proteins such as enzymes. The Company believes
that its proprietary gene transcription technology will lead to the development
of novel, orally-active small molecular weight pharmaceuticals. These drugs
act upon target genes to modulate up or down, on or off, the expression of
proteins that are therapeutically relevant to specific diseases.
The Company pursues its drug discovery and development objectives through
collaborations with pharmaceutical companies and through independent,
proprietary programs. Currently the Company is conducting collaborative
programs with four major pharmaceutical companies, Pfizer Inc. ("Pfizer"),
Ciba-Geigy Limited ("Ciba"), Wyeth-Ayerst Research, a division of American Home
Products Corporation ("Wyeth"), and Hoechst Marion Roussel Inc. (together with
its predecessors, "HMRI").
The Company's cancer therapeutics program is focused on the development of
novel pharmaceuticals for the treatment of cancer in humans by either
inhibiting oncogenes or restoring the activity of tumor suppressor genes.
Oncogenes are a class of genes that, upon activation, play a key role in the
conversion of otherwise normal cells to a cancerous state. The inactivation
through mutation or deletion of tumor suppressor genes is associated with the
creation or spread of cancerous tumors. Additionally, the Company is engaged
in the clinical development of pharmaceuticals that decrease the toxic effects
of existing chemotherapeutic agents on non-cancerous cells. The Company also
has a research program in
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cancer diagnostics focused upon the development of tests for the detection of
cancer in serum and tissue.
The Company is collaborating with Pfizer in the development of cancer
therapeutic products. This program currently focuses on inhibitors for various
oncogenes that have been implicated in breast, lung, colon and ovarian cancers,
and compounds that enhance tumor suppressor genes, including p53, the
inactivation of which has been implicated in lung, breast and colon cancers.
Additionally, the Company is working with Ciba in the clinical development of
the protein-based drug TGF-Beta3 for the treatment of oral mucositis, a toxic
side effect of chemotherapy. The Company's collaboration with Ciba also
involves the development of TGF-Beta3 products for certain other indications,
such as wound healing. The Company is involved in a collaborative program with
Wyeth to develop transcription-based drugs for diabetes, asthma, osteoporosis
and immune modulation. Further, the Company is engaged in various joint
programs with HMRI. The first of these involves the development of
gene-transcription based drugs to treat certain indications in the areas of
inflammation, arthritis and metabolic diseases. An additional HMRI program
focuses on the development of gene transcription-based drugs to treat
Alzheimer's disease. Finally, the Company commenced a collaborative program
with Marion Merrell Dow Inc. ("Marion") to develop drugs for a variety of
cardiovascular indications prior to HMRI's acquisition of Marion in July, 1995.
Based on discussions with HMRI, the Company believes that its collaborative
programs with HMRI and Marion will be consolidated and continued. The Company
also is working with Becton Dickinson and Co., Inc. ("Becton") to develop
cancer diagnostic products. See "--Pharmaceuticals--Gene Transcription-Based
Drugs" and "--Cancer Diagnostics."
In addition to its collaborative programs, the Company is engaged in
various proprietary drug discovery and development programs. The main thrust
of the Company's proprietary efforts currently is the identification and
clinical development of compounds that induce the cellular production of
Erythropoietin ("Epo") for the treatment of anemias. Secondarily, the Company
also is pursuing gene transcription-based therapeutics in the areas of sickle
cell disease (and other hematological disorders), muscular dystrophy and
certain other indications. The Company believes certain of its proprietary
discovery and development programs present opportunities to participate in
niche markets not typically addressed by the mainstream pharmaceutical industry
and also to advance novel therapies into clinical arenas where disease needs
are largely unmet.
The Company's research activities since inception have resulted in the
development of extensive know-how and proprietary technologies in the areas in
which the Company has operated. To date, the Company has filed more than 102
U.S. patent applications and over 132 foreign patent applications. The Company
has not
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obtained FDA approval for any of its human therapeutic products, and does not
expect any of such products to be commercially available for at least four
years. The Company has obtained FDA approval for one of its cancer diagnostic
products, but does not expect any of its other diagnostic products to be
commercially available for two to three years.
The Company was incorporated in Delaware in March 1983. In October 1991
the Company acquired the assets of Applied bioTechnology, Inc. (a private
company) related to the research and development of cancer diagnostic and
therapeutic products based on oncogenes and tumor suppressor genes. Until
August 1995, the Company was engaged in the development, manufacture and
marketing of products for the basic and clinical research markets. In August
1995 the Company sold certain of the assets, and all of the business, of its
Research Products Business.
PHARMACEUTICALS
CANCER
Anti-Cancer Drugs - Collaboration with Pfizer
The Company is actively involved in the development of drugs that
specifically inhibit functional activities associated with certain
oncogene-encoded proteins. For example, studies have implicated ras encoded
proteins in cancers of the lung, colon and pancreas, three of the most common
fatal cancers in the Western World. The neu/erb B2 oncogene has been
implicated in breast and ovarian cancers, and studies have indicated that a
high level of expression of neu/erb B2 encoded protein in a tumor correlates
with poor patient prognosis. The Company's approach to the discovery of drugs
which inhibit oncogene-encoded proteins involves a screening methodology that
utilizes proprietary live cell assays to identify compounds that inactivate
oncogene-encoded proteins. Several compounds already have been identified, and
the Company now is investigating their mechanism of action.
A second family of cellular genes involved in the development of cancer
has also been defined. These genes, designated as tumor suppressor genes, or
anti-oncogenes, encode proteins that generally function to block the
proliferative growth of particular cell types. A loss of function of certain
tumor suppressor genes can result in uncontrolled cell growth and thus
contribute to the neoplastic state of a cancer cell. One such tumor suppressor
gene is the p53 tumor suppressor gene. Research has shown that deletions or
mutations in this gene are among the most common genetic aberrations in human
cancer. In addition, such research has shown that the re-introduction of the
normal p53 gene into cancer cells results in an inhibition of cell growth. The
p53 anti-oncogene has been implicated in a significant percentage of breast,
colon, gastric and lung tumors, as well as melanomas. The
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Company has developed novel assays and rapid biochemical screening procedures
for the identification of potential drugs which may restore the functional
balance of the p53 and other tumor suppressor genes.
Pursuant to a Collaborative Research Agreement effective as of April 1,
1991 (which renewed and extended the original collaborative research programs),
the Company and Pfizer are jointly pursuing the discovery and development of
cancer therapeutic products that target oncogenes and anti-oncogenes. The
Company expects this agreement to be renewed under substantially the same terms
effective April 1, 1996.
Currently, the Company's work with Pfizer focuses on eight target
proteins. Additional target proteins are being worked on under the program at
Pfizer. In 1995, the Company's screening program resulted in the
identification of a proprietary inhibitor of the epidermal growth factor
receptor ("EGFR"), a protein associated with head, neck, breast and bladder
cancers. Under this collaboration, this compound was nominated for and
accepted as a candidate for clinical development. Pfizer is currently
conducting pre-Introductory New Drug Application ("IND") safety and toxicity
studies on this compound.
The Company has recently initiated a new very high throughput screening
("VHTS") technique for the assays focussing on the Pfizer targets. VHTS will
allow the company to perform assay screens on more than 360,000 test compounds
per robotic system per eight-week period.
TGF-Beta3 - Collaboration with Ciba
The Company entered into an agreement with Ciba on April 19, 1995
expanding the scope of the two companies' collaborative efforts with respect to
TGF-Beta3. This agreement grants to Ciba, in exchange for royalty payments and
certain other cash payments described below, an exclusive license to
manufacture, use and sell TGF-Beta3 products for oral mucositis and certain
other indications, including wound healing and psoriasis, throughout the world.
Under this agreement, the Company will fund oral mucositis Phase I clinical
trials and Ciba will fund Phase II and III clinical trials. The Company hopes
to file an IND in early 1996, leading to clinical trials for oral mucositis in
1996, although there can be no assurance that this schedule will be met. In
connection with the agreement, Ciba purchased 909,091 shares of the Company's
common stock at $5.50 per share for an aggregate purchase price of $5,000,000.
In addition, Ciba will pay the Company $10,000,000 if, and at the time, it
decides to initiate Phase IIb or III clinical trials for oral mucositis. In
exchange for such payment, Ciba's license will be expanded to cover all other
indications for TGF-Beta3. Alternatively, Ciba may exercise an option within
four years to expand its license under the agreement to cover all indications
for
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TGF-Beta3 by making the $10,000,000 payment. Under the agreement, Ciba will
supply the Company will all of its developmental and commercial requirements
for TGF-Beta3.
Oral Mucositis. Oral mucositis is a painful, often debilitating condition
characterized by mouth and throat lesions that frequently occur as side effects
of chemotherapy. Most chemotherapeutic agents exert their lethal effects
primarily against cancerous cells undergoing active growth. Chemotherapeutic
agents also attack normal cells that are subject to rapid division, such as the
epithelial cells lining the mouth and gastrointestinal tract. TGF-Beta3, a
growth regulatory protein discovered by researchers at the Company, selectively
inhibits the growth of specific cell types. The Company has developed
formulations based on TGF-Beta3 as a chemoprotectant to inhibit temporarily the
high proliferative growth rate of certain cells in the mouth and
gastrointestinal tract. The objective for using TGF-Beta3 is to reduce the
toxicity associated with the use of chemotherapeutic agents. If successful,
this strategy may ultimately permit the use of more aggressive chemotherapy
dose regimens.
Wound Healing. In addition to its program for the development of
TGF-Beta3 to treat oral mucositis, the Company is collaborating with Ciba in
the development of TGF-Beta3 in an application to promote wound healing. In
September 1994, Ciba initiated and successfully completed a Phase I safety
trial in Europe using a topical form of TGF-Beta3 in healthy volunteers. Ciba
has completed a Phase I clinical trial in the United States and expects to
initiate Phase II trials in the United States and Europe in early 1996 (as to
which there can be no assurance).
Other Indications. Ciba is currently evaluating additional therapeutic
indications for TGF-Beta3. All of these programs are currently in the
research/feasibility stage.
GENE TRANSCRIPTION-BASED DRUGS
Through the Company's work in oncogenes and anti-oncogenes, it became
apparent that a novel class of pharmaceuticals based on orally active small
molecular weight compounds could be developed for a wide range of diseases, by
modulating the expression of specific cellular proteins through gene
transcription. Gene transcription is the process by which genes produce
cellular proteins. The mechanism whereby an extracellular stimulus affects
gene transcription is termed signal transduction. Pharmacological intervention
during the steps of signal transduction can cause cells to either increase or
decrease the production of specific cellular proteins.
To exploit gene transcription as a method of drug discovery, the Company
has developed proprietary screening methods (assays), which employ live,
genetically engineered cells and unique robotic
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systems to determine whether the test compounds will modulate the expression of
the targeted genes. The Company's high throughput robotic facility is now able
to screen in excess of 3 million compounds per year, and the Company is
currently working with approximately 29 different drug screens. As an
important component of its overall strategy, the Company has established
additional collaborative programs in drug discovery and development, analogous
to its cancer therapeutics program with Pfizer, but targeted to different
therapeutic applications.
Collaboration with Wyeth
During the first quarter of 1992, the Company entered into a collaborative
research agreement with Wyeth, which was extended and expanded in January 1994.
This collaboration utilizes the Company's gene transcription technology in an
effort to develop drugs for the treatment of diabetes, immune system
modulation, asthma and osteoporosis. Under the terms of this agreement, Wyeth
is funding the development program. Royalties will be paid to the Company on
sales of resultant products, if any.
The Wyeth collaboration has been successful in generating
transcriptionally active lead compounds on all four targets. In addition to
this, in-vivo active compounds have been identified for the diabetes and immune
system modulation targets. Wyeth has committed medicinal chemistry resources
to these programs.
Collaboration with HMRI
The Company is pursuing various areas jointly with HMRI. On July 18, 1995
HMRI acquired Marion as part of a transaction in which the pharmaceutical
operations of Marion, Hoechst AG and Hoechst Roussel Pharmaceuticals, Inc.
were combined. The Company had collaborative agreements with all three of
these companies prior to this combination. Based on discussions with HMRI, the
Company believes that all of these agreements will be consolidated. The
Company believes that this consolidation will result in a stronger, more
flexible collaborative program, although it expects the total level of funding
from HMRI will be reduced as compared to the aggregate funding from the three
previously separate entities.
In 1992, prior to the acquisition of Marion by HMRI, the Company entered
into a collaborative agreement with Marion to discover and develop gene
transcription-based drugs to treat certain indications of the area of
cardiovascular disease, including primarily atherosclerosis. In July 1994 the
Company successfully completed the first phase under this collaborative
agreement with the development of gene transcription-based assays. This
resulted in a $1.5 million milestone payment and initiation of the compound
screening phase of the collaboration, which has
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recently been completed. The transcription screens have resulted in the
identification of in-vivo active lead compounds for two targets. These lead
series are currently being evaluated by HMRI. This collaboration has pioneered
the use of primary cell cultures in high throughput screening assays.
The Company commenced a collaborative program with HMRI in January 1993,
focussing on inflammation, arthritis and metabolic diseases. In April 1994,
the Company and HMRI commenced a collaborative arrangement to discover and
develop gene transcription-based drugs to treat Alzheimer's disease. Each of
these programs is in a research phase. The Company's two original HMRI
collaborations (i.e., other than the Marion program) have progressed to the
completion of screening of HMRI's medicinal libraries for all four of the
original targets (in the areas of metabolism, Alzheimer's disease, and
rheumatoid arthritis). The lead compounds identified in these screens are
undergoing further analysis. In particular, certain promising compounds are
being pursued in-vivo and through medicinal chemistry for the first rheumatoid
arthritis target.
Proprietary Drug Discovery and Development
In addition to its collaborative programs, the Company has undertaken
independent efforts to discover and develop gene transcription-based
therapeutics in various areas. The Company initiated compound screening in its
proprietary programs in 1994 and is currently screening compounds against
multiple target proteins associated with chronic anemia, sickle cell disease
and other hematological disorders and muscular dystrophy. The goal of these
programs is to identify small molecule, orally-active compounds that will
regulate the expression of key proteins associated with these diseases.
Generally, the Company's objective with respect to its proprietary programs
will be to identify lead compounds, transition them into clinical development
and manage this clinical development through early-stage clinical trials. The
Company anticipates partnering with a large pharmaceutical firm at or before
this stage for clinical and commercial development of each potential
proprietary product.
Chronic Anemia
Currently, the Company's proprietary discovery and development efforts are
focused primarily on the protein erythropoietin ("Epo"). Injectable
recombinant Epo is now the therapy of choice for the treatment of anemia due to
chronic renal failure. The recombinant drug is currently generating worldwide
sales revenues of over $1.0 billion annually. Epo is also being tested for use
in anemia that develops as a consequence of chemotherapy and for autologous
blood donation. However, the high cost of the recombinant protein and the
requirement that it be administered by injection may place some limitations on
its more widespread use.
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The Company believes that there exists a significant market opportunity for an
effective, small molecular weight compound that induces the cellular production
of Epo and can be administered orally. The Company's gene transcription
screens have resulted in the identification of several lead compounds that
regulate the expression of Epo. The company is undertaking early preclinical
evaluation of these lead compounds.
Other Proprietary Targets
In addition to its efforts with respect to Epo, the Company is seeking to
discover and develop orally active gene transcription-based inducers of certain
proteins for the treatment of sickle cell disease, muscular dystrophy, chronic
myelogenous leukemia and certain viral infections.
Sickle Cell Disease. The marked manifestations of sickle cell disease can
be functionally ameliorated by the presence in blood cells of fetal hemoglobin
("HbF"). Currently, there are no approved drugs for the treatment of sickle
cell disease. The Company has developed an assay to determine the ability of
test compounds to induce the production of HbF. The most advanced compound in
clinical testing for this indication is hydroxyurea, which induces the
expression of HbF. The Company's screening assays have resulted in the
identification of several compounds that are more potent than hydroxyurea. The
Company's goal is to establish, through additional screening and evaluation, a
lead compound that induces expression of HbF as a candidate for clinical
development in this area.
Muscular Dystrophy. The functional impairment of the protein dystrophin
causes muscular dystrophy. Utrophin is a closely related protein, elevated
levels of which in muscle cells may effectively reverse this disease. Based on
initial screening work, the Company has received funding from a private
foundation, which will enable the Company to commence the design and
validation of an appropriate utrophin gene transcription assay. Immediately
upon completion of this assay, the Company will commence screening compounds
for induction of utrophin production.
Others. The Company has designed assays to screen compounds against drug
targets for the treatment of chronic myelogenous leukemia ("CML") and the human
immunodeficiency virus ("HIV"). These screens have identified certain active
molecules. Further evaluation of the compounds identified in the CML screens
is being conducted in the laboratories of certain of the Company's
collaborators in a consortium funded under a federal grant. The Company
anticipates that the clinical development of any lead compounds derived from
these evaluations will be conducted pursuant to a collaborative arrangement
with one or more pharmaceutical firms. The Company is seeking a partner in
order to proceed jointly on further development of its anti-viral program,
which
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includes established screens for HIV.
The following table summarizes the Company's drug discovery and
development programs:
<TABLE>
<CAPTION>
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PROGRAM FIELD NUMBER OF
DRUG
TARGETS
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<S> <C> <C>
Proprietary Chronic Anemias 1
Sickle Cell Disease 1
Muscular Dystrophy 1
Chronic Myelogenous
Leukemia 1
Human Immunodeficiency
Virus 3
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Ciba Chemoprotection 1
Wound Healing 1
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HMRI Inflammation 1
Arthritis 1
Metabolic Disease 1
Alzheimer's Disease 1
Cardiovascular Disease 4
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Pfizer Cancer 8
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Wyeth Diabetes 1
Asthma 1
Immune-System Modulation 1
Osteoporosis 1
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TOTAL 29
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</TABLE>
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CANCER DIAGNOSTICS
The Company is engaged in the development of a series of cancer diagnostic
tests based upon oncogenes and tumor suppressor genes as cancer markers. One
line of these tests utilizes immunoassays and monoclonal antibodies to detect
the cancer markers in readily accessible physiological fluids, such as blood
serum. The other line of diagnostic tests utilizes a series of monoclonal
antibodies capable of measuring the cancer markers in tissue sections using
immunohistochemistry techniques. These tests are designed to aid oncologists
in the confirmation, monitoring, staging, screening and prognosis of human
cancer. These tests may enable reference labs and physicians to diagnose
cancer at an earlier stage, select more effective types of treatment, and more
easily monitor patients during therapy. The current focus of the Company's
diagnostic development program is on breast and colon cancer, but the Company
believes that many of the cancer markers in its program will have clinical
utility for other human tumors, such as lung, prostate, ovarian and stomach
cancer.
The Company has been pursuing serum and tissue based cancer diagnostic
products in collaboration with Becton under a collaborative program started in
October 1991 (after an earlier collaboration from 1984 to 1989). However,
during 1995, Becton decided to focus exclusively on tissue-based diagnostic
tests including immunohistochemistry, i.e., manual pathology diagnostic tests
and image analysis. Becton has reduced funding under this program in fiscal
1996 and the Company is uncertain as to the funding of this program thereafter.
Management believes that the Company or Becton will seek FDA approval for one
or more immunohistochemistry tests for the manual pathology market.
Since October 1995, the Company has independently supported its
development program in serum-based cancer diagnostics. The Company is actively
seeking to form a collaboration with one or more major health care firms for
the clinical and commercial development of its serum-based diagnostic products.
INTELLECTUAL PROPERTY
The Company believes that patents and other proprietary rights are vital
to its business. It is the Company's policy to protect its intellectual
property rights in technology developed by its scientific staff by a variety of
means, including applying for patents in the United States and other major
industrialized countries. The Company also relies upon trade secrets and
improvements, unpatented proprietary know-how and continuing technological
innovations to develop and maintain its competitive position. In this regard,
the Company places restrictions in its agreements with third parties, including
research institutions, with respect to the use and disclosure of the Company's
proprietary technology. The Company also has internal nondisclosure
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safeguards, including confidentiality agreements, with its employees,
consultants and scientific advisors.
To date, more than 102 U.S. patent applications and over 132 foreign
patent applications have been filed or acquired by the Company. The Company
currently owns 21 issued U.S. patents and 47 granted foreign patents. In
addition, other institutions have granted exclusive rights under their United
States and foreign patents and patent applications to the Company.
The Company has been granted registration for the trademarks "OSI"(R) and
"TransProbe-1(R)" by the United States Patent and Trademark Office.
There can be no assurance that patents will be issued for the Company's
pending patent applications or any applications which it may file in the
future, that any patent issued will cover a commercially marketable product or
process, or that any patent issued will not be circumvented or invalidated.
Moreover, there can be no assurance that others may not independently develop
the same or similar technology or obtain access to the Company's proprietary
technology. The Company is aware of patent applications filed by, or patents,
issued to, other entities, with respect to technology potentially useful to the
Company and, in some cases, related to products and processes being used or
developed by the Company. The Company currently cannot assess the effect, if
any, that these patents may have on its future operations. The extent to which
efforts by other researchers resulted or will result in patents and the extent
to which the issuance of patents to others would have a material adverse effect
on the Company or would force the Company to obtain licenses from others, if
available, currently is unknown.
The Company is aware of several patents and patent applications owned by
others who may allege infringement by products, including TGF-Beta3, which the
Company is seeking to develop. The Company does not believe it is infringing
any valid claim of a patent owned by any third party and is taking such
actions, consistent with its beliefs, as it deems prudent to minimize the
possibility of any charge of patent infringement being validly raised against
the Company.
MARKETING AND DISTRIBUTION
Those therapeutic products subject to the Company's collaborative
agreements with Pfizer, Ciba, Wyeth and HMRI will be marketed by those
companies and the Company is to receive royalties ranging up to 10% on net
sales of products, depending upon the nature of the product and the ownership
of the underlying technology. The Company expects that products resulting from
future collaborations in gene transcription will be marketed under arrangements
which are similar to these agreements.
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COMPETITION
The biotechnology industry is highly competitive, and the Company expects
competition to intensify as technological advances in the field are made and
become widely known. There are many domestic and foreign biotechnology
companies which are engaged in the same or similar areas of research as those
in which the Company is engaged, many of which have substantially greater
financial, research, human, marketing and distribution resources than the
Company. In addition, there are many large, integrated and established
pharmaceutical, chemical and medical diagnostic companies which have greater
capacity than the Company to develop and to commercialize the technologies upon
which the Company's research and development programs are based. The Company
expects technological development to occur at a rapid rate in the biotechnology
industry. Even if the Company is successful in establishing itself in the
industry, it will be necessary for the Company to maintain a competitive
position with respect to the evolving technology. Universities, colleges, and
various other non-profit organizations are responsible for much of the cancer
research currently being performed. These entities are increasingly becoming
aware of the commercial applications of their research and are seeking patent
protection and license revenues in certain product areas that are competitive
with the Company. Competition in the biotechnology field currently is focused
primarily on research and technological capability. The Company believes that,
as the field develops, manufacturing, regulatory, distribution and marketing
expertise increasingly will be important competitive factors. In this regard,
the Company believes that arrangements with major health care corporations will
be important factors in the commercialization of many of the products which it
is currently developing.
GOVERNMENT REGULATION
Regulation by governmental authorities in the United States and other
countries is a significant factor in the manufacturing and marketing of the
Company's products. The Company is, and the products which the Company intends
to develop are and will be, subject to certain government regulations.
Products that may be developed and sold by the Company in the United States may
require approval from federal regulatory agencies, such as the FDA, as well as
state regulatory agencies. Products that may be developed and sold by the
Company outside the United States may require approval from foreign regulatory
agencies. The clinical diagnostic products being developed by the Company will
be subject to regulation by the Office of Medical Services of the FDA, and will
require some form of pre-market notification. Therapeutic products will
require clinical evaluation under INDs and, in certain instances, clearance
under the auspices of the Office of Biologics in conjunction with other
appropriate FDA divisions.
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In all cases, the Company will be required to comply with all pertinent
Good Manufacturing Practices of the FDA for medical devices, biologics, and
drugs. Accordingly, the regulations to which the Company and certain of its
products may be subject, and any changes with respect thereto, may materially
adversely affect the Company's ability to produce and market new products
developed by the Company.
