<PAGE> 1
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15190
ONCOGENE SCIENCE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3159796
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
106 Charles Lindbergh Blvd., Uniondale, New York 11553
(Address of principal executive offices) (Zip Code)
516-222-0023
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report.)
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 ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
At January 31, 1997 the registrant had outstanding 22,188,630 shares of common
stock .$01 par value.
<PAGE> 2
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Consolidated Balance Sheets - December 31, 1996
and September 30, 1996 3
Consolidated Statements of Operations
- Three months ended December 31, 1996 and 1995 4
Consolidated Statements of Cash Flows
- Three months ended December 31, 1996 and 1995 5,6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial 8-11
Condition and Results of Operations
PART II - OTHER INFORMATION 12,13
EXHIBIT INDEX 14
SIGNATURES 15
* * * *
<PAGE> 3
PART 1. FINANCIAL INFORMATION
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30,
Assets 1996 1996
- ------ ------------- -------------
Current assets: (unaudited)
<S> <C> <C>
Cash and cash equivalents $ 13,293,263 $ 13,409,866
Short-term investments 30,730,857 34,132,879
Receivables, including
trade receivables of $363,944 and
$215,201 at December 31 and
September 30, 1996, respectively 2,633,941 2,031,950
Interest receivable 485,920 480,050
Grants receivable 535,911 331,014
Prepaid expenses and other 661,134 623,827
------------- -------------
Total current assets 48,341,026 51,009,586
------------- -------------
Property, equipment and leasehold
improvements - net 6,566,721 6,495,112
Fungi cultures - net 4,773,206 5,048,584
Loans to officers and employees 37,342 37,342
Other assets 526,009 300,949
Intangible assets - net 10,280,296 10,645,481
------------- -------------
$ 70,524,600 $ 73,537,054
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 3,021,958 $ 3,686,638
Current portion of unearned revenue 106,645 141,541
------------- -------------
Total current liabilities 3,128,603 3,828,179
------------- -------------
Other liabilities:
Long-term portion of unearned revenue 90,166 104,497
Loan payable 232,143 83,244
Deferred acquisition costs 590,675 590,675
Accrued postretirement benefits cost 654,396 643,500
------------- -------------
Total liabilities 4,695,983 5,250,095
------------- -------------
Stockholders' equity:
Common stock, $.01 par value;
50,000,000 shares authorized,
22,184,394 and 22,175,214
issued and outstanding at
December 31 and
September 30, 1996, respectively 221,844 221,752
Additional paid-in capital 104,397,349 104,347,231
Accumulated deficit (38,767,930) (36,071,476)
Cumulative translation adjustments 8,954 (5,355)
Unrealized holding loss on
short-term investments (31,600) (205,193)
------------- -------------
Total stockholders' equity 65,828,617 68,286,959
------------- -------------
Commitments and contingencies $ 70,524,600 $ 73,537,054
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
---------------------------------
<S> <C> <C>
Revenues: 1996 1995
------------ ------------
Collaborative program revenues,
principally from related parties $ 1,833,182 $ 1,987,458
Other research revenue 481,607 288,790
------------ ------------
2,314,789 2,276,248
------------ ------------
Expenses:
Research and development 3,474,333 2,683,262
Selling, general and administrative 1,768,856 1,353,402
Amortization of intangibles 365,185 363,189
------------ ------------
5,608,374 4,399,853
------------ ------------
Loss from operations (3,293,585) (2,123,605)
------------ ------------
Other income (expense):
Net investment income 603,458 364,524
Other expense - net (6,327) (11,513)
------------ ------------
Net loss (2,696,454) (1,770,594)
============ ============
Weighted average number of shares
of common stock outstanding 22,176,112 17,476,132
============ ============
Net loss per weighted average share of
common stock outstanding $ (.12) $ (.10)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended December 31,
-------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flow from operating activities:
Net loss $(2,696,454) $(1,770,594)
Adjustments to reconcile net
loss to net cash used
by operating activities:
Gain on sale of investments (6,411) (27,608)
Depreciation and amortization 680,180 341,240
Amortization of intangibles 365,185 363,189
Foreign exchange loss 14,309 15,449
Changes in assets and liabilities:
Receivables (601,991) (933,518)
Interest receivable (5,870) (22,506)
Grants receivable (204,897) 223,782