A product normally must go through several phases in order to obtain FDA
and other governmental approvals. The research phase involves work up to and
including discovery, research and initial production. The research phase is
followed by the pre-clinical phase, which involves studies in animal models
necessary to support an application to the FDA and foreign health registration
authorities to commence clinical testing in humans. Clinical trials for
pharmaceutical products are conducted in three phases. In Phase I, studies are
conducted to determine safety and dosage limits. In Phase II, studies are
conducted to gain preliminary evidence as to the efficacy of the product. In
Phase III, studies are conducted to provide sufficient data for the statistical
proof as to safety and efficacy, including dose regimen. Phase III is the
final stage of such clinical studies prior to the submission of an application
for approval of a New Drug Application and marketing approval. The amount of
time necessary to complete any of these phases cannot be predicted with any
certainty.
The Company's present and future activities are, and will likely continue
to be, subject to varying degrees of additional regulation under the Atomic
Energy Act, Occupational Safety and Health Act, Environmental Protection Act,
national restrictions on technology transfer, import, export and customs
regulations, and other present and possible future foreign, federal, state and
local regulations.
SCIENTIFIC AND OTHER PERSONNEL
The Company believes that its success will be largely dependent upon its
ability to attract and retain qualified personnel in scientific and technical
fields. As of September 30, 1995, the Company employed 109 persons, of whom 80
were primarily involved in research and development activities, with the
remainder engaged in executive and administrative capacities. All but one of
the Company's 31 scientists have Ph.D. degrees specializing in areas related to
the Company's various technologies. Although the Company believes that it has
been successful to date in attracting skilled and experienced scientific
personnel, competition for such personnel is intense and there can be no
assurance that the Company will continue to be able to attract and retain
personnel of high scientific caliber. The Company considers its employee
relations to be good.
14
<PAGE> 15
ITEM 2. PROPERTIES
The Company leases a 30,000 square foot facility located at 106 Charles
Lindbergh Boulevard, Uniondale, New York. The lease is for a period of fifteen
years with a five-year renewal option. The annual base rent starts at $360,000
commencing July 1, 1991, increases by 10% after the first two years, and
thereafter increases by 10% every three years. The Company is also responsible
for all taxes and utilities and the costs of general maintenance and repair of
the facility during the term of the lease.
As of October 4, 1991, the Company entered into a lease for the executive
offices, laboratories and other facilities utilized in the Diagnostic Division
at 80 Rogers Street/129 Binney Street, Cambridge, Massachusetts. The 11,000
square foot facility contains approximately 6,400 square feet of laboratory
space for immunology, molecular biology, tissue culture and protein chemistry,
a small animal testing facility, a process scale-up laboratory and
approximately 4,600 square feet of office space. As of April 2, 1993, this
lease was amended to cover an additional 8,000 square feet at 84 Rogers Street
for additional office and distribution space. The lease for both 80 and 84
Rogers Street expires December 31, 2003. The combined annual base rent is
$180,500. Assuming the Company is successful in its attempt to secure a
collaborative partner in its serum-based diagnostics program, the Company
intends to continue to operate the Diagnostic Division at this facility. In
August 1995, the Company entered into a sublease agreement for approximately
50% of the Cambridge facility with the purchaser of the Research Products
Business for a term of three years, at an annual payment equal to 50% of the
Company's fixed lease payment and related facility costs, plus certain
operating costs.
The Company believes that its facilities will be adequate to meet current
requirements for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings pending against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal 1995.
15
<PAGE> 16
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is traded in the over-the-counter market and is
included for quotation on the Nasdaq National Market under the symbol ONCS.
The following is the range of high and low sales prices by quarter for the
Company's common stock from the first quarter of fiscal 1994 through September
30, 1995 as reported on the Nasdaq National Market:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1995 FISCAL YEAR
- ----------------
First Quarter $3 3/8 $2 3/8
Second Quarter 3 3/8 2 3/8
Third Quarter 4 5/8 2 15/16
Fourth Quarter 7 1/8 3 1/2
</TABLE>
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1994 FISCAL YEAR
- ----------------
First Quarter $4 3/4 $3 1/2
Second Quarter 4 1/8 3 1/8
Third Quarter 3 7/8 2 7/8
Fourth Quarter 3 5/8 2 1/4
</TABLE>
As of November 30, 1995, there were approximately 771 holders of record of
the Company's common stock. The Company has not paid any dividends since its
inception and does not intend to pay any dividends in the foreseeable future.
Declaration of dividends will depend, among other things, upon future earnings,
the operating and financial condition of the Company, its capital requirements
and general business conditions.
16
<PAGE> 17
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial data with
respect to the Company for each of the years in the five year period ended
September 30, 1995. The information set forth below should be read in
conjunction with the consolidated financial statements and notes thereto
included elsewhere herein.
<TABLE>
<CAPTION>
Years ended September 30
---------------------------------------------------------------
1995(a) 1994(b) 1993(c) 1992(d) 1991
------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues $15,864,999 $16,299,489 $16,088,021 $11,094,175 $ 7,823,883
Expenses:
Research and
development 13,523,043 12,125,210 10,659,806 8,127,466 4,860,226
Production 1,252,990 1,427,981 1,443,649 1,420,686 748,927
Selling, general
and administrative 7,140,208 7,487,090 6,429,701 5,219,606 4,130,777
Amortization of
intangibles 1,696,561 1,745,163 1,745,713 1,745,694 -
Loss from operations (7,747,803) (6,485,955) (4,190,848) (5,419,277) (1,916,047)
Other income, net 768,744 762,031 884,806 882,630 724,450
Relocation related
expenses - - - - (342,653)
Gain on sale of
Research Products 2,720,389 - - - -
Net loss (4,258,670) (5,723,924) (3,306,042) (4,536,647) (1,534,250)
Net loss per share (0.25) (0.35) (0.21) (0.31) (0.17)
Weighted average
number of shares
of common stock
outstanding 16,757,370 16,335,000 16,080,000 14,801,000 9,184,000
Balance Sheet Data:
Cash and short-term
investments $26,786,566 $18,157,891 $22,390,454 $18,897,238 $10,110,352
Accounts Receivable 1,320,015 3,032,839 3,146,990 2,094,464 666,054
Working capital 26,127,781 21,208,145 25,914,827 22,363,383 10,301,199
Total assets 44,057,421 42,040,900 47,614,538 43,930,705 18,079,405
Stockholders' equity 40,549,636 38,656,314 45,044,603 41,960,868 15,867,252
</TABLE>
(a) During fiscal 1995, the Company sold its Research Products Business and
also sold shares of its common stock to Ciba-Geigy, Ltd. (See Notes 3 and 8(c)
to the Consolidated Financial Statements.)
(b) During fiscal 1994, the Company changed its method of accounting for
marketable securities to adopt the provisions of the Statement of Financial
Accounting Standards No.115, "Accounting for Certain Investments in Debt and
Equity Securities".
(c)During fiscal 1993, the Company entered into collaborative agreements with
Marion Merrell Dow and Hoechst AG and also sold shares of its common stock to
Marion Merrell Dow (See Notes 4 and 8(c) of Notes to Consolidated Financial
Statements.)
(d)During fiscal 1992, the Company acquired the cancer business of Applied
bioTechnology and completed an offering of its common stock (see Notes 3 and
8(d) of Notes to Consolidated Financial Statements).
17
<PAGE> 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Revenues
Total revenues decreased approximately $434,000, or 3% in fiscal year 1995
compared to fiscal year 1994 and increased approximately $211,000 or 1%, in
fiscal year 1994 compared to fiscal year 1993. Collaborative program revenues
increased by approximately $597,000 or 7% in fiscal 1995 due to the
commencement of an additional research program with HMRI in April 1994, the
expansion and extension of the collaborative research agreement with Wyeth in
March 1994 and increases in revenues under the Pfizer agreement with respect to
anti-cancer drugs. These increases were offset by decreased funding from
Pfizer associated with Pfizer's decreased participation in the TGF-Beta3 oral
mucositis program in order to focus exclusively on its collaborative programs
with the Company related to the research and development of anti-cancer drugs.
Previously Pfizer had funded the Company's TGF-Beta3 oral mucositis program as
a supplement to its anti-cancer collaborative program. Under a collaborative
agreement with Ciba, entered into on April 19, 1995, the Company will fund the
development of TGF-Beta3 for oral mucositis through the end of Phase I clinical
trials and Ciba will fund its subsequent clinical development. The increase in
collaborative revenues in fiscal 1995 was also offset by decreases in sales and
other research revenues. The Company sold its Research Products Business to
Calbiochem-Novabiochem International, Inc. on August 2, 1995, and accordingly,
there were no significant sales of the Research Products Business recorded
after this date, nor will these sales contribute to overall revenues in the
future. Sales decreased approximately $651,000 or 13% in fiscal 1995. Other
research revenues decreased approximately $380,000 or 17% in fiscal 1995, which
is largely the result of decreased funding related to a National Cooperative
Drug Discovery Group Grant.
The increase in total revenues in fiscal year 1994 is attributable to
increases of $1,606,000 in collaborative research revenues relating to the
commencement of the additional HMRI collaborative program and a milestone
payment from Marion, grant revenues and sales of research products offset by a
$1,395,000 decrease in the payments from Pfizer. As discussed above, previously
Pfizer had funded the development of TGF-Beta3 as a supplement to the
collaborative program. Sales of research products increased approximately
$110,000 or 2% in fiscal 1994, due primarily to a change in the mix of products
sold. Other research revenues in fiscal 1994 increased by approximately
$408,000 or 22%, compared to the prior fiscal year. The increase in fiscal
1994 is due to an increase in the number and size of grants awarded to the
Company.
18
<PAGE> 19
Expenses
Research and development expenses increased by approximately $1,398,000,
or 12% in fiscal year 1995 compared to fiscal year 1994 and increased by
approximately $1,465,000, or 14%, in fiscal year 1994 compared to fiscal year
1993. The increase in fiscal 1995 was due principally to the start during 1994
of the additional research program with HMRI, the expansion and extension of
the Wyeth agreement and the increase in activities related to the Company's
proprietary programs in the area of medicinal and natural products chemistry
and clinical development of TGF-Beta3 for oral mucositis.
The increase in 1994 was due to an increase in expenditures in the
collaborative programs with Marion and the commencement of the additional
program with HMRI, and increased expenses incurred in connection with the
Company's proprietary and grant programs.
Research and development expenses reimbursed by collaborative partners and
government research grants aggregated approximately $12,445,000 $11,075,000,
and $10,305,000, for fiscal years 1995, 1994, and 1993, respectively.
Production expenses decreased approximately $175,000, or 12% for fiscal
year 1995 as compared with fiscal year 1994, reflecting the sale of the
Research Products Business. Production expenses remained approximately
constant in fiscal 1994 compared to fiscal 1993.
Selling, general and administrative expenses decreased approximately
$347,000 or 5% in fiscal 1995 compared to fiscal 1994. This decrease reflects
the reduction in sales and marketing expenses due to the sale of the Research
Products Business, offset by increases in professional fees related to
corporate development activities. Selling, general and administrative expenses
increased approximately $1,057,000 or 16% in fiscal 1994 compared to fiscal
1993. This increase is principally attributable to expenses incurred in the
operations of the Company's French subsidiary and increased payroll and
consulting expenses. In connection with the sale of the Research Products
Business, the Company elected to close down the operations of its French
subsidiary. Costs associated with the close down have been offset against the
gain on the sale of the Research Products Business.
Amortization of intangibles in 1995, 1994, and 1993 represents
amortization of patents and goodwill that resulted from the acquisition of the
cancer diagnostics business of Applied bioTechnology. The decrease in
amortization expense in fiscal 1995 is due to the write-off of a portion of
goodwill in connection with the sale of the Research Products Business.
19
<PAGE> 20
Other Income and Expense
Net investment income decreased approximately $24,000, or 3% for fiscal
1995 compared to fiscal 1994. Interest income earned in fiscal 1995 was
higher than in fiscal 1994 despite a lower average principal balance in the
more recent year due to increased interest rates. However, this was offset in
part by a net realized loss on the sale of certain investments.
Net investment income decreased approximately $72,000 or 8% for fiscal
1994 compared to fiscal 1993. This decrease was a result of declining
interest rates and decreased principal balance invested.
The Company sold its Research Products Business to Calbiochem-Novabiochem
International, Inc. on August 2, 1995 for $6 million in cash and and other
considerations. The net gain on the sale was approximately $2.7 million.
New Accounting Pronouncements
In March 1995, Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" was issued which establishes accounting standards for
the impairment of long-lived assets, certain identifiable intangibles, and
goodwill related to those assets to be held and used and for long-lived assets
and certain intangibles to be disposed of. SFAS No. 121 requires that
long-lived assets and certain intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of the asset may not be recoverable. SFAS No. 121
must be implemented no later than fiscal 1997. The adoption of SFAS No. 121 is
not expected to have material impact on the Company's consolidated financial
position or operating results.
In October 1995, SFAS No. 123, "Accounting for Stock-Based Compensation",
was issued which establishes financial accounting and reporting standards for
stock-based employee compensation plans. SFAS No. 123 defines a fair value
based method of accounting for an employee stock option or similar equity
instrument and encourages all entities to adopt that method of accounting for
all of their employee stock compensation plans. However, SFAS No. 123 would
permit the Company to continue to measure compensation costs for its stock
option plans using the intrinsic value based method of accounting prescribed by
APB Opinion No. 25, "Accounting for Stock Issued to Employees". If the Company
elected to remain with its current accounting, the Company must make pro forma
disclosures of net income and earnings (loss) per share as if the fair value
based method of accounting had been applied. SFAS No. 123 must be implemented
no later than fiscal 1997. The Company has not yet determined the valuation
method it
20
<PAGE> 21
will employ or the effect on operating results of implementing SFAS No. 123.
Liquidity and Capital Resources
At September 30, 1995, working capital (representing primarily cash, cash
equivalents and short-term investments) aggregated approximately $26,128,000.
The Company has been, and will continue to be, dependent upon
collaborative research revenues, government research grants, interest income
and cash balances until products developed from its technology are commercially
marketed. On April 19, 1995, Ciba purchased 909,091 shares of the Company's
common stock for an aggregate purchase price of $5,000,000.
During 1995, Marion was acquired by HMRI as part of a transaction in which
the pharmaceutical operations of Hoechst AG, Hoechst Roussel Pharmaceuticals,
Inc. and Marion were consolidated. The Company is aware that HMRI is
conducting a review of all its research and development programs. However,
based on discussions with HMRI, the Company expects its programs with HMRI to
continue under one overall agreement in the future. The Company anticipates
that the annual funding under the consolidated agreement will be somewhat lower
than the aggregate level of the annual funding under the three previously
separate agreements.
Since its commencement in 1991 and until the second quarter of fiscal
1995, the cancer diagnostics collaborative program with Becton has focused on
both serum-based and histochemical immunoassays. During the second quarter of
fiscal 1995, Becton decided to focus exclusively on cellular cancer
diagnostics including histochemical immunoassays and reduce its funding under
this program in fiscal 1996. The Company is uncertain as to the funding of this
program thereafter. The Company is continuing the development of serum-based
cancer diagnostic products and is in discussions with possible new
collaborative partners in this area, but cannot predict the outcome.
The Company believes that with the funding from its collaborative
research programs, government research grants, interest income, and cash
balances, the Company's financial resources are adequate for its current needs.
However, the Company's capital requirements may vary as a result of a number of
factors, including, competitive and technological developments, and the time
and expense required to obtain governmental approval of products, some of which
factors are beyond the Company's control. There can be no assurance that
scheduled payments will be made by third parties, that current agreements will
not be cancelled, that government research grants will continue to be received
at current levels or that unanticipated events requiring the expenditure of
funds will not occur. Further, there can be no assurance that the
21
<PAGE> 22
Company will be able to obtain any additional required funds, or, if such funds
are available, that such funds will be available on favorable terms. The
Company expects to commence a new technology development program during fiscal
year 1996. This program is intended to expand the Company's technological
capabilities in the drug discovery area and is anticipated to involve an
expenditure of $7-10 million over a 3-year period. The Company has not
determined definitively the method or methods by which it will fund this
program. The scope of this program and the total amount invested may be
affected by the ability of the Company to obtain financing from external
sources on terms the Company deems acceptable.
22
<PAGE> 23
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Financial Statements:
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
Independent Auditors' Report F-1
Consolidated Balance Sheets
September 30, 1995 and 1994 F-2
Consolidated Statements of Operations - Years ended
September 30, 1995, 1994 and 1993 F-3
Consolidated Statements of Stockholders'
Equity - Years ended
September 30, 1995, 1994 and 1993 F-4
Consolidated Statements of Cash Flows - Years ended
September 30, 1995, 1994 and 1993 F-5
Notes to Consolidated Financial Statements F-7
</TABLE>
23
<PAGE> 24
INDEPENDENT AUDITORS' REPORT
The Stockholders
and Board of Directors
Oncogene Science, Inc.:
We have audited the accompanying consolidated balance sheets of Oncogene
Science, Inc. and subsidiaries as of September 30, 1995 and 1994, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended September 30, 1995.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Oncogene
Science, Inc. and subsidiaries at September 30, 1995 and 1994, and the results
of their operations and their cash flows for each of the years in the
three-year period ended September 30, 1995 in conformity with generally
accepted accounting principles.
During fiscal 1994, the Company changed its method of accounting for
income taxes and marketable securities to adopt the provisions of the
Statements of Financial Accounting Standards No.109, "Accounting for Income
Taxes", and No.115, "Accounting for Certain Investments in Debt and Equity
Securities", respectively.
KPMG PEAT MARWICK LLP
Jericho, New York
December 1, 1995
F-1
<PAGE> 25
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $17,919,609 $ 322,308
Short-term investments 8,866,957 17,835,583
Receivables, including
trade receivables of $163,132 and
$956,747 at September 30, 1995
and 1994, respectively 1,320,015 3,032,839
Inventory - 1,744,663
Interest receivable 45,263 147,222
Grants receivable 433,530 659,621
Prepaid expenses 518,150 445,464
---------- -----------
Total current assets 29,103,524 24,187,700
---------- ----------
Property, equipment and leasehold
improvements - net 5,709,515 6,554,237
Other receivable 262,703 425,520
Loans to officers and employees 25,516 85,516
Other assets 325,582 118,068
Intangible assets - net 8,630,581 10,669,859
----------- -----------
$44,057,421 $42,040,900
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable and accrued
expenses $2,825,702 $2,522,171
Current portion of unearned revenue 150,041 457,384
--------- ----------
Total current liabilities 2,975,743 2,979,555
--------- ----------
Other liabilities:
Long-term portion of unearned revenue 165,839 216,588
Accrued postretirement benefit cost 366,203 188,443
--------- ----------
Total liabilities 3,507,785 3,384,586
--------- ----------
Stockholders' equity:
Common stock, $.01 par value;
50,000,000 shares authorized,
17,683,047 shares issued at
September 30, 1995 and
16,564,715 shares issued at
September 30, 1993 176,830 165,647
Additional paid-in capital 66,735,375 61,199,670
Accumulated deficit (26,129,341) (21,870,671)
Cumulative foreign currency
translation adjustment (55,669) (41,773)
Unrealized holding loss on
short-term investments (35,000) (654,000)
----------- ------------
40,692,195 38,798,873
Less: treasury stock, at cost;
222,521 shares at
September 30, 1995 and 1994 (142,559) (142,559)
----------- ------------
Total stockholders' equity 40,549,636 38,656,314
---------- -----------
Commitments and contingencies
$44,057,421 $42,040,900
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE> 26
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Revenues:
Collaborative program
revenues, principally
from related parties $9,685,856 $ 9,089,295 $ 9,396,609
Sales 4,286,540 4,937,917 4,827,185
Other research revenue 1,892,603 2,272,277 1,864,227
---------- ---------- -----------
15,864,999 16,299,489 16,088,021
---------- ---------- -----------
Expenses:
Research and development 13,523,043 12,125,210 10,659,806
Production 1,252,990 1,427,981 1,443,649
Selling, general and
administrative 7,140,208 7,487,090 6,429,701
Amortization of
intangibles 1,696,561 1,745,163 1,745,713
---------- ---------- -----------
23,612,802 22,785,444 20,278,869
---------- ---------- -----------
Loss from operations (7,747,803) (6,485,955) (4,190,848)
----------- ----------- -----------
Other income (expense):
Net investment income 834,830 858,904 930,428
Other expense (66,086) (96,873) (45,622)
Gain on sale of Research
Products Business 2,720,389 - -
----------- ----------- -----------
Net loss $(4,258,670) $(5,723,924) $(3,306,042)
------------ ------------ ------------
Weighted average number
of shares of common
stock outstanding 16,757,370 16,335,000 16,080,000
=========== =========== ===========
Net loss per weighted
average share of
common stock
outstanding $ (.25) $ (.35) $ (.21)
============ ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 27
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Unrealized
Foreign Holding Total
Common stock Additional Currency Loss on Stock-
------------------- Paid-in Accumulated Translation Short-term Treasury holders'
Shares Amount Capital Deficit Adjustment Investments Stock Equity
------ ------ ----------- ------------ ------------ ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1992 15,285,092 $152,851 $54,791,281 $(12,840,705) $ - $ - $(142,559) $41,960,868
Options exercised 175,729 1,758 386,272 - - - - 388,030
Issuance of common stock
for employee purchase plan 211 2 974 - - - - 976
Sale of common stock and
warrants to
Marion Merrell Dow 1,090,909 10,909 5,989,091 - - - - 6,000,000
Foreign currency
translation adjustment - - - - 771 - - 771
Net loss - - - (3,306,042) - - - (3,306,042)
---------- -------- ----------- ----------- --------- -------- --------- -----------
Balance at September 30, 1993 16,551,941 165,520 61,167,618 (16,146,747) 771 - (142,559) 45,044,603
Options exercised 10,700 107 25,724 - - - - 25,831
Issuance of common stock for
employee purchase plan
and other 2,074 20 6,328 - - - - 6,348
Unrealized holding loss on
short term investments - - - - - (654,000) - (654,000)
Foreign currency translation
adjustment - - - - (42,544) - - (42,544)
Net loss - - - (5,723,924) - - - (5,723,924)
---------- -------- ----------- ------------ --------- -------- --------- ------------
Balance at September 30, 1994 16,564,715 165,647 61,199,670 (21,870,671) (41,773) (654,000) (142,559) 38,656,314
Options exercised 206,025 2,060 571,408 - - - - 573,468
Issuance of common stock for
employee purchase plan
and other 3,216 32 10,523 - - - - 10,555
Unrealized holding gain on
short term investments - - - - - 619,000 - 619,000
Sale of common stock to Ciba-Geigy 909,091 9,091 4,953,774 - - - 4,962,865
Foreign currency translation
adjustment - - - - (13,896) - - (13,896)
Net loss - - - (4,258,670) - - - (4,258,670)
---------- -------- ----------- ------------ --------- -------- --------- ------------
Balance at September 30, 1995 17,683,047 $176,830 $66,735,375 $(26,129,341) $ (55,669) $(35,000) $(142,559) $40,549,636
========== ======== =========== ============= ========== ========= ========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 28
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended September 30,
------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flow from operating activities:
Net loss $(4,258,670) $(5,723,924) $(3,306,042)
Adjustments to reconcile net
loss to net cash used
by operating activities:
Gain on sale of Research Products
Business (2,720,389) - -
Loss on sale of investments 118,141 - -
Depreciation and amortization 1,037,044 1,165,809 955,952
Amortization of intangibles 1,696,561 1,745,163 1,745,713
Foreign exchange loss (13,896) (26,649) 5,319
Changes in assets and liabilities, net
of the effects of the sale of the
Research Products Business:
Receivables 1,605,217 114,152 (1,052,526)
Inventory 216,405 (197,570) (132,236)
Interest receivable 101,959 (107,890) 171,643
Grants receivable 226,091 105,895 (497,240)
Prepaid expenses (196,491) (98,068) 27,674
Other receivable 162,817 92,090 (517,610)
Other assets (234,378) 23,863 (115,851)
Accounts payable
and accrued expenses (586,276) 232,439 468,673
Unearned revenue (358,092) 415,972 (209,500)
Accrued postretirement
benefit cost 177,760 78,568 109,875
------- --------- ----------
Net cash used by
operating activities $(3,026,197) $(2,180,150) $(2,346,156)
------------ ------------ ------------
</TABLE>
Continued
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 29
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
Years ended September 30,
------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from investing activities:
Additions to short-term
investments (3,723,180) (5,918,880) (29,092,688)
Maturities and sales of short-term
investments 13,192,665 9,135,823 25,827,272
Additions to property,
equipment and leasehold
improvements (403,275) (1,512,543) (1,486,646)
Disposition of equipment - - 12,028
Net change in loans to officers
and employees 10,400 (40,258) (4,702)
Proceeds from sale of Research Products
Business 6,000,000 - -
Foreign currency transaction - (15,897) (4,548)
--------- ---------- ----------
Net cash provided by (used in)
investing activities 15,076,610 1,648,245 (4,749,284)
---------- ---------- -----------
Cash flows from financing activities:
Proceeds from issuance of common
stock, net 4,962,865 - 6,000,000
Proceeds from exercise
of stock options and
employee stock purchase plan 584,023 32,180 389,006
Repayment of loan
to stockholders - - 1,000,000
---------- ---------- ----------
Net cash provided by
financing activities 5,546,888 32,180 7,389,006
---------- ---------- ----------
Net increase (decrease) in cash
and cash equivalents 17,597,301 (499,725) 293,566
Cash and cash equivalents at
beginning of year 322,308 822,033 528,467
---------- ---------- ----------
Cash and cash equivalents
at end of year $17,919,609 $ 322,308 $ 822,033
=========== ========== ==========
</TABLE>
F-6
<PAGE> 30
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation
The consolidated financial statements of the Company include the accounts
of Oncogene Science, Inc. and its wholly owned subsidiaries Applied
bioTechnology, Inc. and Oncogene Science S.A., a foreign subsidiary. All
intercompany balances and transactions have been eliminated. The Company is
engaged in the research and development of biopharmaceutical products for the
treatment and diagnosis of cancer, cardiovascular and other human diseases
associated with abnormalities of cell growth and control.