Prepaid expenses and other (37,307) (133,874)
Other receivable -- (145,956)
Other assets (225,060) 1,082
Accounts payable
and accrued expenses (664,679) (1,018,793)
Unearned revenue (49,227) 28,795
Accrued postretirement
benefit cost 10,896 33,126
----------- -----------
Net cash used by
operating activities $(3,421,326) $(3,046,186)
----------- -----------
</TABLE>
Continued
5
<PAGE> 6
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended December 31,
---------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from investing activities:
Additions to short-term
investments (2,269,650) (15,772,162)
Maturities and sales of short-term
investments 5,851,675 2,500,000
Additions to property,
equipment and leasehold
improvements (476,411) (76,730)
Net change in loans to officers
and employees -- 52
------------ ------------
Net cash provided by (used in)
investing activities 3,105,614 (13,348,840)
------------ ------------
Cash flows from financing activities:
Net change in loan payable 148,899 --
Proceeds from exercise
of stock options and
employee stock purchase plan 50,210 263,407
------------ ------------
Net cash provided by
financing activities 199,109 263,407
------------ ------------
Net decrease in cash
and cash equivalents (116,603) (16,131,619)
Cash and cash equivalents at
beginning of period 13,409,866 17,919,609
------------ ------------
Cash and cash equivalents
at end of period $ 13,293,263 $ 1,787,990
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
In the opinion of Management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the Company's financial position as of
December 31, 1996 and September 30, 1996, its results of operations and its cash
flows for the three months ended December 31, 1996 and 1995. Certain
reclassifications have been made to the prior financial statements to conform
them to the current presentation.
It is recommended that these consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto in the
Company's 1996 Annual Report on Form 10-K.
Results for interim periods are not necessarily indicative of results for the
entire year.
Net loss per share of common stock outstanding is based on the weighted average
number of shares outstanding. Common share equivalents (stock options and
warrants) are not included in the computation for the three months ended
December 31, 1996 and 1995 since their inclusion would be anti-dilutive.
(2) Subsequent Events -- Bayer Collaboration
In December 1996, the Company and Bayer Corporation's Business Group Diagnostics
Division announced a collaborative research and development agreement in which
the two companies will jointly develop novel products for use in diagnostic
oncology. Under the agreement, which became effective on January 1, 1997, Bayer
will provide the Company with funding for research and development of potential
diagnostic products, as well as the clinical development of the Company's
existing clinical research products.
7
<PAGE> 8
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THE THREE MONTHS
ENDED DECEMBER 31, 1995.
REVENUES
Revenues for the quarter ended December 31, 1996 were approximately
$2,315,000, an increase of $39,000, or 2% compared to revenues of $2,276,000
reported for the quarter ended December 31, 1995. Collaborative program revenue
decreased approximately $154,000 or 8%. This was due to the completion of the
Company's collaborative program in cancer diagnostic with Becton, Dickinson and
Company ("Becton"). The Company is continuing the development of serum-based
cancer diagnostics under a new research collaboration with Bayer Corporation.
Other research revenues, consisting primarily of government grants and service
revenue from the pharmaceutical division of the Company's Aston Molecules Ltd.
("Aston") subsidiary, have increased approximately $193,000 or 67%. The Company
acquired Aston in September 1996. The increase is due primarily to the
inclusion of the subsidiary's service revenues in the current quarter only and
is supplemental to the Company's medicinal chemistry operations.
EXPENSES
The Company's operating expenses increased by approximately $1,209,000
or 27% for the quarter ended December 31, 1996 compared to the same quarter for
the previous fiscal year. Research and development expenses increased
approximately $791,000 or 29% as compared to the same period last year. This was
due primarily to an increase in expenditures in the Company's joint venture with
BioChem Pharma (International) Inc., ("BioChem Pharma"), the expansion of the
Company's proprietary programs, expenses associated with operation of the
natural products chemistry facilities of the Company's MYCOsearch, Inc.