(b) Revenue Recognition
Collaborative research revenues represent funding arrangements for the
conduct of research and development ("R&D") in the field of biotechnology and
are recognized when earned in accordance with the terms of the contracts and
the related development activities undertaken. Other research revenues are
recognized pursuant to the terms of grants which provide reimbursement of
certain expenses related to the Company's other R&D activities. Collaborative
and other research revenues are accrued for expenses incurred in advance of the
reimbursement and deferred for cash payments received in advance of
expenditures. Such deferred revenues are recorded as revenue when earned.
(See Note 3)
Revenue from the sale of diagnostic and research reagent products is
recognized at time of shipment.
(c) Patents and Goodwill
As a result of the Company's research and development programs, including
programs funded pursuant to the research and development funding agreements
(See Note 4), the Company has applied for a number of patents in the United
States and abroad. Such patent rights are of significant importance to the
Company to protect products and processes developed. Costs incurred in
connection with patent applications for the Company's research and development
programs have been expensed as incurred.
Patents and goodwill acquired in connection with the acquisition of
Applied bioTechnology's cancer business in October 1991, have been capitalized
and are being amortized on a straight-line basis over the remaining lives of
the respective patents, and over five years for goodwill. The Company
continually evaluates the recoverability of its intangible assets by assessing
whether the amortized value can be recovered through expected future results.
F-7
<PAGE> 31
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(d) Research and Development Costs
Research and development costs are charged to operations as incurred and
include direct costs of research scientists and equipment and an allocation of
laboratory facility and central service. In fiscal years 1995, 1994, and 1993
R&D activities include approximately $5,695,740, $3,516,000, and $3,012,000, of
independent R&D, respectively. Independent R&D represents those research and
development activities, including research and development activities funded by
government research grants, substantially all the rights to which the Company
will retain. The balance of research and development represents expenses under
the collaborative agreements funded by Pfizer Inc. (Pfizer), Becton Dickinson
and Co.(Becton), Wyeth-Ayerst, a division of American Home Products (Wyeth),
Marion Merrell Dow Inc. (Marion), Hoechst AG and Hoechst-Roussel. On July 18,
1995, Marion, Hoechst AG and Hoechst-Roussel merged forming a new company named
Hoechst Marion Roussel Inc. (HMRI). The Company believes all of the Hoechst
collaborative agreements will continue under HMRI.
(e) Inventories
Inventories represent principally diagnostics and research reagent
products and are stated at the lower of standard costs (approximating average
costs) or market. During fiscal 1995, the Company sold the business and certain
assets, including inventory, of the Research Products Business. (See Note 3)
(f) Depreciation and Amortization
Depreciation of equipment is provided over the estimated useful lives of
the respective asset groups on a straight-line basis. Leasehold improvements
are amortized on a straight-line basis over the lesser of the estimated useful
lives or the remaining term of their lease.
(g) Income Taxes
Effective October 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
No. 109"). SFAS No. 109 requires that the Company recognize deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under SFAS No.
109, deferred tax liabilities and assets are determined on the basis of the
difference between the tax basis of assets and liabilities and their respective
financial reporting amounts ("temporary differences") at enacted tax rates in
effect for the years in which the differences are expected to reverse.
F-8
<PAGE> 32
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
The adoption of SFAS No. 109 did not have any impact on the financial position
or results of operations of the Company. The Company, in years prior to
fiscal 1994, accounted for income taxes in accordance with Accounting
Principles Board Opinion No. 11, "Accounting for Income Taxes."
(h) Loss Per Share
Loss per common share is computed by dividing the net loss by the weighted
average number of common shares outstanding. Common share equivalents (stock
options) are not included in the computation since their inclusion would be
anti-dilutive.
(i) Cash and Cash Equivalents
The Company includes as cash equivalents reverse repurchase agreements,
treasury bills, and other time deposits with original maturities of three
months or less.
(2) Investments
The Company invests its excess cash in U.S. Government securities and debt
instruments of financial institutions and corporations with strong credit
ratings. The Company has established guidelines relative to diversification of
its cash investments and their maturities that should maintain safety and
liquidity. These guidelines are periodically reviewed and modified to take
advantage of trends in yields and interest rates. The Company uses the specific
identification method to determine the cost of securities sold.
The Company adopted SFAS No. 115, "Accounting for Investments in Certain
Debt and Equity Securities," (SFAS No. 115) as of October 1, 1993. SFAS No.
115 requires securities classified as available for sale to be recorded at
estimated fair value. The Company's short-term investments, which include
United States Treasury obligations and corporate debt securities with original
maturities in excess of one year, are classified as securities available for
sale based upon management's current investment policy. Such investments,
prior to the adoption of SFAS No. 115, were recorded at the lower of cost or
estimated market value with aggregate declines in market value below amortized
cost charged against earnings. Under SFAS No. 115, changes in the net
unrealized gains or losses of available for sale securities are reported as a
separate component in stockholder's equity. The adoption of SFAS No. 115 had
no material impact on the Company's financial position.
F-9
<PAGE> 33
The following is a summary of available-for-sale securities as of
September 30, 1995 and 1994:
<TABLE>
<CAPTION>
GROSS
UNREALIZED FAIR
1995 COST LOSSES VALUE
---- ---- (GAINS) -----
-------
<S> <C> <C> <C>
US Treasury Securities
and obligations of US
Government agencies $6,232,027 $ (85,942) $6,146,085
Corporate debt
securities 2,669,930 50,942 2,720,872
--------- --------- ---------
TOTAL $8,901,967 $(35,000) $8,866,957
=========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
GROSS
UNREALIZED FAIR
1994 COST LOSSES VALUE
---- ---- ------ -----
<S> <C> <C> <C>
US Treasury Securities
and obligations of US
Government agencies $16,753,928 $ (458,000) $16,295,928
Corporate debt
securities 1,735,655 (196,000) 1,539,655
----------- ----------- -----------
TOTAL $18,489,583 $ (654,000) $17,835,583
=========== =========== ===========
</TABLE>
Realized losses on sales of investments during fiscal 1995 were approximately
$149,000. The Company has not realized any significant gains or losses on the
sale of its short-term investments during fiscal years 1994 and 1993.
(3) SALE OF RESEARCH PRODUCTS BUSINESS
On August 2, 1995, the Company sold certain assets and the business of
the Research Products Business (Business) to Calbiochem-Novabiochem
International, Inc. (Calbiochem) for $6.0 million in cash. The assets sold
included the Business' line of research products sold or intended for sale to
the academic, industrial and clinical research markets, existing inventory,
property and equipment and certain other assets. The Company retained the
trade accounts receivable and accounts payable outstanding on the date of sale.
In connection with the sale, the Company wrote off the unamortized goodwill
related to the Business of approximately $343,000. The sale resulted in a net
gain of approximately $2.7 million.
The Company also signed a sublease agreement with Calbiochem relating to
the Cambridge facility for a term of three years, at an annual payment equal to
50% of the Company's fixed lease payment
F-10
<PAGE> 34
and related facility costs, plus certain operating costs or approximately
$448,000 per annum.
(4) PRODUCT DEVELOPMENT CONTRACTS
Effective April 1, 1986, the Company entered into a collaborative research
agreement (the "Agreement") with Pfizer. On December 14, 1990, the Company and
Pfizer entered into an agreement to extend the Agreement ("Extension
Agreement") for up to an additional five years effective April 1, 1991.
Pursuant to the Extension Agreement, Pfizer agreed to provide the Company with
up to $16,225,000 in research funding, essentially on a ratable basis, over the
five-year period ending April 1, 1996. In consideration for the funding
commitments by Pfizer, the Company has granted to Pfizer certain rights to
human cancer therapeutic products developed by the Company.
On October 4, 1991, the Company and Becton established a collaborative
research program to develop cancer diagnostic products. The Company and Becton
share equally the cost of discovery phase and pre-clinical research and
development. If Food and Drug Administration ("FDA") approval is obtained,
these products will be sold to the clinical markets by Becton. The Company
will retain some manufacturing rights. Unless terminated by either party, the
collaborative research program will continue for an initial five-year term
through September 30, 1996.
Effective December 31, 1991, the Company entered into a collaborative
research agreement with Wyeth. This agreement was extended and expanded in
January 1994 for an additional 3 years to provide for additional funding of
approximately $4,300,000.
Effective January 1, 1993, the Company and Marion entered into a
collaborative research and license agreement to identify and develop
transcription-based drugs to treat certain indications in the area of
cardiovascular disease. The agreement provided for payments to the Company of
$11,000,000 in research funding and license fees over a five year period
through December 31, 1997. Marion invested $6,000,000 in common stock (See Note
8(b)). The payments with respect to 1996 and 1997 are being consolidated into
a proposed new research agreement.
On January 4, 1993, the Company and Hoechst AG entered into a
collaborative research agreement to jointly develop gene transcription-based
drugs to treat certain indications in the areas of inflammation, viral
infection and metabolic diseases. In April 1994, the Company and
Hoechst-Roussel, a unit of Hoechst AG, entered into a collaborative agreement
to discover and develop gene transcription-based drugs to treat Alzheimer's
disease.
On July 18, 1995 Marion was acquired by an affiliate of Hoechst AG. The
new company was named HMRI. All of the Company's collaborative agreements with
Marion, Hoechst AG and Hoechst-Roussel have continued under HMRI. The Company
expects the related programs to continue under one overall agreement in the
future.
F-11
<PAGE> 35
In April 1995, the Company entered into an agreement with Ciba-Geigy Ltd.
("Ciba") to expand the scope of the two companies' collaborative efforts with
respect to the development of TGF-Beta3 for the treatment of oral mucositis and
other indications. Under the agreement, the Company will fund development
through Phase I clinical trials and Ciba will fund Phase II and III clinical
trials. Ciba will pay the Company $10 million if, and at the time, it decides
to initiate Phase IIB. or III clinical trials or, at the option of Ciba, within
four years of the agreement date. The payment will be characterized, at Ciba's
option, as a milestone payment or a purchase of the Company's common stock at
the higher of $5.50 per share or the then current market price. In exchange
for such payment, Ciba's license will be expanded to include all other
indications for TGF-Beta3.
Under the terms of aformentioned collaborative research agreements, the
collaborative partners will pay the Company royalties ranging from 2% to 10% of
net sales of products resulting from these research programs. To date, the
Company has not received any royalties pursuant to these agreements. The
Company or its collaborative partners may terminate each of the collaborative
research programs upon the occurrence of certain events.
Total collaborative research revenues under the aforementioned agreements
are as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Related Parties:
Pfizer $3,505,427 $3,373,573 $4,768,606
Becton 1,400,094 1,392,314 1,334,534
HMRI 3,405,335 3,026,532 2,211,936
---------- ---------- ----------
$8,310,856 $7,792,419 $8,315,076
Other 1,375,000 1,296,876 1,081,533
---------- ---------- ----------
Total $9,685,856 $9,089,295 $9,396,609
========== ========== ==========
</TABLE>
F-12
<PAGE> 36
(5) PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements are recorded at cost and
consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
ESTIMATED -----------------
LIFE (YEARS) 1995 1994
------------ ---- ----
<S> <C> <C> <C>
Laboratory equipment 5-15 $6,765,012 $6,376,997
Office furniture and
equipment 5-10 1,622,524 1,708,534
Automobile equipment 3 12,697 12,697
Leasehold improvements Life of lease 4,176,290 4,214,228
--------- ---------
12,576,523 12,312,456
Less: accumulated
depreciation and
amortization 6,867,008 5,758,219
--------- ---------
Net property,
equipment and
leasehold
improvements $5,709,515 $6,554,237
========== ==========
</TABLE>
(6) INTANGIBLE ASSETS
The components of intangible assets are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------------
1995 1994
---- ----
<S> <C> <C>
Patents $7,945,038 $ 8,712,250
Goodwill 685,543 1,957,609
---------- -----------
$8,630,581 $10,669,859
========== ===========
</TABLE>
The above amounts reflect accumulated amortization of $5,808,119 and
$5,236,407 at September 30, 1995 and 1994, respectively.
(7) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at September 30, 1995 and 1994 are
comprised of:
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------
1995 1994
---- ----
<S> <C> <C>
Accounts payable $1,497,601 $1,326,744
Accrued future lease escalations 355,516 282,718
Accrued payroll and employee benefits 243,073 155,039
Accrued incentive compensation 424,705 426,189
Accrued expenses 304,807 331,481
------- ----------
$2,825,702 $2,522,171
========== ==========
</TABLE>
F-13
<PAGE> 37
(8) STOCKHOLDERS' EQUITY
(a) Stock Option Plans
The Company has established three stock option plans for its employees,
officers, directors and consultants. The Plans are administered by the
Compensation Committee of the Board of Directors, which may grant either
non-qualified or incentive stock options. The Committee determines the
exercise price and vesting schedule at the time the option is granted. Options
vest over various periods and may expire no later than 10 years from date of
grant. The total authorized shares under these plans is 3,400,000.
The following table summarizes changes in the number of common shares
subject to options in the stock option plans during the years ended September
30, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Beginning of year 2,048,325 1,644,945 1,278,045
Granted-$3.50 to $4.13
per share in 1995;
$4.00 to $4.75
per share in 1994;
$4.38 to $5.25 per
share in 1993; 803,000 475,500 498,000
Exercised (206,025) (10,700) (109,729)
Cancelled (624,021) (61,420) (21,371)
--------- ---------- ----------
End of year-$1.75 to
$5.63 per share 2,021,279 2,048,325 1,644,945
========= ========== ==========
Exercisable 952,883 1,081,874 790,899
======= ========== ==========
</TABLE>
At September 30, 1995, the Company has reserved 2,021,079 shares of its
authorized common stock for all shares issuable under option.
On March 22, 1995, the Company granted the right to current option holders
to surrender their current options in exchange for replacement options on the
basis of three replacement options for four options surrendered. The exercise
price of the replacement options was $3.50 per share, which was greater than
the market price on the date of exchange. The replacement options vested 25%
upon grant with the remaining 75% vesting pro rata on a monthly basis over the
following three years. Option holders surrendered 606,000 options in exchange
for 454,500 replacement options.
F-14
<PAGE> 38
(b) Sale of Stock to Marion Merrell Dow
In December 1992, the Company entered into the common stock purchase and
common stock warrant purchase agreements with Marion. The company issued
1,090,909 shares of common stock at $5.50 per share and a warrant to purchase
up to 500,000 additional shares at $5.50 per share which are exercisable during
the period December 1994 to December 1999. The proceeds to the Company were
$6,000,000.
(c) Sale of Stock to Ciba-Geigy
On April 19, 1995, Ciba-Geigy purchased 909,091 shares of the Company's
common stock at $5.50 per share for an aggregate purchase price of $5,000,000.
(d) Stock Purchase Plan
On May 1, 1993, the Company adopted an Employee Stock Purchase Plan under
which eligible employees may contribute up to 10% of their base earnings toward
the quarterly purchase of the Company's Common Stock. The employees purchase
price is derived from a formula based on the fair market value of the common
stock. No compensation expense is recorded in connection with the plan.
During fiscal 1995, 1994 and 1993, 3,216, 2,074 and 211 shares were issued with
18, 13 and 10 employees participating in the plan, respectively.
(9) INCOME TAXES
There is no provision (benefit) for federal or state income taxes, since the
Company has incurred operating losses since inception and has established a
valuation allowance equal to the total deferred tax asset.
The tax effect of temporary differences, net operating loss carry-forwards and
research and development tax credit carry-forwards as of September 30, 1994 and
1995 are as follows:
<TABLE>
<CAPTION>
1995 1994
---------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward $8,122,444 $6,421,863
Research & development credits 554,838 373,500
Inventory - 838,361
Intangible assets 1,274,336 863,220
Other 469,396 227,958
--------- --------
$10,421,014 $8,724,902
Valuation allowance (10,421,014) (8,724,902)
----------- ----------
$ - $ -
========== ==========
</TABLE>
F-15
<PAGE> 39
As of September 30, 1995, the Company has available federal net operating loss
carry forwards of approximately $24 million which will expire in various years
from 1999 to 2010, and may be subject to certain annual limitations. The
Company's research and development tax credit carry forwards noted above expire
in various years through from 1999 to 2010.
(10) COMMITMENTS AND CONTINGENCIES
(a) Lease Commitments
The Company leases office, operating and laboratory space under various
lease agreements.
Rent expense was approximately $750,000, $743,000, and $656,000 for the
fiscal years ended September 30, 1995, 1994, and 1993, respectively.
The following is a schedule by fiscal years of future minimum rental
payments required as of September 30, 1995, assuming expiration of the lease
for the Uniondale facility on June 30, 2006 and the Cambridge facility on
December 31, 2003.
<TABLE>
<S> <C>
1996 $ 587,800
1997 619,375
1998 627,163
1999 644,288
2000 and thereafter 4,319,474
----------
$6,798,100
==========
</TABLE>
(b) Contingencies
The Company has received several letters from other companies and
universities advising the Company that various products being marketed and
research being conducted by the Company may be infringing on existing patents
of such entities. These matters are presently under review by management and
outside counsel for the Company. Where valid patents of other parties are
found by the Company to be in place, management will consider entering into
licensing arrangements with the universities and/or other companies or
discontinuing the sale or use of any infringing products. Management believes
that the ultimate outcome of these matters will not have a material adverse
effect on the financial position of the Company.
(11) RELATED PARTY TRANSACTIONS
Effective January 1, 1993, the Company compensates its independent outside
directors on a $1,000 retainer per month. This amount increased to $1,500
effective January 1, 1995. For the years ended September 30, 1995, 1994 and
1993 such fees amounted to $99,000, $66,000 and $45,000, respectively. The
Company also has compensated four directors for consulting services performed.
Two
F-16
<PAGE> 40
directors have consulting agreements, the other two were paid on a per diem
basis. For the years ended September 30, 1995, 1994 and 1993, consulting
services in the amounts of $90,000, $85,000 and $56,000 respectively, were paid
by the Company pursuant to these arrangements.
One director is a partner in a law firm which represents the Company on
its patent and license matters. Fees paid to this firm for the year ended
September 30, 1995 are estimated to be approximately $260,000. Fees paid for
this firm for the years ended September 30, 1994 and 1993 amounted to
approximately $372,000 and $538,000, respectively.
(12) EMPLOYEE SAVINGS AND INVESTMENT PLAN
The Company sponsors an Employee Savings and Investment Plan under Section
401(k) of the Internal Revenue Code. The plan allows employees to defer from
2% to 10% of their income on a pre-tax basis through contributions into
designated investment funds. For each dollar the employee invests up to 6% of
his or her earnings, the Company will contribute an additional 50 cents into
the funds. For the years ended September 30, 1995, 1994, and 1993, the
Company's expenses related to the plan were approximately $180,000, $168,000
and $131,000, respectively.
(13) EMPLOYEE RETIREMENT PLAN
On November 10, 1992, the Company adopted a plan which provides
postretirement medical and life insurance benefits to eligible employees, board
members and qualified dependents. Eligibility is determined based on age and
service requirements. These benefits are subject to deductibles, co-payment
provisions and other limitations.
The Company utilizes SFAS No. 106, "Employer's Accounting for Post
Retirement Benefits Other Than Pensions" to account for the benefits to be
provided by the plan. Under SFAS No. 106 the cost of post retirement medical
and life insurance benefits is accrued over the active service periods of
employees to the date they attain full eligibility for such benefits. As
permitted by SFAS No. 106, the Company elected to amortize over a 20 year
period the accumulated post retirement benefit obligation related to prior
service costs.
F-17
<PAGE> 41
Net postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Service cost for benefits
earned during the period $107,175 $ 65,830 $ 70,867
Interest cost on accumulated
postretirement benefit
obligation 47,181 15,591 19,742
Amortization of unrecognized
net loss (gain) 5,855 (20,402) -
Amortization of initial
benefits attributable to
past service 17,549 17,549 19,266
-------- -------- --------
Net postretirement benefit
cost $177,760 $ 78,568 $109,875
======== ======== ========
</TABLE>
The accrued postretirement benefit cost at September 30, 1995 and 1994
were as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Accumulated post retirement benefit obligation-
fully eligible active plan participants $790,437 $285,582
Unrecognized cumulative net gain (loss) (121,517) 223,127
Unrecognized transition obligation (302,717) (320,266)
--------- --------
Accrued postretirement benefit cost $366,203 $188,443
========= ========
</TABLE>
The accumulated postretirement benefit obligation was determined using
a discount rate of 7.5 percent and a health care cost trend rate of
approximately 12 percent decreasing to 6 percent in year 1999 and thereafter
for 1995 and 1994. Increasing the assumed health care cost trend rates by one
percentage point in each year and holding all other assumptions constant would
increase the accumulated post-retirement benefit obligation as of September 30,
1995 and 1994 by approximately $106,000 and $94,000 respectively.
F-18
<PAGE> 42
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
24
<PAGE> 43
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The information required by this item is incorporated by reference to the
similarly named section of the Registrant's Proxy Statement for its 1996
Annual Meeting to be filed with the Securities and Exchange Commission not
later than 120 days after September 30, 1995. (The "1996 Proxy")
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the
similarly named section of the Registrant's 1996 Proxy.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference to the
similarly named section of the Registrant's 1996 Proxy.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to the
similarly named section of the Registrant's 1996 Proxy.
25
<PAGE> 44
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) The following consolidated financial statements are included in Part
II, Item 8:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial statement schedules:
All schedules are omitted as the required information is inapplicable or
the information is presented in the financial statements or related notes.
(3) Exhibits - The list of all exhibits appears on pages 26, 27, 28,
and 29.
(b) Reports on Form 8-K
None.
26
<PAGE> 45
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ONCOGENE SCIENCE, INC.
By /s/ GARY E. FRASHIER
-----------------------------
Gary E. Frashier
Chief Executive Officer
Date: December 20, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ GARY E. FRASHIER Chief Executive Officer December 13, 1995
- ----------------------------- and Director
Gary E. Frashier
/s/ STEVE M. PELTZMAN President, Chief Operating December 13, 1995
- ----------------------------- Officer and Director
Steve M. Peltzman
/s/ J. GORDON FOULKES Vice President, Chief Scientific December 13, 1995
- ----------------------------- Officer and Director
J. Gordon Foulkes, Ph.D.
/s/ ROBERT L. VAN NOSTRAND Vice President, Finance and December 13, 1995
- ----------------------------- Administration (Principal Financial
Robert L. Van Nostrand Officer)
/s/ EDWIN A. GEE Director December 13, 1995
- -----------------------------
Edwin A. Gee, Ph.D.
/s/ GARY TAKATA Director December 13, 1995
- -----------------------------
Gary Takata
/s/ G. MORGAN BROWNE Director December 13, 1995
- -----------------------------
G. Morgan Browne
/s/ WALTER MILLER Director December 13, 1995
- -----------------------------
Walter Miller
/s/ JOHN P. WHITE Director December 13, 1995
- -----------------------------
John P. White, Esq.
/s/ JOHN H. FRENCH, II Director December 13, 1995
- -----------------------------
John H. French, II
/s/ WALTER M. LOVENBERG Director December 13, 1995
- -----------------------------
Walter M. Lovenberg, Ph.D.
27
</TABLE>
<PAGE> 46
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibits Page No.
-------- --------
<S> <C>
3.1* Certificate of Incorporation, as
amended
3.2* By-Laws
10.1 1985 Stock Option Plan (1)
10.2 1989 Incentive and Non-Qualified Stock
Option
Plan (3)
10.3 1993 Incentive and Non-Qualified Stock
Option Plan (filed as an exhibit to
the Company's Registration Statement
on Form S-8 (File No. 33-64713), and
incorporated herein by reference)
10.4 1993 Employee Stock Purchase Plan
(filed as an exhibit to the Company's
Registration Statement on Form S-8
(File No. 33-60182), and incorporated
herein by reference)
10.5 Employment Agreement dated as of
February 9, 1990 between the Company
and Gary E. Frashier (3)
10.6 Employment Agreement dated as of
August 27, 1991 between the Company
and Steven M. Peltzman (4)
10.7 Employment Agreement dated
December 30, 1986 between the Company
and Gordon Foulkes (3)
10.8 Consulting Agreement between the
Company and Dr. Edwin A. Gee (1)
10.9 Lease dated as of October 12, 1990
between the Company and Charles
Bergwell (3)
10.10 First Amendment Lease dated April 2,
1993 between the Company and the
Trustees of the Cambridge East Trust
(filed as an exhibit to the Company's
Annual Report on Form 10-K for the
fiscal year ended September 30, 1993,
and incorporated herein by reference)
10.11 Form of Warrant Purchase Agreement (1)
10.12 Agreement dated as of February 18,
1987 between The University of
Massachusetts and Applied
bioTechnology, Inc. (2)
</TABLE>
28
<PAGE> 47
<TABLE>
<S> <C>
10.13 Letter Agreement dated October 1, 1991
among AbT Acquisition Corp., the
Company and E.I. DuPont de Nemours and
Company (2)
10.14 Agreement dated as of September 16,
1991 between Applied bioTechnology,
Inc. and Becton Dickinson and Company
(2)
10.15 Amendment and Consent to Assignment
dated as of October 4, 1991 between
the Company and Becton Dickinson and
Company (2)
10.16 Collaborative Research Agreement dated
as of October 4, 1991 between the
Company and Becton Dickinson and
Company (2)
10.17 License Agreement between the Company
and Becton Dickinson and Company (2)
10.18 Amendment dated December 5, 1991 to
License Agreement between the Company
and Becton Dickinson and Company (4)
10.19* OSI Royalty Free License Agreement
dated April 1, 1986 between the
Company and Pfizer Inc.
10.20* Pfizer Royalty Free License Agreement
dated April 1, 1986 between the
Company and Pfizer Inc.
10.21* Royalty Agreement dated April 1, 1986
between the Company and Pfizer Inc.
10.22 License Agreement dated December 14,
1990 between the Company and Pfizer
Inc. (3)
10.23 Collaborative Research Agreement dated
April 1, 1991 between the Company and
Pfizer Inc. (3)
10.24 Collaborative Research Agreement dated
as of December 31, 1991 between the
Company and American Home Products
Corporation (5)
10.25 Common Stock Purchase Warrant granted to Marion
Merrell Dow, Inc. dated December 11, 1992 (5)
10.26 Collaborative Research and License
Agreement dated December 11, 1992
between the Company and Marion Merrell
Dow, Inc. (5)
10.27* Collaborative Agreement dated as of
April 19, 1995 between the Company and
Ciba-Geigy Limited
10.28* Letter Agreement dated as of April 19,
1995 between the Company and
Ciba-Geigy Limited
</TABLE>
29
<PAGE> 48
<TABLE>
<S> <C>
10.29* Registration Rights Agreement dated as
of April 19, 1995 between the Company
and Ciba-Geigy Limited
10.30 Asset Purchase Agreement dated
June 26, 1995 among the Company,
Calbiochem-Novabiochem International,
Inc. and Calbiochem-Novabiochem
Corporation (6)
10.31 Sublease dated August 2, 1995 between
the Company and Calbiochem-Novabiochem
Corporation (6)
10.32 New Product License Right of First
Refusal Agreement dated August 2, 1995
between the Company and
Calbiochem-Novabiochem Corporation (6)
21* Subsidiaries of the Company
23* Consent of KPMG Peat Marwick, LLP,
independent public accountants
27* Financial Data Schedule
</TABLE>
- ------------------------
* Filed herewith.
(1) Filed as an exhibit to the Company's registration statement on Form S-1
(File No. 33-3148), and incorporated herein by reference.
(2) Filed as an exhibit to the Registrant's registration statement on Form
S-2, as amended (File No. 33-42369), and incorporated herein by reference.
(3) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1990, and incorporated herein by
reference.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1991, and incorporated herein by
reference.
(5) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1992, as amended, and incorporated herein
by reference.
(6) Filed as an exhibit to the Company's Current Report on Form 8-K dated
August 2, 1995, and incorporated herein by reference.
30
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ONCOGENE SCIENCE, INC.
I, the President of Oncogene Science, Inc., a corporation organized
and existing under the laws of the State of Delaware (the "Corporation"), do
hereby certify that (i) Article Fourth of the Corporation's Certificate of
Incorporation has been amended in its entirety to read as set forth below, and
(ii) such amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
FOURTH. The total number of shares of stock that the Corporation
shall have authority to issue is 50,000,000 shares of common stock,
having a par value of $.01 per share, all of the same class.
IN WITNESS WHEREOF, I have hereunto set my hand and seal as of the
31st day of March, 1993.
(Corporate Seal)
Attest:
/s/ Theresa R. Dragone /s/ Gary E. Frashier (SEAL)
- ----------------------------- -----------------------
Theresa R. Dragone Gary E. Frashier, President
Secretary
<PAGE> 2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ONCOGENE SCIENCE, INC.
-----------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
-----------------------------------------
We, the President and Secretary of ONCOGENE SCIENCE, INC., a
corporation existing under the laws of the State of Delaware, do hereby certify
as follows:
FIRST: That Article IX of the Certificate of Incorporation of said
corporation has been amended in its entirety to read as follows:
ARTICLE IX
INDEMNIFICATION AND INSURANCE
SECTION 1. Right to Indemnification. Each person who was or
is made a party or is threatened to be made a party to or is
involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative ("Proceeding"), by reason of the fact that he, or a
person of whom he is the legal representative, is or was the
director, officer, employee or agent of the Corporation or is or
was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether the basis
of such Proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while
serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (out, in the case of
-1-
<PAGE> 3
any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said
law permitted the Corporation to provide prior to such amendment),
against all expenses, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered
by such person in connection therewith; provided, however, that the
Corporation shall indemnify any such person seeking indemnity in
connection with a Proceeding (or part thereof) initiated by such
person only if the proceeding (or part thereof) was authorized by
the Board of Directors of the Corporation. The right to
indemnification conferred in this Section 1 shall be a contract
right and shall include the right to be paid by the Corporation
expenses incurred in defending any such Proceeding in advance of
its final disposition; provided, however, that if the Delaware
General Corporation Law requires, the payment of such expenses
incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including,
without limitation, service to an employee benefit plan) in advance
of the final disposition of such Proceeding, shall be made only
upon delivery to the Corporation of an undertaking, by or on behalf
of such director or officer, to repay all amounts so advanced if it
should be determined ultimately that such director of officer is
not entitled to be indemnified under this Section or otherwise.
SECTION 2. Non-Exclusivity of Rights. The rights conferred
on any person by Section 1 shall not be exclusive of any other
right which such person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, by-laws,
agreement, vote of stockholders or disinterested directors, or
otherwise.
SECTION 3. Limitation of Liability of Directors. A director
of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General
-2-
<PAGE> 4
Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
SECTION 4. Insurance. The Corporation may maintain
insurance, at its expense, to protect itself and any such director,
officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against
such expense, liability or loss under the Delaware General
Corporation Law.
SECOND: That such amendment has been duly adopted in accordance
with the provisions of the General Corporation Law of the State of Delaware by
the affirmative vote of the holders of not less than a majority of the
outstanding stock entitled to vote thereon.
IN WITNESS WHEREOF, we have signed this certificate this 9th day of
April, 1987.
/s/ Robert E. Ivy
----------------------------
Robert E. Ivy, President
ATTEST: /s/ Gary Takata
----------------------------
Gary Takata, Secretary
-3-
<PAGE> 5
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ONCOGENE SCIENCE, INC.
-----------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
-----------------------------------------
We, the President and Secretary of ONCOGENE SCIENCE, INC., a
corporation existing under the laws of the State of Delaware, do hereby certify
as follows:
FIRST: That Article FOURTH of the Certificate of Incorporation of
said corporation has been amended in its entirety to read as follows:
"FOURTH. The total number of shares of stock which the
Corporation shall have authority to issue is 20,000,000 shares of
common stock, of the par value of $.01 per share, all of the same
class."
SECOND: That such amendment has been duly adopted in accordance
with the provisions of the General Corporation Law of the State of Delaware by
the written consent of the holders of not less than a majority of the
outstanding stock entitled to vote thereon and that written notice of the
corporation action has been given to those stockholders who have not consented
in writing, all in accordance with the provisions of Section 228 of the General
Corporation Law.
<PAGE> 6
IN WITNESS WHEREOF, we have signed this certificate this 18th day
of January, 1986.
/s/ Robert E. Ivy
----------------------------
Robert E. Ivy, President
ATTEST: /s/ Gary Takata
----------------------------
Gary Takata, Secretary
-2-
<PAGE> 7
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ONCOGENE SCIENCE, INC.
--------------------------------
(a Delaware corporation)
--------------------------------
Adopted in accordance with the
provisions of Section 241 of the
General Corporation Law of the
State of Delaware
--------------------------------
THE UNDERSIGNED, Steven Gelles, sole incorporator of ONCOGENE
SCIENCE, INC., does hereby certify:
FIRST: That the Certificate of Incorporation of ONCOGENE
SCIENCE, INC. (the "Corporation") was filed in the office of the Secretary of
State of Delaware on March 6, 1983 and a certified copy thereof was recorded in
the office of the Recorder of Kent County, Delaware on March 16, 1983.
SECOND: That the Corporation has not received payment for its
stock.
THIRD: That the Certificate of Incorporation of the
Corporation is amended as follows:
(i) By striking out paragraph FIRST thereof as it now
exists and inserting in lieu thereof ARTICLE I, reading
as follows:
ARTICLE I
NAME
The name of the corporation is ONCOGENE SCIENCE, INC.
(ii) By striking out paragraph SECOND thereof as it now
exists and inserting in lieu thereof ARTICLE II,
reading as follows:
<PAGE> 8
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The registered office of the Corporation in the State of Delaware
is located at 229 South State Street, City of Dover, County of Kent. The name
and the address of the registered agent of the Corporation in the State of
Delaware is The Prentice-Hall Corporation System, Inc., 229 South State Street,
Dover, Delaware.
(iii) By striking out paragraph THIRD thereof as it now
exists and inserting in lieu thereof ARTICLE III,
reading as follows:
ARTICLE III
CORPORATE PURPOSES AND POWERS
The nature of the business of the Corporation, or the objects or
purposes to be transacted, promoted or carried on by the Corporation are any
and all lawful acts or activities for which corporations may be organized under
the General Corporation Law of Delaware, including but not limited to research
and development, manufacture, production, purchase or acquisition, and sale,
licensing, leasing, or disposition of materials, supplies, substances,
chemicals or equipment used or useful in the field of biotechnology or in any
other field in which such materials, supplies, substances, chemicals or
equipment may profitably be used.
(iv) By striking out paragraph FOURTH thereof as it now
exists and inserting in lieu thereof ARTICLE IV,
reading as follows:
ARTICLE IV
CAPITAL STOCK
The amount of the total authorized capital stock of this
Corporation is One Hundred Thousand Dollars ($100,000) consisting of Ten
Million (10,000,000) common shares, with a par value of one cent ($.01) each.
(v) By striking out paragraph FIFTH thereof as it now
exists and inserting in lieu thereof ARTICLE V, reading
as follows:
ARTICLE V
INCORPORATOR
The name and mailing address of the sole incorporator of the
Corporation is:
-2-
<PAGE> 9
Name Address
---- -------
Steven Gelles 122 East 42nd Street
Suite 606
New York, New York 10168
(vi) By adding thereto additional ARTICLES VI - XI, reading
as follows:
ARTICLE VI
POWERS OF BOARD OF DIRECTORS
In addition to and not in limitation of the powers conferred by
statute, the board of directors of the Corporation expressly is authorized:
(a) To make, adopt, alter, amend or repeal the by-laws,
except as otherwise expressly provided in any by-law adopted by the
holders of Capital Stock of the Corporation entitled to vote thereon.
Any by-law may be altered, amended or repealed by the holders of Capital
Stock of the Corporation entitled to vote thereon at any annual meeting
or at any special meeting called for that purpose;
(b) To authorize and cause to be executed mortgages, liens,
and other security interests upon the real and personal property of the
Corporation;
(c) To determine the use and disposition of any surplus and
net profits of the Corporation including, without limitation by
specification, the determination of the amount of working capital
required by the Corporation, to set apart out of any of the funds of the
Corporation, whether or not available for dividends, a reserve or
reserves for any proper purpose and to abolish any such reserve in the
manner in which it was created;
(d) To designate, by resolution passed by a majority of the
members of the board of directors, one or more committees, each
consisting of two or more directors of the Corporation which, to the
extent provided in the resolution designating the committee or provided
in the by-laws of the Corporation, have and may exercise, subject to the
provisions of the General Corporation Law of Delaware, all the powers and
authority of the board of directors in the management of the business and
affairs of the Corporation. Such committee or committees may authorize
the seal of the Corporation to be affixed to all papers which may require
it. Such committee or committees shall have such name or names as may be
provided in the by-laws of the Corporation or as may be determined from
time to time by resolution adopted by the board of directors;
-3-
<PAGE> 10
(e) To grant rights or options entitling the holders
thereof to purchase from the Corporation shares of its Capital Stock
evidenced by or in such instrument or instruments as shall be approved by
the board of directors. The terms upon which, the time or times at or
within which, the persons to whom, and the price or prices at which any
such rights or options may be issued and any shares of Capital Stock may
be purchased from the Corporation upon the exercise of any such right or
option shall be such as shall be fixed in a resolution or resolutions
adopted by the board of directors providing for the creation and issuance
of such rights or options. In the absence of actual fraud in the
transaction, the judgment of the board of directors as to the
consideration for the issuance of such rights or options and the
sufficiency thereof shall be conclusive. No such rights or options shall
be invalidated or in any way affected by the fact that any director shall
be a grantee thereof or shall vote for the issuance of such rights or
options to himself or for any plan pursuant to which he may receive any
such rights or options;
(f) To adopt such plans as from time to time may be
approved by the board of directors for the purchase by officers or
employees of the Corporation and of any corporation either affiliated
with or a subsidiary of the Corporation of shares of Capital Stock of the
Corporation. The terms upon which, the time or times at or within which
and the price or prices at which shares of Capital Stock may be purchased
from the Corporation pursuant to such plan shall be fixed in the plan by
the board of directors. No such plan which is not at the time of
adoption unreasonable or unfair shall be invalid or in any way affected
because any director shall be entitled to purchase shares of Capital
Stock of the Corporation thereunder and shall vote for such plan;
(g) To adopt or assume and carry out such plans as from
time to time may be approved by the board of directors for the
distribution among the officers or employees of the Corporation and of
any corporation which is affiliated with or a subsidiary of the
Corporation, or any of them, in addition to their regular salaries, of
part of the earnings of the Corporation, in consideration for or in
recognition of services rendered by such officers or employees or as an
inducement to future efforts. No such plan which is not at the time of
adoption or assumption unreasonable or unfair shall be invalidated or in
any way affected because any director shall be a beneficiary thereunder
or shall vote for any plan under which he may benefit or for any
distribution thereunder in which he may participate;
(h) To adopt such pension, profit sharing, retirement,
deferred compensation or other employee benefit plans or provisions as
may, from time to time, be approved by the board of directors, providing
for pensions, profit sharing, retirement income, deferred compensation or
other benefits for officers or employees of the Corporation and of any
corporation which is affiliated with or a subsidiary of the Corporation,
or any of them, in consideration for or in recognition of the services
rendered by such officers or employees or as an inducement to future
efforts. No
-4-
<PAGE> 11
such plan or provision, which is not at the time of adoption unreasonable
or unfair shall be invalidated or in any way affected because any
director shall be a beneficiary thereunder or shall vote for any plan or
provision under which he may benefit; and
(i) To exercise, in addition to the powers and authorities
herein or by law conferred upon the board of directors, any such powers
and authorities and do all such acts and things as may be exercised or
done by the Corporation subject, nevertheless, to the provisions of the
General Corporation Law of Delaware, this certificate of incorporation
and any by-laws from time to time adopted by the holders of Capital Stock
of the Corporation entitled to vote thereon.
ARTICLE VII
MEETINGS AND CONSENTS OF STOCKHOLDERS AND DIRECTORS;
CORPORATION BOOKS; ELECTIONS OF DIRECTORS;
AND NOTICES
Meetings of holders of Capital Stock of the Corporation and of the
board of directors and of any committee thereof may be held outside the State
of Delaware if the by-laws so provide. Except as otherwise provided by law or
by this certificate of incorporation, any action required to be taken at any
annual, or special meeting of stockholders of the Corporation or any action
which may be taken at any annual or special meeting of such stockholders may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders
of outstanding Capital Stock having not less than the minimum number of votes
that would be necessary to authorize or to take such action at a meeting at
which all shares of Capital Stock entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing. Any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting as provided by statute if the by-laws of the Corporation so
provide. Except as otherwise provided by law, the books of the Corporation may
be kept outside the State of Delaware at such place or places as may be
designated from time to time by the board of directors or in the by-laws of the
Corporation. The elections of directors need not be by ballot unless the
by-laws of the Corporation so provide. Any notice permitted or required by
this certificate of incorporation shall be written, signed by the sender and
mailed, postage prepaid, in the United States by certified or registered mail.
ARTICLE VIII
TRANSACTIONS WITH DIRECTORS AND OFFICERS
No contract or transaction between the Corporation and one or more
of its directors or officers or between the Corporation and any other
corporation, partnership,
-5-
<PAGE> 12
association or other organization, in which one or more of its directors or
officers are directors or officers or have a financial interest, shall be void
or voidable solely for such reason or solely because the director or officer is
present at or participates in the meeting of the board of directors or
committee thereof which authorizes the contract or transaction or solely
because his or their votes are counted for such purpose if: (a) The material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the board of directors or the committee and the
board of directors or the committee in good faith authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors even though the disinterested directors may be less than a quorum; or
(b) the material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or (c) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or
ratified by the board of directors, a committee thereof or the stockholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the stockholders or the board of directors or of a
committee which authorizes the contract or transaction.
ARTICLE IX
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification by Corporation.
(a) Any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(other than action by or in the right of the Corporation) by reason of
the fact that he is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall be indemnified by the
Corporation, unless similar indemnification is provided by such other
corporation or organization which may be involved (any funds received by
any person as a result of the provisions of this Article shall be deemed
an advance against his receipt of any such other indemnification from any
such other corporation or organization), against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. Any such person
who could be indemnified pursuant to the preceding sentence except for
the fact that the subject action or suit is or was by or in the right of
the Corporation shall be indemnified by the Corporation against expenses
(including attorneys' fees) actually and reasonably incurred by him, in
connection with the defense or settlement of such
-6-
<PAGE> 13
action or suit except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of
his duties to the Corporation unless and only to the extent that the
Court of Chancery of the State of Delaware or the court in which such
action or suit was brought shall determine upon application that, despite
the 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 Court of Chancery or such other court shall deem
proper;
(b) To the extent that a director, officer, employee or
agent of the Corporation has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in paragraph (a)
of this Section 1 or in defense of any claim, issue or matter therein, he
shall be indemnified by the Corporation against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith without the necessity of any action being taken by the
Corporation other than the determination, in good faith, that such
defense has been successful. In all other cases wherein indemnification
is provided by this Article, unless ordered by a court, indemnification
shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct specified in this Article. Such
determination shall be made: (1) By the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding; or (2) if such a quorum is not obtainable or,
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion; or (3) by the holders of
a majority of the Capital Stock outstanding;
(c) The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere
or its equivalent shall not create, of itself, a presumption that the
person seeking indemnification did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful. Entry of a judgment by consent as part of a settlement shall
not be deemed final adjudication of liability for negligence or
misconduct in the performance of duty or of any other issue or matter;
(d) Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by
the board of directors in the specific case upon receipt of an
undertaking by the director, officer, employee or agent involved to repay
such amount unless it ultimately shall be determined that he is entitled
to be indemnified by the Corporation; and
-7-
<PAGE> 14
(e) The indemnification provided in this Article shall not
be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action
in an official capacity and as to action in another capacity while
holding such office, and shall continue 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 person.
SECTION 2. Insurance. By action of the board of directors,
notwithstanding any interest of the directors in the action, the Corporation
may purchase and maintain insurance, in such amounts as the board of directors
deems appropriate, on behalf of any person who is or was a director, officer,
employee or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the Corporation shall have the power to
indemnify him against such liability under the provisions of this Article.
ARTICLE X
COMPROMISE OR ARRANGEMENT BETWEEN CORPORATION
AND ITS CREDITORS OR STOCKHOLDERS
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
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<PAGE> 15
ARTICLE XI
RESERVATION OF RIGHT TO AMEND CERTIFICATE
OF INCORPORATION
The Corporation reserves the right to amend, alter, change or
repeal any provisions contained in this certificate of incorporation in the
manner now or hereafter prescribed by law and by this certificate of
incorporation. All the provisions of this certificate of incorporation and all
rights and powers conferred in this certificate of incorporation on
stockholders, directors and officers are subject to such reserved power.
FOURTH: That such amendment has been duly adopted in accordance
with the provision of Section 241 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, I have signed this certificate this 15th day of
April, 1983.
/s/ Steven Gelles
--------------------------
STEVEN GELLES
-9-
<PAGE> 16
CERTIFICATE
OF
INCORPORATION
OF
ONCOGENE SCIENCE, INC.
FIRST: The name of this Corporation is ONCOGENE SCIENCE, INC.
SECOND: Its Registered Office in the State of Delaware is to be located at
600 Bay Road, in the City of Dover, Zip Code 19901. The Registered
Agent in charge thereof is Ms. Pam Goldsborough.
THIRD: The purpose of the Corporation is to perform research and to
develop, manufacture, produce, purchase or otherwise acquire, and
to sell, license, lease or otherwise dispose of materials,
supplies, substances, chemicals or equipment used or useful in the
field of Biotechnology or in any other field in which such
materials, supplies, substances, chemicals or equipment may be
profitably used and to engage in any lawful act or activity for
which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The amount of the total authorized capital stock of this
Corporation is One Hundred Thousand Dollars ($100,000) divided into
Ten Million (10,000,000) shares, of One Cent ($.01) each.
FIFTH: The name and mailing address of the incorporator are as follows:
Name: Steven Gelles
Mailing Address: 122 East 42nd Street, Suite 606
Zip Code: New York, New York 10168
I, THE UNDERSIGNED, for the purpose of forming a Corporation under the laws of
the State of Delaware, do make, file and record this Certificate, and do
certify that the facts herein stated are true, and I have accordingly hereto
set my hand this Tenth day of March, 1983.
/s/ Steven Gelles
- ---------------------------- ------------------------------
- ----------------------------
<PAGE> 1
EXHIBIT 3.2
ONCOGENE SCIENCE, INC.