("MYCOsearch") subsidiary (which the Company acquired in April 1996), and the
medicinal and pharmaceutical facilities of Aston, as well as amortization
expense on MYCOsearch's library of fungi cultures. Selling, general and
administrative expenses increased approximately $415,000 or 31% for the quarter
ended December 31, 1996 as compared to the same quarter in the previous fiscal
year. These increases were primarily related to the expenses associated with
the Company's recent corporate development activities and the general and
administrative costs associated with the Company's recently acquired
subsidiaries.
OTHER INCOME AND EXPENSES
Investment income increased approximately $239,000, or 66% for the
quarter ended December 31, 1996 as compared to the quarter ended in the same
period for the previous fiscal year. This increase was largely due to the
investment of the proceeds of approximately $30.3 million from the Company's
sale of common stock in April 1996.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1996, working capital (representing primarily cash,
cash equivalents and short-term investments) aggregated approximately $45.2
million.
8
<PAGE> 9
The Company is dependent upon collaborative research revenues,
government research grants, interest income and cash balances, and will remain
so until products developed from its technology are successfully
commercialized. In April 1996, the Company completed a public offering of its
common stock as well as the sale of 500,000 shares of common stock to BioChem
Pharma that provided total net proceeds of approximately $30.3 million.
The Company and Hoechst Marion Roussel, Inc. ("HMRI") have jointly
announced an agreement in principle to continue under one overall agreement
through December 31, 2001 as opposed to the separate collaborative programs
previously formed between the Company and each of Hoechst AG ("Hoechst"),
Hoechst Roussel Pharmaceuticals, Inc. ("HRPI") and Marion Merrell Dow Inc.
("MMDI"). During 1995, the pharmaceutical operations of Hoechst, HRPI and MMDI
were consolidated into HMRI, and HMRI is conducting a review of all its
research and development programs. In accordance with the agreement in
principle, HMRI is expected to provide up to $12.5 million in research funding
through December 31, 2001. HMRI and the Company have not yet executed a new
definitive overall agreement.
The Company's tissue based cancer diagnostics collaboration with
Becton, which commenced in October 1991 (after an earlier collaboration from
1984 to 1989), ended on its scheduled expiration date of September 30, 1996.
The Company is continuing the development of serum-based cancer diagnostic
products, however, and commenced a research collaboration with Bayer
Corporation ("Bayer") in this area in January 1997. Bayer will provide annual
research funding of $1.5 million for the first two years of this five-year
program and $1 million for each subsequent year, subject to Bayer's right to
terminate the program at the end of the second year.
The Company's collaboration with Wyeth-Ayerst Laboratories Division of
American Home Products Corporation ("Wyeth") concluded on December 31, 1996
in accordance with the collaborative research agreement. The Company had
received approximately $1.6 million annually in research and development funding
from Wyeth pursuant to this collaborative agreement.
In April 1996, the Company purchased MYCOsearch, owner of a
collection of fungi and actinomycetes, for approximately $1.75 million in cash
and $3.4 million in common stock and warrants. In September 1996, the Company
acquired Aston, a provider of medicinal and pharmaceutical chemistry expertise,
for $2.4 million in stock and rights valued at approximately $591,000.
9
<PAGE> 10
The Company believes that with the funding from its collaborative
research programs, government research grants, interest income, and cash
balances, its financial resources are adequate for its operations for the
foreseeable future. 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. The
Company's capital requirements may also vary depending on the funds required
for expansion of the Company's technology platform, including possible joint
ventures, collaborations and acquisitions. Examples of such ventures include
the formation of Anaderm Research Corporation in April 1996 with Pfizer Inc.
and New York University, and the Company's co-venture with BioChem Pharma,
which commenced in May 1996. Generally the Company expects to commit greater
resources to such programs in exchange for greater commercialization rights,
as compared to its traditional collaborative research programs in which the
Company receives research funding and royalty rights with respect to future
sales of commercialized products. In the absence of additional ventures,
collaborations or acquisitions, the Company expects to continue its current
level of expenditures and capital investment over the next several years to
enhance its drug discovery technologies, pursue internal proprietary drug
discovery programs, and to commit resources to co-ventures with pharmaceutical
companies. There can be no assurance that scheduled payments will be made by
third parties, that current agreements will not be canceled, 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 Company will be able to obtain any
additional required funds on acceptable terms, if at all. Failure to obtain
additional funds when required would have a material adverse effect on the
Company's business, financial condition and results of operations.