A Delaware corporation
BY-LAWS
------------------------
ARTICLE I
STOCKHOLDERS
Section 1.1 Annual Meeting
An annual meeting of stockholders for the purpose of electing
directors and of transacting such other business as may come before it shall be
held each year at such date, time, and place, either within or without the
State of Delaware, as may be specified by the Board of Directors.
Section 1.2 Special Meetings
Special meetings of stockholders for any purpose or purposes may be
held at any time upon call of the Chairman or the Board, if any, the President
or a majority of the Board of Directors, at such time and place either within
or without the State of Delaware as may be stated in the notice. A special
meeting of stockholders shall be called by the President upon the written
request, stating time, place, and the purpose or purposes of the meeting, of
stockholders who together own of record a majority of the outstanding stock of
all classes entitled to vote at such meeting.
Section 1.3 Notice of Meetings
Written notice of stockholders meetings, stating the place, date,
and hour thereof, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given by the Chairman of the
Board, if any, the President, any Vice
<PAGE> 2
President, the Secretary, or an Assistant Secretary, to each stockholder
entitled to vote thereat at least ten days but not more than sixty days before
the date of the meeting, unless a different period is prescribed by law.
Section 1.4 Quorum
Except as otherwise provided by law or in the Certificate of
Incorporation or these By-Laws, at any meeting of stockholders, the holders of
a majority of the outstanding shares of each class of stock entitled to vote at
the meeting shall be present or represented by proxy in order to constitute a
quorum for the transaction of any business. In the absence of a quorum, a
majority in interest of the stockholders present or the chairman of the meeting
may adjourn the meeting from time to time in the manner provided in Section 1.5
of these By-Laws until a quorum shall attend.
Section 1.5 Adjournment
Any meeting of stockholders, annual or special, may adjourn from
time to time to reconvene at the same or some other place, and notice need not
be given of any such adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting.
Section 1.6 Organization
The Chairman of the Board, if any, or in his absence the President,
or in their
2
<PAGE> 3
absence any Vice President, shall call to order meetings of stockholders and
shall act as chairman of such meetings. The Board of Directors or, if the
Board fails to act, the stockholders may appoint any stockholder, director, or
officer of the Corporation to act as chairman of any meeting in the absence of
the Chairman of the Board, the President, and all Vice Presidents.
The Secretary of the Corporation shall act as secretary of all
meetings of stockholders, but, in the absence of the Secretary, the chairman of
the meeting may appoint any other person to act as secretary of the meeting.
Section 1.7 Voting
Except as otherwise provided by law or in the Certificate of
Incorporation or these By-Laws and except for the election of directors, at any
meeting duly called and held at which a quorum is present, a majority of the
votes cast at such meeting upon a given question by the holders of outstanding
shares of stock of all classes of stock of the Corporation entitled to vote
thereon who are present in person or by proxy shall decide such question. At
any meeting duly called and held for the election of directors at which a
quorum is present, directors shall be elected by a plurality of the votes cast
by the holders (acting as such) of shares of stock of the Corporation entitled
to elect such directors.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Number and Term of Office
The business, property, and affairs of the Corporation shall be
managed by or under the direction of a Board of seven directors provided,
however, that the Board, by
3
<PAGE> 4
resolution adopted by vote of a majority of the then authorized number of
directors, may increase or decrease the number of directors. The directors
shall be elected at the annual meeting of stockholders, and each shall serve
(subject to the provisions of Article IV) until the next succeeding annual
meeting of the stockholders and until his respective successor has been elected
and qualified.
Section 2.2 Chairman of the Board
The directors may elect one of their members to be Chairman of the
Board of Directors. The Chairman shall be subject to the control of and may be
removed by the Board of Directors. He shall perform such duties as may from
time to time be assigned to him by the Board.
Section 2.3 Meetings
The annual meeting of the Board of Directors, for the election of
officers and the transaction of such other business as may come before the
meeting, shall be held without notice at the same place as, and immediately
following, the annual meeting of the stockholders.
Regular meetings of the Board of Directors may be held without
notice at such time and place as shall from time to time be determined by the
Board.
Special meetings of the Board of Directors shall be held at such
time and place as shall be designated in the notice of the meeting whenever
called by the Chairman of the Board, if any, the President, or by a majority of
the directors then in office.
Section 2.4 Notice of Special Meetings
The secretary, or in his absence any other officer of the
Corporation, shall
4
<PAGE> 5
give each director notice of the time and place of holding of special meetings
of the Board of Directors by mail at least three days before the meeting, or by
telegram, cable, radiogram, or personal service at least one day before the
meeting. Unless otherwise stated in the notice thereof, any and all business
may be transacted at any meeting without specification of such business in the
notice.
Section 2.5 Quorum and Organization of Meetings
A majority of the total number of members of the Board of Directors
as constituted from time to time shall constitute a quorum for the transaction
of business, but, if at any meeting of the Board of Directors (whether or not
adjourned from a previous meeting) there shall be less than a quorum present, a
majority of those present may adjourn the meeting to another time and place,
and the meeting may be held as adjourned without further notice or waiver.
Except as otherwise provided by law or in the Certificate of Incorporation or
these By-Laws, a majority of the entire Board of Directors may decide any
question brought before such meetings. Meetings shall be presided over by the
Chairman of the Board, if any, or in his absence by the President, or in the
absence of both such other person as the directors may select. The Secretary
of the Corporation shall act as secretary of the meeting, but in his absence
the chairman of the meeting may appoint any person to act as secretary of the
meeting.
Section 2.6 Committees
The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees, each committee to consist of
one or more of the directors of the Corporation. The Board may designate one
or more directors as alternate
5
<PAGE> 6
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member
of a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all powers and authority of the Board of Directors
in the management of the business, property, and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it; but no such committee shall have power or authority in
reference to amending the Certificate of Incorporation of the Corporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease, or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of dissolution, or amending
these By-Laws; and, unless the resolution expressly so provided, no such
committee shall have power or authority to declare a dividend or to authorize
the issuance of stock. Each committee which may be established by the Board of
Directors or these By-Laws may fix its own rules and procedures. Notice of
meetings of committees, other than of regular meetings provided for by the
rules, shall be given to committee members. All action taken by the committees
shall be recorded in minutes of the meetings.
Section 2.7 Action Without Meeting
Nothing contained in these By-Laws shall be deemed to restrict the
power of
6
<PAGE> 7
the directors or members of any committee to take any action, required or
permitted to be taken by them, without meeting.
Section 2.8 Telephone Meetings
Nothing contained in these By-Laws shall be deemed to restrict the
power of members of the Board of Directors, or any committee designated by the
Board, to participate in a meeting of the Board, or committee, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other.
ARTICLE III
OFFICERS
Section 3.1 Executive Officers
The executive officers of the Corporation shall be a President, a
Scientific Director, one or more Vice Presidents, a Treasurer, and a Secretary,
each of whom shall be elected by the Board of Directors. The Board of
Directors may elect or appoint such other officers (including a Chairman of the
Board, Chief Financial Officer, a Controller and one or more Assistant
Treasurers and Assistant Secretaries) as it may deem necessary or desirable.
Each officer shall hold office for such term as may be prescribed by the Board
of Directors from time to time. Any person may hold at one time two or more
offices.
Section 3.2 Powers and Duties
The Chairman of the Board, if any, or, in his absence, the
President, shall preside at all meetings of the stockholders and of the Board
of Directors. The President shall be the chief executive officer of the
Corporation. In the absence of the President, a Vice
7
<PAGE> 8
President appointed by the President or, if the President fails to make such
appointment, by the Board, shall perform all the duties of the President. The
officers and agents of the Corporation shall each have such powers and
authority and shall perform such duties in the management of the business,
property, and affairs of the Corporation as generally pertain to their
respective offices, as well as such powers and authorities and such duties as
from time to time may be prescribed by the Board of Directors.
ARTICLE IV
RESIGNATIONS, REMOVALS AND VACANCIES
Section 4.1 Resignations
Any director or officer of the Corporation, or any member of any
committee, may resign at any time by giving written notice to the Board of
Directors, the President, or the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein or, if the time be
not specified therein, then upon receipt thereof. The acceptance of such
resignation shall not be necessary to make it effective.
Section 4.2 Removals
The Board of Directors, by a vote of not less than a majority of
the entire Board, at any meeting thereof, or by written consent, at any time,
may, to the extent permitted by law, remove with or without cause from office
or terminate the employment of any officer or member of any committee and may,
with or without cause, disband any committee.
8
<PAGE> 9
Any director or the entire Board of Directors may be removed, with
or without cause, by the holders of a majority of the shares entitled at the
time to vote at an election of directors.
Section 4.3 Vacancies
Any vacancy in the office of any director or officer through death,
resignation, removal, disqualification, or other cause, and any additional
directorship resulting from increase in the number of directors, may be filled
at any time by a majority of the directors then in office (even though less
than a quorum remains) or, in the case of any vacancy in the office of any
director, by the stockholders, and, subject to the provisions of this Article
IV, the person so chosen shall hold office until his successor shall have been
elected and qualified; or, if the person so chosen is a director elected to
fill a vacancy, he shall (subject to the provisions of this Article IV) hold
office for the unexpired term of his predecessor.
ARTICLE V
CAPITAL STOCK
Section 5.1 Stock Certificates
The certificates for share of the capital stock of the Corporation
shall be in such form as shall be prescribed by law and approved, from time to
time, by the Board of Directors.
Section 5.2 Transfer of Shares
Shares of the capital stock of the Corporation may be transferred
on the books of the Corporation only by the holder of such shares or by his
duly authorized attorney, upon
9
<PAGE> 10
the surrender to the Corporation or its transfer agent of the certificate
representing such stock properly endorsed.
Section 5.3 Fixing Record Date
In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion, or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which, unless otherwise provided by law, shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than sixty days
prior to any other action.
Section 5.4 Lost Certificates
The Board of Directors or any transfer agent of the Corporation may
direct a new share certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation, alleged to
have been lost, stolen, or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his legal representative, to give the Corporation bond in such
sum as the Board of Directors shall direct to indemnify the Corporation against
any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen, or destroyed or
10
<PAGE> 11
the issuance of such new certificates, and such requirement may be general or
confined to specific instances.
Section 5.5 Regulations
The Board of Directors shall have power and authority to make all
such rules and regulations as it may deem expedient concerning the issue,
transfer, registration, cancellation, and replacement of certificates
representing stock of the Corporation.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Corporate Seal
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization, and the words "Corporate Seal" and
"Delaware", and shall be in such form as may be approved from time to time by
the Board of Directors.
Section 6.2 Fiscal Year
The fiscal year of the Corporation shall be determined by
resolution of the Board of Directors.
Section 6.3 Notices and Waivers Thereof
Whenever any notice is required by law, the Certificate of
Incorporation, or these By-Laws to by given to any stockholder, director, or
officer, such notice, except as otherwise provided by law, may be given
personally, or by mail, or in the case of directors or officers, by telegram,
cable, or radiogram, addressed to such address as appears on the books or the
Corporation. Any notice given by telegram, cable, or radiogram shall be deemed
to have been given when it shall have been delivered for transmission and any
notice
11
<PAGE> 12
given by mail shall be deemed to have been given when it shall have been
deposited in the United States mail with postage thereon prepaid.
Whenever any notice is required to be given by law, the Certificate
of Incorporation, or these By-Laws, a written waiver thereof, signed by the
person entitled to such notice, whether before or after the meeting or the time
stated therein, shall be deemed equivalent in all respects to such notice to
the full extent permitted by law.
Section 6.4 Stock of Other Corporations Other Interests
Unless otherwise ordered by the Board of Directors, the President,
the Secretary, and such attorneys or agents of the Corporation as may be from
time to time authorized by the Board of Directors or the President, shall have
full power and authority on behalf of this Corporation to attend and to act and
vote in person or by proxy at any meeting of the holders of securities of any
corporation or other entity in which this Corporation may own or hold shares or
other securities, and at such meetings shall possess and may exercise all the
rights and powers incident to the ownership of such shares or other securities
which this Corporation, as the owner or holder thereof, might have possessed
and exercised if present. The President, the Secretary or such attorneys or
agents, may also execute and deliver on behalf of the Corporation powers of
attorney, proxies, consents, waivers and other instruments relating to the
shares or securities owned or held by this Corporation.
ARTICLE VII
AMENDMENTS
The holders of shares entitled at the time to vote for the election
of directors shall have power to adopt, amend, or repeal the By-Laws of the
Corporation by vote of not
12
<PAGE> 13
less than a majority of such shares, and except as otherwise provided by law,
the Board of Directors shall have power equal in all respects to that of the
stockholders to adopt, amend, or repeal the By-Laws by vote of not less than a
majority of the entire Board. However, any By-Law adopted by the board may be
amended or repealed by vote of the holders of a majority of the shares entitled
at the time to vote for the election or directors.
13
<PAGE> 1
EXHIBIT 10.19
OSI ROYALTY FREE LICENSE
This AGREEMENT is entered into as of April 1, 1986 by and between PFIZER
INC. ("PFIZER"), a Delaware corporation having an office at 235 East 42nd
Street, New York, New York 10017, and ONCOGENE SCIENCE, INC. ("OSI"), a
Delaware corporation having an office at 222 Station Plaza North, Suite 330,
Mineola, New York, 11501.
The parties agree as follows:
1. DEFINITIONS
The capitalized terms used herein have the meanings specified in
Exhibits I, II, III and IV of the Collaborative Research Agreement dated as of
April 1, 1986 between PFIZER and OSI.
2. GRANT
2.1. PFIZER grants to OSI an exclusive, irrevocable, worldwide,
royalty-free, perpetual right and license, including the right to grant
sublicenses, under Joint Patent Rights and Joint Technology to make, have made,
use and sell products in the following fields of use:
(a) in vitro and in vivo diagnostics, including in vivo imaging;
and
(b) Monoclonal Antibody Technology; and
(c) products sold exclusively for research use.
<PAGE> 2
2.2. PFIZER grants to OSI a nonexclusive, irrevocable, worldwide,
royalty-free, perpetual right and license, including the right to grant
sublicenses, under Joint Patent Rights and Joint Technology to make, have made,
use and sell products in all fields of use other than those listed in Section
2.1.
3. INFRINGEMENT
3.1. OSI shall have the right, at its expense, to institute
actions under Joint Patent Rights and Joint Technology for infringement or
misappropriation in the fields of use in which PFIZER has granted rights to
OSI.
4. MISCELLANEOUS
4.1. This Agreement is made and delivered in New York and shall be
governed by, and construed in accordance with, the laws of the State of New
York applicable to agreements made and to be performed entirely within the
State of New York.
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<PAGE> 3
4.2. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective legal representatives, successors
and assigns.
ONCOGENE SCIENCE, INC.
By: /s/ John R. Stephens
---------------------------------------
Title: Scientific Director
PFIZER INC.
By: /s/ Barry M. Bloom
---------------------------------------
Title: Vice President
-3-
<PAGE> 1
EXHIBIT 10.20
PFIZER ROYALTY FREE LICENSE
This AGREEMENT is entered into as of April 1, 1986 by and between PFIZER
INC. ("PFIZER"), a Delaware corporation having an office at 235 East 42nd
Street, New York, New York 10017, and ONCOGENE SCIENCE, INC. ("OSI"), a
Delaware corporation having an office at 222 Station Plaza North, Suite 330,
Mineola, New York, 11501.
The parties agree as follows:
1. DEFINITIONS
The capitalized terms used herein have the meanings specified in
Exhibits I, II, III and IV of the Collaborative Research Agreement dated as of
April 1, 1986 between PFIZER and OSI.
2. GRANT
2.1. OSI grants to PFIZER a nonexclusive, irrevocable, worldwide,
royalty-free, perpetual right and license, including the right to grant
sublicenses, under Joint Patent Rights and Joint Technology to make, have made,
use and sell products in all fields of use except the following:
(a) in vitro and in vivo diagnostics, including in vivo imaging;
and
(b) Monoclonal Antibody Technology; and
(c) products sold exclusively for research use.
<PAGE> 2
3. INFRINGEMENT
3.1. PFIZER shall have the right, at its expense, to institute
actions under Joint Patent Rights and Joint Technology for infringement or
misappropriation in the fields of use in which OSI has granted rights to
PFIZER.
4. MISCELLANEOUS
4.1. This Agreement is made and delivered in New York and shall be
governed by, and construed in accordance with, the laws of the State of New
York applicable to agreements made and to be performed entirely within the
State of New York.
4.2. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective legal representatives, successors
and assigns.
ONCOGENE SCIENCE, INC.
By: /s/ John R. Stephens
---------------------------------
Title: Scientific Director
PFIZER INC.
By: /s/ Barry M. Bloom
---------------------------------
Title: Vice President
-2-
<PAGE> 1
EXHIBIT 10.21
ROYALTY AGREEMENT
This ROYALTY AGREEMENT is entered into as of April 1, 1986 by and between
PFIZER INC. ("PFIZER"), a Delaware corporation having an office at 235 East
42nd Street, New York, New York 10017, and ONCOGENE SCIENCE, INC. ("OSI"), a
Delaware corporation having an office at 222 Station Plaza North, Suite 330,
Mineola, New York, 11501.
WHEREAS, PFIZER and OSI have entered into a Collaborative Research
Agreement dated April 1, 1986, pursuant to which, among other things, PFIZER
has committed to fund certain cancer therapeutant research projects of OSI,
WHEREAS, certain results and materials arising from that Collaborative
Research Agreement will be useful and will be used by PFIZER in its own
research directed to the discovery of novel agents for the therapy of cancer,
and
WHEREAS, PFIZER recognizes the contribution of OSI in assisting PFIZER in
this process,
ACCORDINGLY, in consideration of the foregoing and of the mutual
covenants and promises hereinafter contained, the parties hereto agree as
follows:
1. DEFINITIONS.
Whenever used in this Royalty Agreement, the capitalized terms defined in
Exhibits A, B, C and D shall have the meanings specified therein.
<PAGE> 2
2. ROYALTIES.
PFIZER shall pay to OSI a royalty of between one percent (1%) and six
percent (6%) of the Net Sales of each Cancer Therapeutant Product sold by
PFIZER; provided, that such Cancer Therapeutant Product is in existence, as
evidenced by the filing with the U.S. Food and Drug Administration of an
Investigational New Drug Application (or the filing of a foreign equivalent)
for such Cancer Therapeutant Product, during or within five years after the
termination or expiration of, the Collaborative Research Agreement; and
provided, that such Cancer Therapeutant Product (a) was not developed as a
result of an existing PFIZER internal research project concerning inhibitors of
tissue plasminogen activators; or (b) does not involve Monoclonal Antibody
Technology; or (c) is not an acquired product to which PFIZER has excluded from
the Collaborative Research Agreement pursuant to Section 8.1.2(c) of the
Collaborative Research Agreement; or (d) is not a product resulting from
research which PFIZER has excluded from the Collaborative Research Agreement
pursuant to Section 8.1.2 (c) of the Collaborative Research Agreement. PFIZER
and OSI shall negotiate in good faith the precise royalty rate to be paid with
respect to each such Cancer Therapeutant Product. If PFIZER and OSI are unable
to agree, the royalty rate shall be determined by arbitration in accordance
with Paragraph 7. Royalty rates in excess of one percent shall be based upon
the extent to which OSI contributes to the development of each such Cancer
Therapeutant Product.
If PFIZER shall owe to OSI a royalty pursuant to this Royalty Agreement
and a royalty pursuant to an Exclusive Cancer Therapeutant License Agreement,
PFIZER shall pay to OSI only the higher such royalty.
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<PAGE> 3
3. ROYALTY PERIOD.
Royalties shall be paid for 10 years from the date of first commercial
sale by PFIZER of each such Cancer Therapeutant Product in each country of the
world, on a country by country basis.
4. PAYMENT OF ROYALTIES, ACCOUNTING FOR ROYALTIES, RECORDS, ETC.
4.1. Payment Dates.
Royalties shall be paid by PFIZER during the royalty period on all
sales of each Cancer Therapeutant Product within 60 days after the end of each
calendar quarter in which such sales are made. Such payments shall be
accompanied by a statement showing the Net Sales of each Cancer Therapeutant
Product by PFIZER and each Affiliate or sublicensee of PFIZER in each country,
the applicable royalty rate for the Cancer Therapeutant Product, and a
calculation of the amount of royalty due.
4.2. Accounting; Blocked Currency; Devaluation.
The Net Sales used for computing the royalties payable to OSI by
PFIZER pursuant to Paragraph 2 hereof shall be computed in U.S. Dollars; and
all payments of such royalties shall be made in U.S. Dollars. For the purpose
of determining the amount of royalties due, the amount of Net Sales in any
foreign currency shall be computed by (a) converting such amount into U.S.
Dollars at the prevailing commercial rate of exchange for purchasing U.S.
Dollars with the foreign currency in question as quoted by Citibank in New
York, New York, one business day before the date on which the relevant royalty
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<PAGE> 4
payment is to be made by PFIZER and (b) deducting therefrom the amount of any
tax, duty, charge, commission, discount or other fee payable in respect of such
conversion into, and remittance of, U.S. Dollars; provided, that in the event
any foreign currency shall, at the time that a royalty payment in respect of
Net Sales in such foreign currency is due, not be convertible into U.S. Dollars
and freely transferable by reason of moratorium, embargo, banking restriction
or other restriction, PFIZER shall, upon notice thereof to OSI, have no
obligation to make payment of such royalties until such time as such foreign
currency shall be convertible into U.S. Dollars and freely transferable to the
United States, except that, in such event, OSI may, by notice to PFIZER,
request that such royalties be paid by PFIZER in such foreign currency
(calculated on the basis of Net Sales in such foreign currency) and deposited
in a local bank account in the relevant country specified by OSI, in the name
of OSI. During any period of non-payment of royalties hereunder, the royalties
that are due and payable by PFIZER shall accrue in the foreign currency in
which they were earned. PFIZER shall pay to OSI the amount of any such accrued
royalties within 20 business days after the date on which the relevant foreign
currency shall become convertible into U.S. Dollars and freely transferable to
the United States. PFIZER shall provide to OSI such documentation with respect
to any of the above situations as OSI shall reasonably request.
4.3. Records.
PFIZER shall keep for three years from the date of payment of
royalties hereunder complete and accurate records of sales by PFIZER of each
Cancer Therapeutant Product, in sufficient detail to allow the royalties
accruing hereunder to be accurately
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<PAGE> 5
determined. OSI shall have the right for a period of three years after
receiving any report or statement with respect to royalties due and payable
hereunder to appoint an independent certified public accountant reasonably
acceptable to PFIZER to inspect the relevant records of PFIZER to verify such
report or statement. PFIZER shall make its records available for inspection by
such independent certified public accountant during regular business hours at
such place or places where such records are customarily kept, upon reasonable
notice from OSI, to the extent reasonably necessary to verify the accuracy of
the reports and payments required hereunder. Such inspection right shall not
be exercised more than once in any calendar year. OSI agrees to hold strictly
confidential all information concerning royalty payments and reports, other
than the total amounts thereof, and all information learned in the course of
any audit or inspection hereunder, except to the extent that it is necessary
for OSI to reveal such information in order to enforce its rights under this
Royalty Agreement or that disclosure is required by law. The failure of OSI to
request verification of any report or statement during said three-year period
shall be considered acceptance of the accuracy of such report, and PFIZER shall
have no obligation to maintain any records pertaining to such report or
statement beyond said three-year period.
5. TERM AND TERMINATION.
5.1. Term.
This Royalty Agreement shall commence as of the Effective Date
hereof and shall continue in effect until the expiration of PFIZER's last
obligation to pay royalties hereunder.
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<PAGE> 6
6. ARBITRATION.
In the event PFIZER and OSI cannot agree pursuant to Paragraph 2 on a
royalty rate for any Cancer Therapeutant Product, the royalty rate shall be
determined for such Cancer Therapeutant Product by arbitration to be held in
New York, New York, in accordance with the then prevailing rules for commercial
arbitration of the American Arbitration Association, and the determination
resulting from such arbitration shall be final and binding upon both PFIZER and
OSI.
7. NOTICES.
7.1. Notices.
All notices, statements, or other documents required to be given
hereunder shall be in writing and shall be given either personally, or by
mailing the same in a sealed envelope, postage prepaid, certified or registered
mail, return receipt requested, or by telegraph, telex or cable confirmed by
letter mailed as provided above, addressed as follows, or to such other address
as may be designated from time to time by notice given in the manner provided
in this Section 7:
If to PFIZER to:
Pfizer Inc.