FORWARD LOOKING STATEMENTS
A number of the matters and subject areas discussed in this Item 2 "Management's
Discussion and Analysis of Financial Condition" that are not historical or
factual deal with potential future circumstances and developments. The
discussion of such matters and subject areas is qualified by the inherent risks
and uncertainties surrounding future expectations generally, and such discussion
may materially differ from the Company's actual future experience involving any
one or more of such matters and subject areas. Examples of this are the
discussions in this Item 2 describing the Company's expectations with regard to
the consolidation of its collaborative research programs with HMRI and receipt
of funding from Bayer. Factors that may arise in the future that prevent the
execution of a definitive overall agreement with HMRI include possible
technological developments by competitors that render the compounds being
pursued by HMRI and the Company less commercially viable, shifts in strategic
direction on the part of HMRI that would de-emphasize the therapeutic areas or
technologies in which the Company is involved, and negative results in the
Company's current programs with HMRI.
10
<PAGE> 11
The Company's diagnostics collaboration with Bayer is subject to similar risks.
Consequently, the future payments from Bayer are uncertain. The forward looking
statements described above, as well as all other discussions contained herein
that may deal with potential future circumstances and developments, are also
subject generally to other risks and uncertainties that are described from
time to time in the Company's reports and registration statements filed with
the Securities and Exchange Commission.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
3.1 Certificate of Incorporation, as amended (1)
3.2 By-Laws, as amended (1)
*10.1 Collaborative Research and License Agreement
dated as of January 1, 1997 between the
Company and Bayer Corporation.
*10.2 Collaborative Research, Development and
Commercialization Agreement dated as of
May 1, 1996 between the Company and BioChem
Pharma (International) Inc.
27 Financial Data Schedule
------------------------
* Portions of this exhibit have been
redacted and are subject to a
confidential treatment request filed
with the Secretary of the Securities
and Exchange Commission pursuant to
Rule 24b-2 under the Securities
Exchange Act of 1934, as amended.
12
<PAGE> 13
(1) Included as an exhibit to the
Company's registration statement on
Form S-3 (File No. 333-937)
initially filed on February 14,
1996, and incorporated herein by
reference.
(b) REPORTS ON FORM 8-K.
The Company filed a Current Report on Form 8-K on
November 8, 1996. The earliest event covered by such report occurred on
September 13, 1996. The items included on this report, as amended, consisted of:
Item 5. Other Events
(a) Changes in Personnel at Management
and Board Levels
(b) Acquisition of Aston Molecules
Limited
Item 7. Financial Statements and Exhibits
(a) News Release dated September 13,
1996
(b) News Release dated September 18,
1996
(c) News Release dated September 19,
1996
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ONCOGENE SCIENCE, INC.
(Registrant)
Date February 14, 1997 /s/ Gary E. Frashier
------------------- ---------------------
Gary E. Frashier
Chief Executive Officer
Date February 14, 1997 /s/ Robert L. Van Nostrand
------------------- ---------------------------
Robert L. Van Nostrand
Vice President
Finance & Administration
14
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Incorporation, as amended (1)
3.2 By-Laws, as amended (1)
*10.1 Collaborative Research and License Agreement
dated as of January 1, 1997 between the
Company and Bayer Corporation.
*10.2 Collaborative Research, Development and
Commercialization Agreement dated as of
May 1, 1996 between the Company and BioChem
Pharma (International) Inc.
27 Financial Data Schedule
- -------------------------
* Portions of this exhibit have been redacted and are subject to a
confidential treatment request filed with the Secretary of the
Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
(1) Included as an exhibit to the Company's registration statement
on Form S-3 (File No. 333-937) initially filed on February
14, 1996, and incorporated herein by reference.
15
<PAGE> 1
Portions of this Exhibit 10.1 have been redacted and are the subject of a
confidential treatment request filed with the Secretary of the Securities and
Exchange Commission.
<PAGE> 2
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
This COLLABORATIVE RESEARCH AND LICENSE AGREEMENT is entered by and between
BAYER CORPORATION, an Indiana corporation acting through its Business Group
Diagnostics, having an office at 511 Benedict Avenue, Tarrytown, New York 10591
("Bayer"), and ONCOGENE SCIENCE, INC., a Delaware corporation, having an office
at 106 Charles Lindbergh Blvd., Uniondale, New York 11533 ("OSI").
WHEREAS, OSI was organized to develop, produce and market research,
diagnostic and therapeutic products for, among other things, the early
detection, monitoring and treatment of human disease, particularly cancer;
WHEREAS, Bayer has the capability to develop, format, manufacture, attain
regulatory approvals for, market and distribute diagnostic products and
instrumentation systems throughout the world; and
WHEREAS, Bayer desires to commercialize proprietary cancer assays in the
Clinical Diagnostic Market (as defined herein) and OSI desires to establish
proprietary cancer assays for the Clinical Research Market (as defined herein);
and
WHEREAS, Bayer and OSI wish to collaborate in research to identify and
develop proprietary cancer diagnostic assays.
NOW, THEREFORE, in consideration of the premises and promises contained
herein, the parties agree as follows:
<PAGE> 3
1. Definitions
Whenever used in this Agreement, the terms defined in this Section 1 shall
have the meanings specified.
1.1 "Affiliate" means any corporation or other legal entity controlled by,
controlling, or under common control with the affected party, wherein control
means direct or indirect ownership of a least forty percent (40%) of the voting
stock, or at least forty percent (40%) interest in the income, of such
corporation or other business entity or in either case the maximum amount
allowed by local law.
1.2 "Allocated Costs" means the amount of costs, determined in accordance
with generally accepted accounting principles, incurred by OSI and allocated to
the Research Program.
1.3 "Annual Commitment" means the maximum amount agreed upon by the Joint
Management Committee to fund the OSI/Bayer Annual Operating Plan and Budget for
any Commitment Year.
1.4 "Bayer" means Bayer Corporation and its Affiliates.
1.5 "Bayer Confidential Matter" means all information, material or other
matter encompassed within Bayer Technology which is disclosed or provided by
Bayer to OSI, orally or in writing, and is designated by Bayer, in writing,
"Confidential", or words to the same effect, no later than thirty (30) days
after the time of first disclosure or provision to OSI, but excluding any such
information, material or matter that is (i) already known to OSI at the time of
disclosure or provision to it, other than by virtue of a prior confidential
disclosure or provision to OSI by Bayer, (ii) at any time disclosed in the
published literature or
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<PAGE> 4
otherwise generally known or available to the public, or (iii) at any time
obtained from a Third Person free from any obligation of secrecy.
1.6 "Bayer Patent Rights" shall mean all Patent Rights comprised in Bayer
Technology. Bayer Patent Rights shall be owned by Bayer subject to the rights
granted to OSI under this Agreement.
1.7 "Bayer Technology" means all Technology that was:
(a) developed by employees of, or consultants to, Bayer alone or
jointly with Third Persons on or prior to the Effective Date which Bayer
determines in its sole discretion to contribute to the Research Program; or
(b) acquired by purchase, license, assignment or other means from
Third Persons by Bayer on or prior to the Effective Date which Bayer
determines in its sole discretion to contribute to the Research Program.
Bayer Technology shall be owned by Bayer subject to the rights granted
to OSI under this Agreement.
1.8 "Bayer/OSI Patent Rights" means all Patent Rights comprised in
Bayer/OSI Technology.
1.9 "Bayer/OSI Technology" means Technology that is:
(a) developed by employees of, or consultants to, OSI alone or jointly
with Bayer during the term hereof in the Field; or
(b) acquired by purchase, license, assignment or other means from
Third Persons by OSI, Bayer or both Bayer and OSI
- 3 -
<PAGE> 5
after the Effective Date in the Field in accordance with Paragraph 2.1.1(a)
hereof.
Bayer/OSI Technology shall be owned by Bayer subject to the rights
granted to OSI under this Agreement.
1.10 "Clinical Diagnostic Market" means those medical centers,
laboratories, cancer centers, clinicians, pathologists, oncologists and others
that typically utilize regulatory approved diagnostic kits and systems to
provide clinical information to assist in the diagnosis, prognosis, monitoring
or screening of cancer or potential cancer patients.