235 East 42nd Street
New York, New York 10017
Attention: President, Central Research
with copy to: Office of the General Counsel
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If to OSI to:
Oncogene Science, Inc.
222 Station Plaza North
Mineola, N.Y. 11501
Attention : President
Notices given personally shall be deemed given as of the date delivered.
Notices given by telegraph, telex or cable shall be deemed given as of the date
received; provided, that the letter confirming such notices shall have been
mailed on the same date and shall have been received. Mailed notices shall be
deemed given as of the date of receipt by the party to whom such notices are
directed.
8. GOVERNING LAW.
8.1. New York State Law.
This Royalty Agreement is made and delivered in New York and shall
be governed by, and construed in accordance with, the laws of the State of New
York applicable to agreements made and to be performed entirely within the
State of New York.
9. MISCELLANEOUS.
9.1. Binding Effect.
This Royalty Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
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<PAGE> 8
9.2. Headings.
Paragraph headings are inserted herein for convenience of reference
only and do not form a part of this Royalty Agreement, and no construction or
inference shall be derived therefrom.
9.3. Counterparts.
This Royalty Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.4. Amendment; Waiver; etc.
This Royalty Agreement may be amended, modified, superseded or
cancelled, and any of the terms hereof may be waived, only by a written
instrument executed by each party hereto or, in the case of waiver, by the
party or parties waiving compliance. The delay or failure of any party at any
time or times to require performance of any provision hereof shall in no manner
effect the rights at a later time to enforce the same or any other provision.
No waiver by any party of any condition, or of the breach of any term,
contained in this Royalty Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such condition or of the breach of such term or any
other term of this Royalty Agreement.
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<PAGE> 9
9.5. No Third Party Beneficiaries.
No person not a party to this Royalty Agreement, including any
employee of any party to this Royalty Agreement, shall have or acquire any
rights by reason of this Royalty Agreement, nor shall any party hereto have any
obligations or liabilities to such other Person by reason of this Royalty
Agreement.
9.6. Assignment and Successors.
This Royalty Agreement may not be assigned by either party hereto
except that either party may assign this Royalty Agreement to any of its
Affiliates, to any purchaser of all or substantially all of its assets or to
any successor corporation resulting from any merger or consolidation with or
into such corporation. In the event of any such assignment by PFIZER, its
successor shall expressly assume in writing the performance of all the terms
and conditions of this Royalty Agreement to be performed by PFIZER.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Royalty Agreement
to be executed by their duly authorized representatives as of the date first
written above.
PFIZER INC.
By:/s/ Barry M. Bloom
-----------------------------
Title: Vice President
ONCOGENE SCIENCE, INC.
By:/s/ John R. Stephens
-----------------------------
Title: Scientific Director
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<PAGE> 11
EXHIBIT A
DEFINITIONS
1. "Affiliate" means any corporation or other legal entity owning,
directly or indirectly, fifty percent or more of the voting capital shares or
similar voting rights of PFIZER or OSI; any corporation or other legal entity
fifty percent or more of the voting capital shares or similar voting rights of
which is owned, directly or indirectly, by PFIZER or OSI; or any corporation or
other legal entity fifty percent or more of the voting capital shares or
similar voting rights of which is owned, directly or indirectly, by a
corporation or other legal entity which owns, directly or indirectly, fifty
percent or more of the voting capital shares or similar voting rights of PFIZER
or OSI.
2. "Cancer Therapeutant Product" means any product that is useful in
the therapy of human cancer.
3. "Collaborative Research Agreement" means the Collaborative Research
Agreement dated April 1, 1986 between PFIZER and OSI.
4. "Dollars" mean lawful currency of the United States of America.
5. "Effective Date" means April 1, 1986.
6. "Net Sales" means the gross amount invoiced by PFIZER or any
Affiliate or sublicensee of PFIZER (PFIZER, Affiliates of PFIZER and
sublicensees of PFIZER are sometimes referred to collectively in this Royalty
Agreement as "PFIZER") for arm's-length sales to a third party or parties of
Cancer Therapeutant Products, after deducting, if not already deducted in the
actual amount invoiced the following: normal and customary trade discounts
actually allowed; returns; credits; taxes the legal incidence of which is on
the purchaser and separately shown on PFIZER's invoices; and transportation,
insurance and postage charges, if prepaid by PFIZER and billed on PFIZER's
invoices as a separate item.
7. "Patent Rights"
(a) The term "OSI Patent Rights" means and includes:
(i) all patentable inventions pertaining to OSI Technology
(a) which were in existence on the Effective Date of
this Agreement or which were made at any time during
the term of the Collaborative Research Agreement by any
employee of, or consultant to, OSI, or both; and (b)
which are legally or beneficially owned, or both, by
OSI; and
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<PAGE> 12
(ii) all applications for letters patent, whether domestic
or foreign, claiming such patentable inventions,
including all continuations, continuations-in-part,
divisions, renewals and patent of addition thereof, all
letters patent granted thereon, and all reissues and
extensions thereof.
(b) The term "PFIZER Patent Rights" means and includes:
(i) all patentable inventions pertaining to PFIZER
Technology (a) which were in existence on the Effective
Date of this Agreement or which were made at any time
during the term of the Collaborative Research Agreement
by any employee of, or consultant to, PFIZER, or both;
and (b) which are legally or beneficially owned, or
both, by PFIZER; and
(ii) all applications for letters patent, whether domestic
or foreign, claiming such patentable inventions
including all continuations, continuations-in-part,
divisions, renewals and patents of addition thereof,
all letters patent granted thereon, and all reissues
and extensions thereof.
(c) The term "Joint Patent Rights" means and includes:
(i) all patentable inventions pertaining to Joint
Technology (a) which were in existence on the Effective
Date of this Agreement or which were made at any time
during the term of the Collaborative Research Agreement
jointly by employees of, or consultants to, OSI and
PFIZER; and (b) which are legally or beneficially owned
by OSI and PFIZER, each of OSI and PFIZER having made
an inventive contribution to such invention and owning
an undivided interest therein as determined by the laws
of inventorship; and
(ii) all applications for letters patent, whether domestic
or foreign, claiming such patentable inventions
including all continuations, continuations-in-part,
divisions, renewals and patents of addition thereof,
all letters patent granted thereon, and all reissues
and extensions thereof.
8. "Technology". The terms "OSI Technology", "PFIZER Technology" and
"Joint Technology" have the meanings defined in Exhibits A, B, C and D,
respectively; or such amended meanings as shall be agreed upon by the parties
pursuant to the Collaborative Research Agreement.
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<PAGE> 13
EXHIBIT B
OSI TECHNOLOGY
The term "OSI Technology" means and includes all technology and technical
information, including all inventions, cultures, strains, vectors, genes, gene
fragments and their sequences, cell lines, hybridoma cell lines, monoclonal and
polyclonal antibodies, proteins and protein fragments and their sequences,
non-protein chemical structures and methods for synthesis, structure-activity
relationships, assay methodology, methods, processes, formulae, plans,
specifications, characteristics, equipment and equipment designs, know-how,
experience and trade secrets:
(a) which have been developed by employees of, or consultants to, OSI
prior to, or during the term of, the Collaborative Research
Agreement; and
(b) which pertain to:
(i) any of a family of genes designed oncogenes, including those
of viral, normal or tumor cell origin and all mutants whether
obtained from natural sources or artificial constructions,
and the proteins, syntheses of which are directed by the
oncogenes, whether obtained from virus, normal or tumor
cells, or by molecular cloning and expression of such genes
in a prokaryotic or eukaryotic cell system, and to the
regulation of these oncogenes and their products, or both, as
expressed in the transformed phenotype ("Oncogene
Technology"), including, but not limited to, the oncogenes
designated ras oncogenes ("ras Technology"); or
(ii) any of a family of polypeptides capable of regulating tumor
growth, their sources, methods of isolation and purification,
biochemical or biophysical structures, or both, biological
activities, the biochemical structures of the genes or DNA
sequences coding for the polypeptides, methods for cloning
and expressing the polypeptides in prokaryotic and eukaryotic
cell systems, and methods for purifying the polypeptides so
expressed ("Tumor Growth Regulating Protein Technology"),
including but not limited to, the proteins designated Tumor
Inhibitory Factors ("TIFs") and Tumor Growth Inhibitors
("TGIs") (collectively, "TIF and TGI Technology") ; or
(iii) both (i) and (ii).
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<PAGE> 14
EXHIBIT C
PFIZER TECHNOLOGY
The term "PFIZER Technology" means and includes all technology and
technical information, including all inventions, cultures, strains, vectors,
genes, gene fragments and their sequences, cell lines, hybridoma cell lines,
monoclonal and polyclonal antibodies, proteins and protein fragments and their
sequences, non-protein chemical structures and methods for synthesis,
structure-activity relationships, assay methodology, methods, processes,
formulae, plans, specifications, characteristics, equipment and equipment
designs, know-how, experience and trade secrets:
(a) which have been developed by employees of, or consultants to,
PFIZER prior to, or during the term of, the Collaborative Research
Agreement; and
(b) which pertain to:
(i) Oncogene Technology, including, but not limited to, ras
Technology, both terms being as defined in Exhibit B; or
(ii) Tumor Growth Regulating Protein Technology, including, but
not limited to, TIF and TGI Technology, both terms being as
defined in Exhibit B; or
(iii) both (i) and (ii).
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EXHIBIT D
JOINT TECHNOLOGY
The term "Joint Technology" means and includes all technology and
technical information, including all inventions, cultures, strains, vectors,
genes, gene fragments and their sequences, cell lines, hybridoma cell lines,
monoclonal and polyclonal antibodies, proteins and protein fragments and their
sequences, non-protein chemical structures and methods for synthesis,
structure-activity relationships, assay methodology, methods, processes,
formulae, plans, specifications, characteristics, equipment and equipment
designs, know-how, experience and trade secrets:
(a) which have been developed jointly by employees of, or consultants
to, PFIZER and OSI during the term of the Interim Research
Agreement dated November 7, 1985 between PFIZER and OSI or of the
Collaborative Research Agreement, such that each of PFIZER and OSI
having contributed to the development of such technology and
technical information owns an undivided interest therein; and
(b) which pertain to:
(i) Oncogene Technology, including but not limited to, ras
Technology, both terms being as defined in Exhibit B; or
(ii) Tumor Growth Regulating Protein Technology, including, but
not limited to TIG and TGI Technology, both terms being as
defined in Exhibit B; or
(iii) both (i) and (ii).
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<PAGE> 1
EXHIBIT 10.27
April, 1995
ONCOGENE SCIENCE, INC.
and
CIBA-GEIGY Limited
COLLABORATIVE AGREEMENT
relating to TGF-Beta3
<PAGE> 2
THIS AGREEMENT is made as of the 19th day of April, 1995.
BETWEEN
CIBA-GEIGY LIMITED
of Klybeckstrasse 141, 4002 Basel, Switzerland
(hereinafter referred to as "CIBA-GEIGY")
AND
ONCOGENE SCIENCE, INC.
of 106 Charles Lindbergh Boulevard,
Uniondale, New York 11553-3649, USA
(hereinafter referred to as "ONCOGENE SCIENCE")
WHEREAS:
(A) ONCOGENE SCIENCE has know-how and rights to TGF-Betas and has applied for
patent rights to certain novel proteins, including TGF-Beta3.
(B) By a License Agreement dated the 1st April, 1991 (the "1991 Agreement")
made between ONCOGENE SCIENCE and PFIZER INC. ("PFIZER"), ONCOGENE SCIENCE
granted to PFIZER the exclusive right to manufacture, have manufactured,
use and sell products containing TGF-Beta3 for a range of indications
including the Licensed Indications as hereinafter defined.
(C) By an Addendum to the 1991 Agreement made between ONCOGENE SCIENCE and
PFIZER on the 17th April, 1995, PFIZER surrendered to ONCOGENE SCIENCE all
the rights relating to TGF-Beta3 granted to PFIZER pursuant to the 1993
Agreement subject only to the reservation in favour of CIBA-GEIGY of those
rights granted to CIBA-GEIGY under the Agreement dated the 11th August,
1993, between ONCOGENE SCIENCE, CIBA-GEIGY and PFIZER ("the 1993
Agreement").
(D) CIBA-GEIGY wishes to take an exclusive license direct from ONCOGENE
SCIENCE to manufacture, have manufactured, use and sell products
containing the Compound (as defined in Clause 1.3) for the Licensed
Indications (as defined in Clause 1.5) and ONCOGENE SCIENCE is willing to
grant such a license to CIBA-GEIGY in substitution for the license granted
to it under the 1993 Agreement on the terms and conditions hereinafter
appearing.
(E) The parties have agreed that the 1993 Agreement shall be terminated and
replaced by this Agreement as from the date of its execution and delivery
by both parties.
<PAGE> 3
(F) CIBA-GEIGY also wishes to have the opportunity to acquire from ONCOGENE
SCIENCE a license to manufacture, use and sell products containing
TGF-Beta3 and other TGF-Betas for all other indications not now included
in the Licensed Indications.
(G) CIBA-GEIGY has developed a process for the manufacture of certain
TGF-Betas.
(H) ONCOGENE SCIENCE wishes to have the right to buy such TGF-Betas from
CIBA-GEIGY and, subject as hereinafter mentioned, CIBA-GEIGY is willing to
supply TGF-Betas to ONCOGENE SCIENCE on the terms hereinafter appearing.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS
The following terms where used in this Agreement shall, unless the context
clearly indicates to the contrary, have the meanings set out below:
1.1 "Affiliate" shall mean with respect to each party or a licensee or
sub-licensee, any legal entity that directly or indirectly controls,
is controlled by or is under common control with, such party,
licensee or sub-licensee, but only for so long as such control shall
continue. One entity shall be deemed to control another entity if
such entity has the power to direct or cause the direction of the
management or policies of the other entity.
1.2 "Combination Product" shall mean a Product containing the Compound in
combination with one or more therapeutically active ingredients.
1.3 "Compound" shall mean transforming growth factor Betas ("TGF-Betas")
as described in the OSI Patents.
1.4 "Know-How" shall mean all information and material, technical data
and other know-how invented, developed or acquired by, or under the
control of any party hereto and which directly relates to the
Compound or the Product, or to the development, manufacture or use of
the same, including but not limited to chemical data, toxicological
and other pre-clinical data, product forms and formulations, control
assays and specifications and methods of preparation and stability
data, all such data belonging to one party constituting that party's
confidential information. "CG Know-How" and "OSI Know-How" shall
mean that Know-How belonging respectively to CIBA-GEIGY and ONCOGENE
SCIENCE. For the avoidance of doubt, the OSI Know-How shall be
deemed to include the PFIZER Know-How as defined in the 1993
Agreement.
1.5 "Licensed Indications" shall mean (1) oral mucositis arising from the
use of chemotherapy or radiation therapy in the treatment or
prevention of cancer, and (2) topical or local (as opposed to
systemic) application of the Products including, but not limited to,
the healing of soft tissue wounds however caused, and the treatment
of ophthalmic conditions and psoriasis, but excluding topical
application in the
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gastrointestinal tract in the treatment or prevention of cancer or
the management of side effects or adverse reactions arising from the
use in the treatment or prevention of cancer of chemotherapy or
radiation therapy; and also (3) all other indications deemed to be
included in the Licensed Indications pursuant to Clause 5.8.
1.6 "Major Country" shall mean any one of the following countries: the
United States of America, France, Germany, Italy, the United Kingdom.
1.7 "Net Sales" shall mean the invoice price billed to Third Parties on
the sale of the Products, less:
(i) trade and/or quantity discounts;
(ii) sales, value added or other excise taxes paid on the sale
of the Products;
(iii) amounts repaid or credited by reason of purchase
chargebacks, rebates, rejections or returns;
(iv) charges for freight, handling and transportation separately
billed; and
(v) rebates (including, but not limited to, all governmental
and managed health care rebates and hospital performance
incentive programme chargebacks).
all to the extent actually allowed, accrued or taken, and as
determined in accordance with CIBA-GEIGY's standard accounting
procedures.
In the case of Products which are Combination Products the parties
will negotiate in good faith and agree on an equitable method of
calculating the Net Sales having regard to the Net Sales of Products
which are not Combination Products and the value of the active
ingredient or ingredients other than the Compound.
1.8 "OSI Patents" shall mean all of ONCOGENE SCIENCE's right, title and
interest in and to the patents relating to TGF-Betas set out in
Schedule 1 hereto and corresponding foreign patents or applications
therefor, together with any patents issuing on the said applications,
or any addition, continuation, continuation-in-part, division,
reissue, renewal or extension based thereon (including any
supplementary protection certificate ("SPC") based on the said
patents).
1.9 "CG Patents" shall mean all of CIBA-GEIGY's right, title and interest
in and to patents relating to processes for the manufacture of
TGF-Betas including the Patents set out in Schedule 2 hereto and
corresponding foreign patents or applications therefor, together
with any patents issuing on the said applications, or any addition,
continuation, continuation-in-part, division, reissue, renewal or
extension based thereon (including any SPC based on the said patents).
1.10 "Third Party Patents" shall mean the patents set out in Schedule 3
hereto and corresponding foreign patents or applications therefor,
together with any patents issuing on the said applications, or any
addition, continuation, continuation-in-part, division, reissue,
renewal or extension based thereon (including any SPC based on the
said patents).
1.11 "Products" shall mean pharmaceutical preparations containing the
Compound designed for administration to human beings which fall
within the scope of the claims of the OSI Patents.
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<PAGE> 5
1.12 "Territory" shall mean all countries of the world.
1.13 "Third Party" shall mean any person or legal entity, whether or not
incorporated, other than any of the parties hereto or their
respective Affiliates or CIBA-GEIGY's sub-licensees.
1.14 "Year" shall mean a period of 12 calendar months commencing on the
1st January.
1.15 "Half Year" shall mean a period of six calendar months commencing on
the 1st January or the 1st July in any Year.
2. GRANT
2.1 In consideration of the covenants on the part of CIBA-GEIGY
hereinafter contained, ONCOGENE SCIENCE hereby grants to CIBA-GEIGY
an exclusive license, with the right to grant sub-licenses, under the
OSI Patents and OSI Know-How, the right to manufacture, use and sell
the Products for the Licensed Indications within the Territory.
2.2 ONCOGENE SCIENCE warrants that it is free to enter into this
Agreement and to carry out all the obligations on its part contained
herein.
2.3 Within 30 days from the date hereof, ONCOGENE SCIENCE will deliver to
CIBA-GEIGY such of the OSI Know-How as is in written form and is
relevant to the Compound and Licensed Indications.
2.4 ONCOGENE SCIENCE will pursue applications for the OSI Patents with
reasonable diligence and will notify CIBA-GEIGY as and when patents
are granted on the said applications.
2.5 If ONCOGENE SCIENCE should decide to abandon any of the OSI Patents
it shall notify CIBA-GEIGY, and CIBA-GEIGY shall have the right to
take an assignment of the OSI Patent or Patents in question.
3. SUPPLY OF TGF-Betas
3.1 CIBA-GEIGY warrants that it owns or has rights to the CG Patents and
that it is free to enter into this Agreement and to carry out the
obligations on its part contained herein.
3.2 CIBA-GEIGY warrants that it is the licensee under the Third Party
Patents which entitles it to manufacture TGF-Betas without infringing
such patents.
3.3 (a) CIBA-GEIGY agrees to establish processes for the manufacture of
TGF-Beta3 and of such other TGF-ps as shall be agreed from time to
time between itself and ONCOGENE SCIENCE, and, subject as hereinafter
mentioned, agrees to supply to ONCOGENE SCIENCE, and ONCOGENE SCIENCE
agrees to purchase from
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<PAGE> 6
CIBA-GEIGY the quantities of TGF-Betas required by it for research
and development purposes.
(b) ONCOGENE SCIENCE acknowledges that it is its present intention
to purchase, and, subject as hereinafter mentioned, shall purchase
from CIBA-GEIGY, and CIBA-GEIGY shall supply, the quantities of
TGF-Betas required by ONCOGENE SCIENCE for commercial purposes. If
ONCOGENE SCIENCE should decide not to purchase its commercial
requirements of TGF-Betas from CIBA-GEIGY as from or at any time
subsequent to the date of commercial launch of the Products, it shall
give CIBA-GEIGY not less than 36 months' prior notice in writing of
that decision. Upon expiry of such notice ONCOGENE SCIENCE shall be
relieved of its obligation to purchase, and CIBA-GEIGY shall be
relieved of its obligation to supply, such commercial requirements.
(c) For the avoidance of doubt, it is agreed by the parties that
CIBA-GEIGY shall not be required to manufacture or supply TGF-Betas
pursuant to this Agreement if by so doing it would be liable to suit
for infringement or contributory infringement of the intellectual
property rights of a Third Party.
(d) The processes to be developed by CIBA-GEIGY pursuant to this
Clause shall initially be adequate to meet the requirements of itself
and its sub-licensees, of ONCOGENE SCIENCE, and the licensees of
ONCOGENE SCIENCE, for research and development purposes and clinical
trials as foreseen at the date of this Agreement. It is the
intention of CIBA-GEIGY to scale up such processes to meet the
estimated future requirements of itself and ONCOGENE SCIENCE for
commercial quantities of the Compound. Should it fail to do so, or
if processing capacity should prove to be inadequate to meet all
ONCOGENE SCIENCE actual requirements and CIBA-GEIGY should be
unwilling to invest in additional capacity, it agrees if so requested
to grant a license to ONCOGENE SCIENCE under the CG Patents and CG
Know-How to produce the Compound on terms to be negotiated in good
faith, the financial terms to be reasonable having regard to the cost
of supplies of the Compound as at the date of the license
negotiations, the cost to ONCOGENE SCIENCE of procuring the grant of
licenses for any parts of the process covered by Third Party Patents,
and the estimated production costs of ONCOGENE SCIENCE. CIBA-GEIGY
will also provide reasonable assistance to ONCOGENE SCIENCE with
plant design and operations so far as its resources permit.
(e) CIBA-GEIGY will notify ONCOGENE SCIENCE promptly should it
decide not to scale up manufacture of the Compound or to discontinue
manufacture thereof. For a period of 36 months following such
notification, unless a shorter period should be agreed in writing by
the parties hereto, CIBA-GEIGY shall continue to supply the Compound
to ONCOGENE SCIENCE in accordance with the arrangements hereinafter
set out, it being understood, however, that CIBA-GEIGY shall not be
obliged to produce quantities of the Compound for its own consumption
and for supply to ONCOGENE SCIENCE in excess of the production
capacity available to it at the time of such notification.
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<PAGE> 7
(f) Upon the request of ONCOGENE SCIENCE to be made in writing not
less than one year in advance of the date when such supplies are
required, CIBA-GEIGY will manufacture and store for ONCOGENE SCIENCE,
and ONCOGENE SCIENCE will purchase and pay storage for up to a
one-year supply of Compound as projected in the ordinary course of
business. In the event that CIBA-GEIGY is unable to supply the
Compound to ONCOGENE SCIENCE for a period of 90 days by reason of
force majeure or otherwise, it will use all commercially reasonable
endeavours to have an alternative plant for the production of the
Compound validated within one year from the date of cessation of
supply.
3.4 The ex-works price at which CIBA-GEIGY shall supply the Compound to
ONCOGENE SCIENCE for use for pre-clinical and clinical purposes shall
be equal to CIBA-GEIGY's cost of manufacture, including overheads,
calculated in accordance with its standard accounting practices
("Manufacturing Cost"), freight, transport and insurance charges
incurred in delivering the material to the purchasing party, and
royalties to third parties for bulk material, but shall exclude any
profit element.
3.5 (a) The ex-works price at which and all other terms and conditions
on which CIBA-GEIGY shall supply the Compound for the manufacture of
products for subsequent sale shall be negotiated by the parties in
good faith prior to the date of commencement of supply. However, if
the parties should be unable to reach agreement on price during such
negotiations then the price shall be equal to the Manufacturing Cost,
plus any freight, transport and insurance charges incurred by
CIBA-GEIGY in shipping the Compound to ONCOGENE SCIENCE plus an
amount equal to eight per cent (8%) of ONCOGENE SCIENCES' and its
licensees' Net Sales. In the latter case, payments shall be
calculated and paid as mentioned in Clause 3.5(c).