1.11 "Clinical Diagnostic Product" means test kits or systems, other than
manual or semi-automated microtiter plate-based test kits and systems, which are
developed pursuant hereto for use in the Field, it being understood that such
product format is typically targeted for the Clinical Diagnostic Market;
provided, however, that such products shall exclude any products that are
subject to any exclusive rights held by any of the Other Companies pursuant to
agreements with OSI in effect prior to the Effective Date.
1.12 "Clinical Research Market" means those medical centers, laboratories,
cancer centers, clinical researchers, pathologists, oncologists and others that
typically utilize test kits and systems which do not require approval by the
United States Food and Drug Administration (the "FDA") to establish clinical
utility and correlation and that often publish the results in academic or
research journals, but shall specifically exclude any utilization of research
products in life science research typically performed
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with non-human specimens that is the subject of the sublicense granted by OSI to
Calbiochem-Novabiochem Corporation under the Sublicense Agreement dated as of
August 2, 1995.
1.13 "Clinical Research Product" means manual or semi-automated microtiter
plate-based test kits or systems which are developed pursuant hereto for use in
the Field, it being understood that such product format is typically targeted
for the Clinical Research Market; provided, however, that such products shall
exclude any products that are subject to any exclusive rights held by any of the
Other Companies pursuant to agreements with OSI prior to the Effective Date.
1.14 "Commitment Year" means a twelve-month period commencing each January
1.
1.15 "Contract Period" means the period beginning on the Effective Date and
ending on the date on which this Agreement terminates.
1.16 "Effective Date" shall mean January 1, 1997.
1.17 "Event(s) of Termination" has the meaning set forth in Section 10.3.
1.18 "Field" means methods and reagents, test compositions, test devices
and other products useful in the diagnosis of cancer. To the extent that a
method or product is first discovered to be useful in the diagnosis of cancer
and subsequently is discovered to be useful in the diagnosis of one or more
other conditions, all such uses of such method or product shall be included in
"Field"; whereas to the extent that a method or product is first discovered to
be useful in the diagnosis of at least one condition other than
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<PAGE> 7
cancer and subsequently is discovered to be useful in the diagnosis of cancer,
only such use in cancer diagnosis shall be included in "Field".
1.19 "Fully absorbed costs" means all direct expenses of OSI, as well as
OSI's proportional allocation of overhead consistent with OSI's usual practice.
1.20 "Joint Management Committee" has the meaning specified in Section 2.2.
1.21 "Licensed Diagnostic Product" means a Clinical Diagnostic Product that
employs Bayer, OSI and/or Bayer/OSI Technology in its manufacture, use or sale.
1.22 "Licensed Research Product" means a Clinical Research Product that
employs Bayer, OSI and/or Bayer/OSI Technology in its manufacture, use or sale.
1.23 "Licensed Product" means a Clinical Diagnostic Product or a Clinical
Research Product, as the case may be.
1.24 "Net Sales" means the gross amount received by Bayer (and its
sublicensee) or OSI (and its permitted sublicensees, if any), as the case may be
for arm's length sales to a Third Person of Licensed Products, respectively,
after deducting, where applicable, the following:
(a) normal and customary trade discounts actually allowed and taken;
(b) returns and credits;
(c) taxes (the legal incidence of which is on the purchaser and
separately shown on the shipping invoice); and
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<PAGE> 8
(d) transportation, insurance and postage charges (if prepaid and
invoiced as a separate item).