(b) Payment for the said supplies shall be made by ONCOGENE SCIENCE
in two installments, as follows:
(i) the first installment, being an amount equal to the
Manufacturing Cost, plus freight, transport and insurance
charges, shall be paid within thirty (30) days of the end of the
month in which the supplies are delivered;
(ii) the second installment, being an amount equal to eight per
cent (8%) of ONCOGENE SCIENCE's and its licensees' Net Sales of
the Products and/or of the Compound during each Half Year, shall
be paid within sixty (60) days of the end of such Half Year.
(c) Notwithstanding the provisions hereinbefore contained, if CIBA-
GEIGY's weighted average Manufacturing Cost per gram of Compound
supplied to ONCOGENE SCIENCE in any Year, expressed as a percentage
(the "Actual Percentage") of ONCOGENE SCIENCE's weighted average Net
Sales Value per active gram of Product sold by ONCOGENE SCIENCE and
its licensees in the same Year should be less than four per cent
(4%), then, in addition to the amounts mentioned in Clause 3.5(b),
ONCOGENE SCIENCE shall pay to CIBA-GEIGY a percentage of its and its
licensees Net Sales equal to one half of the difference between four
per cent (4%) and the Actual Percentage. For the purposes of this
calculation,
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<PAGE> 8
the Net Sales Value per active gram shall be determined by dividing
the Net Sales of ONCOGENE SCIENCE and its licensees by the number of
grams and/or parts of a gram of the Compound contained in the
quantities of the Product sold. (An example of a calculation using
hypothetical figures is set out in Schedule 4 hereto.)
Such payment shall be made at the same time as the second payment due
under Clause 3.5(b)(ii) in respect of the Half Year ending on the
31st December of that Year.
(d) ONCOGENE SCIENCE shall be entitled to have CIBA-GEIGY's cost of
manufacture and overhead confirmed by an independent firm of
accountants to which CIBA-GEIGY has no reasonable objection, but not
more than once in any Year PROVIDED HOWEVER that such firm of
accountants shall only report to ONCOGENE SCIENCE the amount of such
costs, including overheads, and shall keep confidential all other
information acquired in the course of the examination.
(e) ONCOGENE SCIENCE shall supply to CIBA-GEIGY within 60 days of
the end of each Half Year a statement showing the Net Sales during
such Half Year of Products produced from the Compound.
(f) ONCOGENE SCIENCE shall keep accurate records in sufficient
detail to enable the price of the Compound to be calculated and shall
maintain such records for a period of two Years after the end of the
period to which they relate. CIBA-GEIGY shall be entitled to have
such records examined during normal working hours by an independent
firm of accountants to which ONCOGENE SCIENCE has no reasonable
objection (but not more than once in any one Year) so as to verify
the correctness of any royalty payment PROVIDED HOWEVER that such
firm of accountants shall only report to CIBA-GEIGY the correct
amount of net sales, and shall keep confidential all other
information acquired in the course of such examination.
(g) Not later than the end of each Year ONCOGENE SCIENCE will supply
to CIBA-GEIGY an estimate of its requirement of the Compound during
the ensuing three Years, and will update this estimate at six-monthly
intervals. CIBA-GEIGY will notify ONCOGENE SCIENCE within 30 days of
receipt of such estimate if it will be unable to supply the whole or
any part of the requirements mentioned in such estimate.
(h) Together with the three-year estimate, ONCOGENE SCIENCE will
deliver to CIBA-GEIGY firm orders for its requirements of the
Compound not less than twelve (12) months in advance of the required
date of delivery. CIBA-GEIGY shall fulfill such orders provided that
the quantifies specified therein do not exceed those quantities
contained in the previous estimate for the same period and provided
that CIBA-GEIGY has not previously advised ONCOGENE SCIENCE that it
will be unable to supply all or part of such quantities.
All other terms of supply and purchase shall be negotiated by the
parties in good faith.
3.6 Apart from material supplied for research purposes and for the
Licensed Indications, CIBA-GEIGY will not during the life of the OSI
Patents supply the Compound to any
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<PAGE> 9
Third Party without the prior consent of ONCOGENE SCIENCE, provided
that such consent shall not be unreasonably withheld or delayed.
3.7 It is a condition precedent to the performance by the parties hereto
of their respective obligations under this Agreement that CIBA-GEIGY
shall have delivered copies of the License Agreements under the Third
Party Patents to ONCOGENE SCIENCE.
4. DEVELOPMENT
4.1 Subject as herein mentioned, CIBA-GEIGY will pursue the development
of the Products for the Licensed Indications wound healing, psoriasis
and oral mucositis with reasonable diligence. ONCOGENE SCIENCE will
cooperate fully and accept certain responsibilities as set forth
below.
4.1.1 ONCOGENE SCIENCE will be responsible for developing the
Compound through Phase I clinical trials for Oral
Mucositis, in consultation with CIBA-GEIGY based on a
protocol approved by CIBA-GEIGY, and ONCOGENE SCIENCE will
pay for all Phase I Oral Mucositis expenses from its funds,
except those studies done directly by CIBA-GEIGY or under
the direction or control of CIBA-GEIGY.
4.1.2 ONCOGENE SCIENCE agrees that if so requested by CIBA-GEIGY
it is willing to assume responsibility for Phase II trials
for Oral Mucositis in accordance with CIBA-GEIGY's standard
operating procedures for clinical trials and based on a
protocol approved by CIBA-GEIGY in consultation with
CIBA-GEIGY, with the expense of the Phase II trials to be
paid by CIBA-GEIGY in accordance with a budget to be
mutually agreed by the parties in advance.
4.1.3 CIBA-GEIGY will be responsible for Phase III trials for
Oral Mucositis and will pay the expense of the trials, in
consultation with ONCOGENE SCIENCE. ONCOGENE SCIENCE is
willing to assume responsibility for Phase III trials in
any respect requested by CIBA-GEIGY, with expenses to be
paid by CIBA-GEIGY.
4.1.4 CIBA-GEIGY will be responsible for the development of the
Compound for Licensed Indications, other than Oral
Mucositis, in consultation with ONCOGENE SCIENCE, and will
pay all expenses.
4.2 CIBA-GEIGY shall have the right to discontinue development of the
Products at any time.
4.3 If CIBA-GEIGY should decide to discontinue the development of the
Products it shall promptly notify ONCOGENE SCIENCE and thereupon:
(a) all licenses granted hereunder to CIBA-GEIGY will automatically
terminate.
-8-
<PAGE> 10
(b) CIBA-GEIGY will make available to ONCOGENE SCIENCE for use by
ONCOGENE SCIENCE or its sub-licensees the results of all
development work carried out up to the date of discontinuance
(including rights under any patents or CG Know-How developed by
CIBA-GEIGY so far as they relate exclusively to the Products) on
terms to be negotiated in good faith.
(c) the provisions with regard to supply of the Compound and the
licensing of the process for the manufacture of the Compound set
out in Clause 3 shall remain binding on CIBA-GEIGY for a period
of three years from the date of such notification. CIBA-GEIGY
may at its discretion opt to continue the supply of the
Compound, in which event the parties will enter into an
Agreement for the supply of the Compound on the same terms as to
price and ordering as set out herein and on such other terms as
shall be mutually agreed.
(d) CIBA-GEIGY will return to ONCOGENE SCIENCE all documents
received from ONCOGENE SCIENCE containing OSI Know-How.
4.4 The parties will cooperate with one another, and ONCOGENE SCIENCE
shall ensure that its licensees cooperate with CIBA-GEIGY, with a
view to facilitating the regulatory approval and commercialization of
products containing the Compound, and in particular will share
Know-How relating to such products.
4.5 During the term of this Agreement and to the extent necessary to give
effect to the purposes of this Agreement each of the parties will
disclose to the other any new Know-How coming to its attention,
including, but not limited to, information which would modify or
supplement to a material degree information disclosed to the other
party pursuant to the preceding provisions of this Agreement, or
which in the reasonable opinion of that party could have a material
bearing on the other party's testing, registration or marketing of
products produced from the Compound.
4.6 For the purpose of limiting infringing or off-label use of a product
produced from the Compound each of the parties agrees to use all
commercially reasonable efforts to develop products formulated or
presented in such a manner as to make them difficult to use in the
other party's licensed indications.
5. PAYMENT OF ROYALTIES AND FOR RIGHTS GRANTED
5.1 In consideration of the license and rights hereby granted, CIBA-GEIGY
agrees to pay ONCOGENE SCIENCE the royalties herein set forth and to
purchase ONCOGENE SCIENCE common stock as set forth in clauses 5.7
and 5.8, or alternatively, at CIBA-GEIGY's option to pay the
respective milestone fees in lieu of purchasing stock as set forth in
clauses 5.7 and 5.8.
5.2 CIBA-GEIGY agrees to pay ONCOGENE SCIENCE a royalty of 8% of Net
Sales of the Products made by CIBA-GEIGY or its sub-licensees during
the royalty period. The royalty period shall be calculated on a
country-by-country basis and shall commence on the date of commercial
launch of any of the Products in each country and shall end on the
date of expiry of the Patents in the country.
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<PAGE> 11
5.3 If ONCOGENE SCIENCE shall not have applied for any Patent in a
particular country or if patent protection for the Products should be
refused or revoked, the rate of royalty payable on Net Sales in that
country shall be reduced by half. Royalties under this Clause 5.3
shall be payable for a period of ten years from the date of
commercial launch in the country in question.
5.4 No later than 60 days after the end of each Half Year CIBA-GEIGY
shall deliver to ONCOGENE SCIENCE a statement showing its and its
sub-licensees Net Sales of the Products invoiced during such Half
Year, and shall pay to ONCOGENE SCIENCE the amount of royalty due on
such Net Sales.
5.5 CIBA-GEIGY shall keep accurate records in sufficient detail to enable
the amount of the royalties due hereunder to be calculated and shall
maintain such records for a period of two Years after the end of the
period to which they relate. ONCOGENE SCIENCE shall be entitled to
have such records examined during normal working hours by an
independent firm of accountants to which CIBA-GEIGY has no reasonable
objection so as to verify the correctness of any royalty payment
PROVIDED HOWEVER that such firm of accountants shall only report to
ONCOGENE SCIENCE the correct amount of Net Sales and the amount of
royalty due to ONCOGENE SCIENCE and shall keep confidential all other
information acquired in the course of such examination.
5.6 (a) Royalties shall be paid in US dollars into such accounts as
shall be nominated by ONCOGENE SCIENCE for that purpose. Net Sales
in currencies other than US dollars shall be converted into US
dollars at the rate of exchange prevailing on the last day of the
Half Year to which they relate.
(b) If CIBA-GEIGY is obliged to deduct withholding tax on royalties,
the royalties shall be paid net of withholding tax. CIBA-GEIGY will
deliver to ONCOGENE SCIENCE receipts or other evidence of payment
issue any the relevant tax authorities to enable it to claim any
available double-taxation relief.
5.7 CIBA-GEIGY agrees to pay ONCOGENE SCIENCE $5 million in cash at the
time this Agreement is signed, or to purchase ONCOGENE SCIENCE common
stock to the value of $5,000,000.50 at a price of $5.50 per share in
accordance with the terms of the Stock Subscription and Purchase
Agreement ("the Stock Purchase Agreement") contained in Schedule 5.
In recognition of this payment or investment, CIBA-GEIGY is hereby
granted an option to include all other indications for the Compound
in the Licensed Indications, upon making the milestone payment or
stock purchase set forth in Clause 5.8, such option to be exercised,
if at all, within 60 days of the decision by CIBA-GEIGY to initiate
full development of the Product (i.e. Phase IIb or Phase III clinical
trials for Oral Mucositis (which decision shall be communicated
promptly to ONCOGENE SCIENCE in writing) or within four years from
the date hereof whichever is the earlier. For the avoidance of
doubt, it is agreed that unless CIBA-GEIGY advises ONCOGENE SCIENCE
to the contrary, the option shall be deemed to have been
automatically exercised by CIBA-GEIGY upon making the said milestone
payment or the said stock purchase in accordance with Clause 5.8
without
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<PAGE> 12
the need for further notification to ONCOGENE SCIENCE. The option
shall automatically lapse if it is not exercised within the time
limits hereinbefore prescribed.
5.8 Within 60 days after the earlier of: (a) the date of the decision by
CIBA-GEIGY to initiate full development (as defined in Clause 5.7) of
the Product for Oral Mucositis, or (b) the exercise of the option set
out in Clause 5.7, CIBA-GEIGY agrees either to make a milestone
payment of $10 million in cash to ONCOGENE SCIENCE or to purchase
ONCOGENE SCIENCE common stock to the value of $10 million at the
higher of EITHER the average closing price for the 30-day period
ending on the date of purchase or $5.50 per share. Upon making this
milestone payment or completion of the stock purchase, all other
indications for the Compound not already licensed to CIBA-GEIGY shall
be deemed to be included in the Licensed Indications. The retention
of the rights to such other indications shall be subject to the
provisions of the Stock Purchase Agreement.
6. DEFENSE OF PATENTS, INFRINGEMENTS, ETC.
6.1 Each of the parties hereto agrees to notify the other party if it
should become aware of any infringement or threatened infringement of
the Patents.
6.2 ONCOGENE SCIENCE shall have the prior right, but not the obligation,
to bring legal proceedings against an infringer of the OSI Patents or
to take such other action against such infringer as it thinks fit
PROVIDED HOWEVER that it shall not settle or compromise any such
action where the infringing act involved the sale of products for one
of the Licensed Indications without obtaining the prior written
agreement of CIBA-GEIGY, such agreement not to be unreasonably
withheld or delayed. If so requested, CIBA-GEIGY will provide
reasonable assistance in connection with any such proceedings or
other action.
6.3 With respect to Licensed Indications, if ONCOGENE SCIENCE should fail
to institute proceedings against an infringer of the OSI Patents
within 60 days of the receipt of information of such infringement or
threatened infringement CIBA-GEIGY shall have the night to institute
proceedings in its own name where practicable, or otherwise in the
name of ONCOGENE SCIENCE, to prevent or put an end to the
infringement, including, at its option, the filing of a claim for
damages. In this event ONCOGENE SCIENCE shall do all such things as
are reasonably necessary to enable CIBA-GEIGY to institute such
proceedings and shall cooperate with CIBA-GEIGY in the conduct of
such proceedings.
6.4 Any damages and costs recovered from the infringer in proceedings
brought or other action taken against the infringer pursuant to
Clause 6.2 or 6.3 shall be applied firstly in defraying the legal
costs and expenses of the proceedings. Any surplus remaining shall
be used to compensate whichever of ONCOGENE SCIENCE or CIBA-GEIGY has
incurred losses as the result of the infringement, and if both of
them shall have incurred losses, the surplus shall be divided between
them in proportion to their respective losses. If the net amount of
damages and costs recovered exceeds the legal costs and expenses and
their respective losses, the surplus remaining shall be paid to
ONCOGENE SCIENCE.
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<PAGE> 13
6.5 If CIBA-GEIGY shall be unable to exploit the license hereby granted
without infringing the patent rights of a Third Party, ONCOGENE
SCIENCE will use all reasonable endeavours to obtain an unblocking
license. If they shall fail to do so, CIBA-GEIGY shall be entitled
to negotiate the terms of a license for itself and its sub-licensees
directly with the Third Party. If under such a license CIBA-GEIGY is
obliged to pay a lump sum or royalty to the Third Party, it shall be
entitled to deduct the amount of such lump sum or royalty from the
royalties due to ONCOGENE SCIENCE hereunder, provided, however that
the deduction in any one Year shall not cause the royalty to be paid
by CIBA-GEIGY to ONCOGENE SCIENCE in that year to be reduced below 5
percent.
7. CONFIDENTIALITY
7.1 For the purposes of this Clause 7, "Confidential Information" shall
mean all information, whether technical, commercial, or otherwise
(including, but not limited to, Know-How, technical and non-technical
materials and specifications) disclosed by any of the parties hereto,
or its Affiliates, licensees or sub-licensees (the "Discloser") to
the other party or any of its Affiliates, licensees or sub-licensees
(the "Receiver") which the Discloser deems to be confidential and
proprietary to the Discloser, other than information which the
Receiver can show to the reasonable satisfaction of the Discloser:
(i) was already in the possession or control of the
Receiver prior to the time of disclosure;
(ii) is at the time of disclosure or thereafter becomes
available to the public otherwise than as the result
of any fault or omission by the Receiver or any
employee of the Receiver contrary to the terms of this
Agreement;
(iii) is disclosed to the Receiver by a third party who did
not acquire it directly or indirectly from the
Discloser in confidence;
(iv) is approved for release by the Discloser.
7.2 Each of the parties hereto agrees that it will not use any
Confidential Information disclosed to it by the other party except
for the purposes of the development, registration, manufacture, use
and sale of Products produced from the Compound pursuant to the terms
of this Agreement and that, except as required by law it will not
disclose the Confidential Information to any Third Party without the
consent of the Discloser PROVIDED HOWEVER that such consent shall be
deemed to have been given to disclosure of the Confidential
Information to those of its Affiliates, or sub-licensees or to those
of its officers or employees, or officers or employees of such
Affiliates, licensees or sub-licensees who require to have the
Confidential Information in connection with the development,
registration, manufacture, use or sale of the Products produced from
the Compound, but only if such Affiliates, licensees, sub-licensees,
officers or employees are bound by obligations of confidentiality no
less strict than those set out herein.
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<PAGE> 14
7.3 Each of the parties agrees to notify the Discloser forthwith in the
event that it should become aware of the disclosure or use of the
Discloser's Confidential Information contrary to the terms hereof.
7.4 All proprietary rights (including, but not limited to, patent rights
and trade secrets) in and to the Confidential Information shall
remain the property of the Discloser.
7.5 The obligations set out in this Clause 7 shall remain binding on the
parties hereto either for the term of this Agreement and for a period
of five (5) years thereafter or for a term of ten (10) years from the
date hereof, whichever is the longer.
8. PUBLIC ANNOUNCEMENTS
Except as required by law, neither the existence nor the terms of this
Agreement nor the arrangements contemplated herein shall be disclosed by
any party to any Third Party or made public without the prior written
agreement of the other party, such agreement not to be unreasonably
withheld or delayed.
9. TERM AND TERMINATION
9.1 This Agreement shall come into operation on the date hereof, and,
subject to the provisions for earlier termination set out herein,
shall remain in force until the expiry of the last to expire of the
OSI Patents in the Territory.
9.2 The 1993 Agreement is hereby terminated.
9.3 Each of the parties shall be entitled to terminate this Agreement
with immediate effect by notice in writing to the other in either of
the following events:
(i) If the other party owes an obligation hereunder, and should
commit or permit a material breach of such obligation and
shall fail or be unable to cure such breach within 60 days
of receipt of notice specifying the breach;
(ii) If the other party should go into liquidation otherwise
than for the purpose of reconstruction or amalgamation; or
if a petition should be presented for its dissolution or
winding up and such petition should not be withdrawn or
dismissed within 60 days of its presentation; or if a
receiver or manager should be appointed of its assets; or
if it should enter into any composition with its creditors.
9.4 Termination or expiry of this Agreement shall not affect the rights
of any party against the other party in respect of any antecedent
breach of the terms hereof, nor the rights or obligations of any
party pursuant to the provisions of Clause 5 with regard to royalty
payments in respect of Net Sales of the Products up to the date of
termination or expiry, Clause 7 in respect of confidentiality and
Clause 10 in respect of indemnities.
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<PAGE> 15
9.5 The expiration or termination of this Agreement, if brought about as
referred to in Clause 9.2 by the expiry of the Patents or if
CIBA-GEIGY should terminate this Agreement pursuant to Clause 9.2,
shall not terminate the night of CIBA-GEIGY to continue to use OSI
Know-How or to manufacture, have manufactured, use and sell the
Products in the Territory.
9.6 Notwithstanding expiry of this Agreement by effluxion of time or
termination pursuant to Clause 4.3 hereof, if at the relevant time
CIBA-GEIGY is supplying ONCOGENE SCIENCE with its requirements of the
Compound, it will continue to do so on the same terms as to supply as
are then in force. In such case and if so requested by CIBA-GEIGY,
ONCOGENE SCIENCE will enter into a formal Supply Agreement
incorporating such terms.
10. INDEMNITIES
10.1 Each of the parties hereto shall hold harmless and indemnify the
other party hereto from and against any claim for damages for human
bodily injury or death resulting from the ingestion or use of any
products produced from the Compound and sold by the indemnifying
party or its Affiliates or sub-licensees except to the extent that
such injury or death is attributable to the negligence or intentional
misconduct of the party seeking indemnity.
10.2 The party seeking indemnity shall promptly notify the indemnifying
party of any such claim, and shall allow the indemnifying party
and/or its insurers the opportunity to assume the direction and
control of the defense of such claim, including, without limitation,
the settlement thereof at the sole discretion of the indemnifying
party or its insurers, except to the extent that the indemnifying
party alleges that there has been negligence or intentional
misconduct on the part of the party seeking indemnity. The party
seeking indemnity shall cooperate with the indemnifying party and/or
its insurers in the defense and disposition of any such claim.
11. ASSIGNMENT
11.1 Each party hereto may assign the whole or any part of its rights and
obligations under this Agreement to any of its Affiliates or to any
successor to the whole of its pharmaceutical business. Save as
mentioned in this Clause 11.1, none of the parties hereto may assign
its rights and obligations hereunder to any Third Party without first
obtaining the written consent of the other party hereto.
11.2 If so requested by the other party, the party assigning its rights
and obligations hereunder shall procure that the assignee will
undertake directly with the other party to perform the obligations
assigned to it. Pending the giving of such undertaking, the
assigning party shall remain responsible for the performance of such
obligations by the assignee.
11.3 Written notice of any assignment permitted under Clause 11.1 hereof
shall be given by the assigning party to the other within seven (7)
days after the date of such assignment.
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<PAGE> 16
11.4 CIBA-GEIGY shall be entitled to grant sub-licenses to any of its
Affiliates and to Third Parties to manufacture or have manufactured,
use and sell the Products in any country of the Territory.
CIBA-GEIGY will ensure that the terms of any such sub-license impose
on the sub-licensee obligations no less onerous than those accepted
by it hereunder, including, but not limited to, obligations relating
to the keeping of records, provision and verification of sales
returns, payment of royalties, indemnities and confidentiality.
12. MISCELLANEOUS
12.1 APPLICABLE LAW, ETC. This Agreement shall be construed and applied
in accordance with the laws of the State of New York. Venue shall be
New York.
12.2 NOTICES. Any notices required or authorized to be served hereunder
shall be deemed to have been properly served if delivered by hand, or
sent by registered or certified mail, or sent by facsimile
transmission confirmed by registered or certified mail, to the party
to be served at the address specified by such party for that purpose,
or, if no such address is specified, at the address given at the head
of this Agreement.
12.3 ENTIRE AGREEMENT. This Agreement represents the entire agreement and
understanding between the parties relating to the subject matter
hereof, and supersedes all documents or verbal consents or
understandings (if any) given or made between the parties prior to
the date hereof. None of the terms hereof may be amended or modified
except by an instrument in writing signed by authorized
representatives of the parties hereto.
12.4 WAIVERS. Any delay or omission on the part of any party in the
exercise of its strict rights hereunder will not impair those rights
nor will it constitute a renunciation or waiver of those rights. Any
waiver by any party of any term or condition of this Agreement in any
one instance shall not be deemed or construed to be a waiver of such
term or condition for any other instance in the future (whether
similar or dissimilar) or of any subsequent breach hereof. All
rights, remedies, undertakings, obligations and agreements contained
in this Agreement shall be cumulative, and none of them shall be a
limitation of any other right, remedy, undertaking, obligation, or
agreement of any of the parties.
12.5 FORCE MAJEURE. None of the parties hereto shall be liable to the
other party for any failure to perform any obligation on its part
hereunder to the extent that such failure is due to circumstances
beyond its reasonable control, including in particular war, act of
God, strike, lock-out, Government intervention, riot or civil
commotion, plant breakdown and scarcity or nonavailability of raw
materials. It shall however notify the other party as soon as
practicable of the occurrence of any such circumstance, and the
parties shall meet to consider what steps, if any, can be taken to
overcome any difficulties thereby occasioned.
12.6 HEADINGS. Headings in this Agreement are included for ease of
reference only and have no legal effect.
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<PAGE> 17
AS WITNESS the signatures of the representatives of the parties hereto the day
and year first above written.