In the event that a Licensed Product sold by Bayer can be identified
as having been sold (a) at a price which is increased to include an amount
or amounts to cover instrument systems, service, interest and/or other
costs, such as under a Reagent Agreement or Reagent Rental Plan (herein
referred to as "RAP"), (b) as part of an arrangement in which the customer
pays a comprehensive monthly or other periodic charge for a fixed total
volume of assays from a product list that may include both Licensed
Products as well as assays which are not Licensed Products, and the
customer then selects the quantity of each different assay to be delivered,
such as under a Cost Management Plan (herein referred to as "CMP"), or (c)
some other reagent plan, the Net Sales of such reagent Licensed Product
sold under a RAP, CMP or other reagent plan ("Reagent Plans") shall be
calculated by (i) multiplying the total number of reagent Licensed Product
units sold under Reagent Plans by the fraction E/F where E is the total net
revenue invoiced for sales of Licensed Product when sold (i.e., independent
of a Reagent Plan) in the United States and F is the total number of units
of Licensed Product sold (i.e., independent of a Reagent Plan) in the
United States, and (ii) then multiplying the result of (i) by the
adjustment factor 0.55, which is estimated (subject to audit) by Bayer to
reflect the portion of net revenue invoiced that is attributable to the
sale of such reagent Licensed Product. Such adjustment factor shall be
recalculated by Bayer in accordance with generally
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accepted accounting principles at the close of each calendar year after the
first commercial sale of the first Licensed Product to be sold, and a
retroactive correction made to the royalties paid during such prior
calendar year, with settlement of any overpayment or underpayment of
royalties being made in the payment for the first quarter royalties for the
new calendar year and with the new adjustment factor being applied to
royalties to be paid on sales during the new calendar year. Bayer hereby
represents and warrants that the adjustment factor set forth herein is
equal to the adjustment factor used by Bayer in those of its agreements
with Third Persons which contain the foregoing formula. In the event that
Bayer changes the adjustment factor in any of those agreements or provides
for a different adjustment factor in agreements it enters into with Third
Persons during the Term hereof, resulting in either case in the adjustment
factor being more favorable to any such Third Person than the adjustment
factor set forth herein, then this Agreement shall be deemed to be amended
to provide for the more favorable adjustment factor.
1.25 "OSI" means Oncogene Science, Inc. and its Affiliates.
1.26 "OSI Confidential Matter" means all information, material or other
matter encompassed within OSI Technology which is disclosed or provided by OSI
to Bayer, orally or in writing, and is designated by OSI, in writing,
"Confidential", or words to the same effect, no later than thirty (30) days
after the time of first disclosure or provision to Bayer, but excluding any such
information, material or matter that is (i) already known to Bayer at the time
of disclosure or provision to it, other than by virtue
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<PAGE> 10
of prior confidential disclosure or provision to Bayer by OSI, (ii) at any time
disclosed in the published literature or otherwise generally known or available
to the public, or (iii) at any time obtained from a Third Person free from any
obligation of secrecy.
1.27 "OSI Patent Rights" means all Patent Rights comprised in OSI
Technology. OSI Patent Rights shall be owned by OSI subject to the rights
granted to Bayer under this Agreement. The OSI Patent Rights existing on the
Effective Date are listed on Exhibit C, attached hereto.
1.28 "OSI Technology" means all Technology relating to the Field that was:
(a) developed by employees of, or consultants to, OSI alone or jointly
with Third Persons on or prior to the Effective Date, but specifically
excludes any Technology that is subject to any exclusive rights held by any
of the Other Companies pursuant to agreements with OSI in effect prior to
the Effective Date; or
(b) acquired by purchase, license, assignment or other means from
Third Persons by OSI on or prior to the Effective Date, but specifically
excludes any Technology transferred, assigned or sold to any of the Other
Companies with respect to which OSI does not retain a co-exclusive license
as set forth in Exhibit A attached hereto.
OSI Technology shall be owned by OSI subject to the rights granted to
Bayer under this Agreement.
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<PAGE> 11
1.29 "OSI/Bayer Annual Operating Plan and Budget" means the written plan
describing the research, projects, contemplated products, clinical trials,
timetables, technical goals, manufacturing, regulatory approvals and marketing
to be carried out during each Commitment Year by Bayer and OSI.
1.30 "Other Companies" shall mean each of Becton, Dickinson and Company and
Calbiochem-Novabiochem International, Inc. The essential terms and conditions of
the agreements between OSI and the respective Other Companies affecting the
rights of Bayer in OSI Technology are set forth in Exhibit A attached hereto and
forming a part hereof.
1.31 "Patent Rights" means all patentable inventions, including all
applications for patents, whether domestic or foreign, disclosing or claiming
such inventions, all continuations, continuations-in-part, divisions, renewals
and patents of addition thereof, all patents granted thereon, whether domestic
or foreign, and all reissued or reexamined patents based thereon.
1.32 "Person" means any individual, estate, trust, partnership, joint
venture, association, firm, corporation, company or other entity.
1.33 "Product" means any Clinical Diagnostic Product, Licensed Diagnostic
Product, Clinical Research Product or Licensed