ONCOGENE SCIENCE, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
CIBA-GEIGY Limited
By:
Names: M. Sundman R.E. Walker
Titles: Head of Business Development Division Counsel
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<PAGE> 18
SCHEDULE 1
List of OSI Patents
<TABLE>
<CAPTION>
COUNTRY APPLICATION/PATENT NO. FILING DATE EXPIRY DATE
<S> <C> <C> <C>
Australia 600230 21.04.1986 21.04.2002
Australia 620795 19.10.1987 19.10.2003
Australia 57293/90 17.05.1990 17.05.2006
Australia 81828/91 25.06.1991 25.06.2007
Australia 83958/91 25.06.1991 25.06.2007
Austria 200090 (E) 15.04.1986 15.04.2006
Austria 384494 (E) 20.10.1987 20.10.2007
Austria 508883 (E) 17.04.1990 17.04.2010
Austria 536275 (E) 25.06.1991 25.06.2011
Austria 538395 (E) 25.06.1991 25.06.2011
Belgium 200090 (E) 15.04.1986 15.04.2006
Belgium 384494 (E) 20.10.1987 20.10.2007
Belgium 508983 (E) 17.04.1990 17.04.2010
Belgium 536275 (E) 25.06.1991 25.06.2011
Belgium 538395 (E) 25.06.1991 25.06.2011
Canada 1274471 18.04.1986 18.04.2006
Canada 549582-2 20.10.1987 20.10.2007
Canada 2056981-6 17.05.1990 17.05.2010
Canada 2084992 25.06.1991 25.06.2011
Canada 2084510 25.06.1991 25.06.2011
Denmark 536275 (E) 25.06.1991 25.06.2011
Denmark 538395 (E) 25.06.1991 25.06.2011
EPO 200090 (E) 15.04.1986 15.04.2006
EPO 384494 (E) 20.10.1987 20.10.2007
EPO 508983 (E) 17.04.1990 17.04.2010
EPO 536275 (E) 25.06.1991 25.06.2011
EPO 538395 (E) 25.06.1991 25.06.2011
France 200090 (E) 15.04.1986 15.04.2006
France 384494 (E) 20.10.1987 20.10.2007
France 508983 (E) 17.04.1990 17.04.2010
France 536275 (E) 25.06.1991 25.06.2011
France 538395 (E) 25.06.1991 25.06.2011
Germany 36 87 241 15.04.1986 15.04.2006
Germany 384494 (E) 20.10.1987 20.10.2007
Germany 508983 (E) 17.04.1990 17.04.2010
Germany 536275 (E) 25.06.1991 25.06.2011
Germany 538395 (E) 25.06.1991 25.06.2011
Great Britain 200090 (E) 15.04.1986 15.04.2006
Great Britain 384494 (E) 20.10.1987 20.10.2007
Great Britain 508983 (E) 17.04.1990 17.04.2010
Great Britain 536275 (E) 25.06.1991 25.06.2011
</TABLE>
-17-
<PAGE> 19
Schedule 1 (continued)
List of OSI Patents
<TABLE>
<S> <C> <C> <C>
Great Britain 538395 (E) 25.06.1991 25.06.2011
Greece 384494 (E) 20.10.1987 20.10.2007
Greece 536275 (E) 25.06.1991 25.06.2011
Greece 538395 (E) 25.06.1991 25.06.2011
Ireland 971/86 14.04.1986 14.04.2006
Ireland 2809/87 19.10.1987 19.10.2007
Israel (Div.) 103617 20.04.1986 20.04.2006
Israel 78546 20.04.1986 20.04.2006
Israel 84211 19.10.1987 19.10.2007
Italy 20732BE/93 15.04.1986 15.04.2006
Italy 384494 (E) 20.10.1987 20.10.2007
Italy 509983 (E) 17.04.1990 17.04.2010
Italy 536275 (E) 25.06.1991 25.06.2011
Italy 538395 (E) 25.06.1991 25.06.2011
Japan 089844/86 18.04.1986
Japan 265201/87 20.10.1987
Japan 514242/91 25.06.1991
Japan 513051/91 25.06.1991
Japan 508246/90 17.05.1990
Liechtenstein 200090 (E) 15.04.1986 15.04.2006
Liechtenstei n384494 (E) 20.10.1987 20.10.2007
Liechtenstein 509983 (E) 17.04.1990 17.04.2010
Liechtenstein 536275 (E) 25.06.1991 25.06.2011
Liechtenstein 538395 (E) 25.06.1991 25.06.2011
Luxembourg 200090 (E) 15.04.1986 15.04.2006
Luxembourg 384494 (E) 20.10.1987 20.10.2007
Luxembourg 508983 (E) 17.04.1990 17.04.2010
Luxembourg 538395 (E) 25.06.1991 25.06.2011
Luxembourg 536275 (E) 25.06.1991 25.06.2011
Netherlands 200090 (E) 15.04.1986 15.04.2006
Netherlands 384494 (E) 20.10.1987 20.10.2007
Netherlands 508983 (E) 17.04.1990 17.04.2010
Netherlands 536275 (E) 25.06.1991 25.06.2011
Netherlands 538395 (E) 25.06.1991 25.06.2011
New Zealand 215887 18.04.1986 18.04.2002
New Zealand 222168 14.10.1987 14.10.2003
Spain 554177 18.04.1986 18.04.2006
Spain 8702981 19.10.1987 19.10.2007
Spain 508983 (E) 17.04.1990 17.04.2010
Spain 536275 (E) 25.06.1991 25.06.2011
Spain 538395 (E) 25.06.1991 25.06.2011
Sweden 384494 (E) 20.10.1987 20.10.2007
Sweden 508983 (E) 17.04.1990 17.04.2010
Sweden 536275 (E) 25.06.1991 25.06.2011
</TABLE>
-18-
<PAGE> 20
Schedule 1 (continued)
List of OSI Patents
<TABLE>
<S> <C> <C> <C>
Sweden 538395 (E) 25.06.1991 25.06.2011
Switzerland 200090 (E) 15.04.1986 15.04.2006
Switzerland 384494 (E) 20.10.1987 20.10.2007
Switzerland 508983 (E) 17.04.1990 17.04.2010
Switzerland 536275 (E) 25.06.1991 25.06.2011
Switzerland 538395 (E) 25.06.1991 25.06.2011
USA 08/344519 19.04.1986*
USA 08/317283 19.04.1985*
USA 07/960925 20.04.1988*
USA 5262319 25.06.1990 16.11.2010
USA 08/071223 25.06.1990*
USA 07/992479 21.09.1992*
USA 08/210232 21.09.1992*
USA 08/115519 21.09.1992*
USA 08/118197 19.04.1985*
USA 08/294061 19.04.1985*
</TABLE>
* Effective filing date
-19-
<PAGE> 21
SCHEDULE 2
LIST OF CG PATENTS
<TABLE>
<CAPTION>
COUNTRY APPLICATION/PATENT NO. FILING DATE EXPIRY DATE
<S> <C> <C> <C>
Australia 67018/90 27.11.1990 27.11.2006
Austria 433225 (E) 27.11.1990 27.11.2010
Belgium 433225 (E) 27.11.1990 27.11.2010
Canada 2031430 04.12.1990 04.12.2010
Denmark 433225 (E) 27.11.1990 27.11.2010
Finland 905956 03.12.1990 03.12.2010
France 433225 (E) 27.11.1990 27.11.2010
Germany 433225 (E) 27.11.1990 27.11.2010
Great Britain 433225 (E) 27.11.1990 27.11.2010
Greece 433225 (E) 27.11.1990 27.11.2010
Hungary 8084/1990 05.12.1990 05.12.2010
Ireland 4386/90 05.12.1990 05.12.2010
Israel 96549 05.12.1990 05.12.2010
Italy 433225 (E) 27.11.1990 27.11.2010
Japan 330871/90 30.11.1990
Korea 19881/90 05.12.1990
Luxembourg 433225 (E) 27.11.1990 27.11.2010
Mexico 23579 04.12.1990 04.12.2010
Netherlands 433225 (E) 27.11.1990 27.11.2010
New Zealand 236333 04.12.1990 04.12.1990
Norway P905264 05.12.1990 05.12.2010
Pakistan 132484 10.11.1990 06.12.2005
Philippines 41681 05.12.1990
Philippines 47025 05.12.1991
Philippines 48001 05.12.1990
Portugal 96068 04.12.1990
South Africa 9762/90 05.12.1990 05.12.2010
Spain 433225 (E) 27.11.1990 27.11.2010
Sweden 433225 (E) 27.11.1990 27.11.2010
Switzerland 433225 (E) 27.11.1990 27.11.2010
Taiwan 56999NI 13.11.1990 11.06.2007
USA 621502/07 03.12.1990
USA 960309/07 (Cont.) 13.10.1992
USA 201703/08 25.02.1994
</TABLE>
-20-
<PAGE> 22
SCHEDULE 3
LIST OF THIRD PARTY PATENTS
LICENSOR
(1) The Board of Trustees of the Leland Stanford Junior University
PATENT NO. DATE OF ISSUE/FILING
US Patent No. 4,237,224 2nd December, 1980
US Patent No. 4,468,464 28th August, 1984
US Patent Application No. 602,294 20th April, 1984
(2) Brookhaven National Laboratory
PATENT NO. DATE OF ISSUE/FILING
US Patent No. 4,952,496 28th August, 1990
-21-
<PAGE> 23
SCHEDULE 4
Example of calculation for the purposes of Clause 3.5(c)
(N.B.: All figures used are hypothetical)
CIBA-GEIGY supplies three batches of Compound to ONCOGENE SCIENCE in 1996. The
Manufacturing Cost ("MC") of the first batch of 10 grams is SFr. 125/mg (total
cost SFr. 1,250,000); the MC of the second batch of 12 grams is SFr. 75/mg
(total cost SFr. 900,000); the MC of the third batch of 16 grams is also SFr.
75/mg (cost SFr. 1,200,000). The average MC per gram of Compound is SFr.
3,350,000 divided by 38 = SFr. 88,157.9. ONCOGENE SCIENCE's Net Sales of
Product during 1996 total SFr. 60,000,000. The total amount of Compound
contained in the Product sold in 1996 is 24 grams and therefore the average Net
Sales Value per active gram of Product is SFr. 2,500,000. The MC is only
3.526316% of the Net Sales Value of Product, i.e. less than 4% by 0.473684.
Therefore ONCOGENE SCIENCE pays to CIBA-GEIGY one half of 0.473684% of SFr.
60,000,000 = SFr. 142,105.2.
-22-
<PAGE> 24
SCHEDULE 5
STOCK SUBSCRIPTION AND PURCHASE AGREEMENT
19th April, 1995
The Board of Directors of
Oncogene Science, Inc.
Dear Sirs:
The undersigned, Ciba-Geigy Limited ("the Purchaser") hereby
subscribes for and purchases 909,091 shares ("the Shares") of Common Stock,
$.01 par value per share, of Oncogene Science, Inc., a Delaware corporation
("the Company"), for a total consideration of U.S. $5,000,000.50 in cash, such
consideration to be paid and the Shares to be issued to the Purchaser within 10
business days of the date hereof.
Certain of the capitalised terms used herein are defined in the
Collaborative Agreement between the Purchaser and the Company dated as of the
19th April, 1995.
The Purchaser hereby agrees, represents, and warrants to the Company
that.
(1) The Purchaser is acquiring the Shares for its own account (and
not for the account of others) for investment and not with a view to the
distribution or resale thereof,
(2) By virtue of its position, the Purchaser has access to the same
kind of information which would be available in a registration statement filed
under the Securities Act of 1933;
(3) The Purchaser is a sophisticated investor;
(4) The Purchaser shall have the registration rights set forth in
the Registration Rights Agreement between the Purchaser and the Company dated
as of the 19th April, 1995. The Purchaser agrees that if any of the Shares are
sold prior to the 19th April, 1999 without the written consent of the Company,
the option set forth in Section 5.8 of the Collaborative Agreement to include
all other indications for the Compound in the Licensed Indications shall lapse.
If at the time of the sale of the Shares such option has already been
exercised, then such other indications shall thereupon be removed from the
Licensed Indications.
-23-
<PAGE> 25
(5) The Purchaser understands that it may not sell or otherwise
dispose of such shares in the absence of either a registration statement under
the Securities Act of 1933 or an exemption from the registration provisions of
the Securities Act of 1933; and
(6) The certificates representing the Shares may contain a legend to
the effect of (5) above, and the Company may place stop-transfer orders with
the transfer agent of the Company's securities with respect to the Shares in
the event of any sale or disposal, or purported sale or disposal, of the Shares
contrary to (5) above .
This Stock Subscription and Purchase Agreement shall be binding upon
the successors and assigns of the undersigned, and may not be amended or
modified except by any agreement in writing signed by the parties hereto. This
Stock Subscription and Purchase Agreement shall be governed by the laws of the
State of New York, without regard to principles of conflicts of laws.
Yours faithfully,
CIBA-GEIGY Limited
Accepted:
ONCOGENE SCIENCE, INC.
By:
----------------------------
Name:
Title:
-24-
<PAGE> 1
EXHIBIT 10.28
CIBA-GEIGY LIMITED
BASLE, SWITZERLAND
The Board of Directors of
Oncogene Science, Inc.
106 Charles Lindbergh Blvd.
Uniondale, NY 11553-3649
USA
April 19, 1995
Dear Sirs:
The undersigned, Ciba-Geigy Limited ("the Purchaser") hereby
subscribes for and purchases 909,091 shares ("the Shares") of Common Stock,
$.01 par value per share, of Oncogene Science, Inc., a Delaware corporation
("the Company"), for a total consideration of U.S. $5,000,000.50 in cash, such
consideration to be paid and the Shares to be issued to the Purchaser within 10
business days of the date hereof.
Certain of the capitalized terms used herein are defined in the
Collaborative Agreement between the Purchaser and the Company dated as of the
19th April, 1995.
The Purchaser hereby agrees, represents and warrants to the Company
that:
(1) The Purchaser is acquiring the Shares for its own account (and
not for the account of others) for investment and not with a view to the
distribution or resale thereof;
(2) By virtue of its position, the Purchaser has access to the
same kind of information which would be available in a registration statement
filed under the Securities Act of 1933;
(3) The Purchaser is a sophisticated investor;
(4) The Purchaser shall have the registration rights set forth in
the Registration Rights Agreement between the Purchaser and the Company dated
as of the 19th April, 1995. The Purchaser agrees that if any of the Shares are
sold prior to the 19th April, 1999 without the written consent of the Company,
the option set forth in Section 5.8 of the Collaborative Agreement to include
all other indications for the Compound in the Licensed Indications shall lapse.
If at the time of the sale of the Shares such option has already been
exercised, then such other indications shall thereupon be removed from the
Licensed Indications.
(5) The Purchaser understands that it may not sell or otherwise
dispose of such shares in the absence of either a registration statement under
the Securities Act of 1933 or an exemption from the registration provisions of
the Securities Act of 1933; and
<PAGE> 2
The Board of Directors of
Oncogene Science, Inc.
April 19, 1995
Page 2
(6) The certificates representing the Shares may contain a legend
to the effect of (5) above, and the Company may place stop-transfer orders with
the transfer agent of the Company's securities with respect to the Shares in
the event of any sale or disposal, or purported sale or disposal, of the Shares
contrary to (5) above.
This Stock Subscription and Purchase Agreement shall be binding upon
the successors and assigns of the undersigned, and may not be amended or
modified except by any agreement in writing signed by the parties hereto. This
Stock Subscription and Purchase Agreement shall be governed by the laws of the
State of New York, without regard to principles of conflicts of laws.
Yours faithfully,
CIBA-GEIGY Limited
/s/ M. Sundman /s/ R.E. Walker
Head of Business Development Division Counsel
Accepted:
ONCOGENE SCIENCE, INC.
By: /s/ Gary E. Frashier
-------------------------------
Name: Gary E. Frashier
Title: Chief Executive Officer
-2-
<PAGE> 1
EXHIBIT 10.29
REGISTRATION RIGHTS AGREEMENT
Agreement dated as of April 19, 1995, between CIBA-GEIGY LIMITED of
Klybeckstrasse 141, 4002 Basel Switzerland (the "Holder") and ONCOGENE SCIENCE,
INC. of 106 Charles Lindbergh Boulevard, Uniondale, New York 11553-3649, USA
(the "Company")
WHEREAS, Holder is a holder of the common stock, par value $.01 per share, of
the Company ("Common Stock");
WHEREAS, Holder desires to have certain registration rights under the
securities laws, and the Company desires that Holder have such registration
rights;
NOW, THEREFORE, in consideration of the mutual agreements contained herein and
other good and valuable consideration, the parties hereby agree as follows:
1. At such time as the Company shall determine to file any
registration statement, or any post-effective amendment to a registration
statement, under the Securities Act of 1933 (the "Act"), covering equity
securities of the Company (other than registration statements on Form S-8 or
S-4 or any other form not generally available for the registration of
securities for sale to the public) for its own account or for the account of
others, the Company shall advise Holder, by written notice at least 14 business
days prior to any filing, and shall, upon the request of the Holder, and at the
expense of the Company, include in any such
<PAGE> 2
registration statement, or any such post-effective amendment to a registration
statement, all of the Registrable Securities (as hereinafter defined) that
Holder has requested in writing to be registered, provided that such written
request is delivered to the Company within 10 business days of the Holder's
receipt of notice from the Company. As used in this Agreement, Registrable
Securities shall mean (i) the Common Stock purchased or owned by the Holder,
and (ii) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any convertible security, options, warrant right or
other security which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of such Common Stock. All
costs and expenses of such registration statement shall be borne by the
Company, except underwriting discounts or commissions applicable to any of the
Registrable Securities sold by the Holder. The Company shall not be required
to register securities of the Holder on more than two occasions; provided that
if the Holder has been prevented from selling all of the Common Stock it wished
to sell because of limitations imposed under paragraph (c) of this Section 1,
then the Holder shall be entitled to include such Common Stock in one or more
additional registration statements under the terms of this Section 1 until the
Holder has been able to sell all of the Common Stock it wished to sell.
(a) The Company shall supply prospectuses and such other
documents as Holder may reasonably request in order to facilitate the public
sale or other disposition of the Registrable Securities, use its best efforts
to register and qualify any of the Registrable Securities for sale in such
reasonable number of states as Holder designates and do any and all other acts
and things which may be necessary or desirable to enable Holder to
-2-
<PAGE> 3
consummate the public sale or other disposition of the Registrable Securities
subject to the rights of others with similar rights. The Company agrees to
maintain such registration statement or post-effective amendment with respect
to the Registrable Securities current under the Act as to the Registrable
Securities for a period of at least six months, and an additional three months
upon written request of Holder.
(b) The Company shall also furnish indemnification in the manner
provided in Section 2 hereof, except that the maximum amount of such
indemnification shall be limited to the net amount of proceeds received by
Holder from the sale of the Registrable Securities. Holder shall furnish
information and indemnification as set forth in Section 2 hereof, except that
the maximum amount which may be recovered from Holder shall be limited to the
net amount of proceeds received by Holder from the sale of the Registrable
Securities.
(c) In connection with any offering involving an underwriting of
shares of the Company's Common Stock, the Company shall not be required under
Section 1 hereof to include any of the Holder's securities in such underwriting
unless they accept the terms of the underwriting as agreed upon between the
Company and the underwriters selected by it (or by other persons entitled to
select the underwriters), and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible
-3-
<PAGE> 4
with the success of the offering, then the Company shall be required to include
in the offering only that number of such securities, including Registrable
Securities, which the underwriters determine in their sole discretion will not
jeopardize the success of the offering (the securities so included to be
apportioned pro rata, subject to prior existing rights, among the selling
stockholders according to the total amount of securities entitled to be
included therein owned by each selling stockholder or in such other proportions
as shall mutually be agreed to by such selling stockholders).
2. (a) Whenever pursuant to Section 1, a registration statement
relating to any of the Registrable Securities is filed under the Act, amended
or supplemented, the Company shall, to the extent permitted by law, indemnify
and hold harmless Holder, and each person, if any, who controls (within the
meaning of the Act) Holder, and each underwriter (within the meaning of the
Act) of such securities and each person, if any, who controls (within the
meaning of the Act) any such underwriter, against such losses, claims, damages,
liabilities or actions, joint or several, to which Holder, any such controlling
person or any such underwriter may become subject, under the Act or otherwise,
insofar as such losses, claims, damages, 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 any such registration statement or
any preliminary prospectus or final prospectus constituting a part thereof or
any amendment or supplement thereto, or arise out of or are based upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse
Holder and each such controlling person and
-4-
<PAGE> 5
underwriter for any legal or other expenses reasonably incurred by Holder or
such controlling person or underwriter in connection with investigating or
defending any such losses, claims, damages, liabilities or actions; provided,
however, that the Company will not be liable in any such case to the extent
that any such losses, claims, damages, liabilities or actions arise out of or
are based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in said registration statement, said preliminary
prospectus, said final prospectus or said amendment or supplement in reliance
upon and in conformity with written information furnished by Holder or any
other underwriter, for use in the preparation thereof.
(b) Holder shall indemnify and hold harmless the Company, each of
its directors, each of its officers and each person, if any, who controls the
Company within the meaning of the Act against any losses, claims, damages,
liabilities or actions, 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, liabilities or actions arise out of or are based
upon any untrue or alleged untrue statement of any preliminary prospectus, said
final prospectus, or said amendment or supplement, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement 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 said registration statement, said preliminary prospectus, said final
prospectus or said amendment or supplement in reliance upon and in conformity
with written information furnished by Holder for use in the preparation
thereof; and shall reimburse the
-5-
<PAGE> 6
Company or any such director, officer or controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such losses, claims, damages, liabilities or actions.
(c) Promptly after receipt by an indemnified party under this
Section 2 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof; but the
omission to so notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 2.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party, the indemnifying party shall not be liable to such
indemnified party under this Section 2 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof, other than reasonable costs of investigation.
(e) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
-6-
<PAGE> 7
contribution with respect to any amounts for which it would otherwise be liable
under this Section 2 to the extent permitted by law, provided that (i) no
contribution shall be made under circumstances where the indemnifying party
would not have been liable for indemnification under the fault standards set
forth in this Section 2, (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation and (iii) contribution by
Holder shall be limited in amount to the net amount of proceeds received by him
from the sale of the Registrable Securities.
3. The provisions of Section 12. of the Agreement between the Company
and the Holder dated the date hereof shall be applicable to this agreement as
if fully set forth herein.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
ONCOGENE SCIENCE, INC.
By:
-------------------------------
Title:
----------------------------
CIBA-GEIGY LIMITED
By:
------------------------------- -----------------------------
Title:
---------------------------- -----------------------------
-8-
<PAGE> 1
EXHIBIT 21
Subsidiaries of the Company
Applied bioTechnology, Inc.
Oncogene Science S.A.
<PAGE> 1
EXHIBIT 23
Independent Auditors' Consent
The Board of Directors
Oncogene Science, Inc.:
We consent to incorporation by reference in the registration statements on
Forms S-8 (No. 33-60182, No. 2-03148 and No. 33-64713) of Oncogene Science,
Inc. of our reports dated December 1, 1995, relating to the consolidated
balance sheets of Oncogene Science, Inc. and subsidiaries as of September 30,
1995 and 1994, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the years in the three-year
period ended September 30, 1995, which reports appear in the September 30, 1995
annual report on Form 10-K of Oncogene Science, Inc.
KPMG PEAT MARWICK LLP
Jericho, New York
December 12, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<CASH> 17,919,609
<SECURITIES> 8,866,957
<RECEIVABLES> 1,320,015
<ALLOWANCES> (37,974)
<INVENTORY> 0
<CURRENT-ASSETS> 29,103,524
<PP&E> 12,576,523
<DEPRECIATION> (6,867,008)
<TOTAL-ASSETS> 44,057,421
<CURRENT-LIABILITIES> 2,975,743
<BONDS> 0
0
0
<COMMON> 176,830
<OTHER-SE> 40,549,636
<TOTAL-LIABILITY-AND-EQUITY> 44,057,421
<SALES> 4,286,540
<TOTAL-REVENUES> 15,864,999
<CGS> 1,252,990
<TOTAL-COSTS> 23,612,802
<OTHER-EXPENSES> 66,086
<LOSS-PROVISION> 24,112
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,258,670)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,258,670)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
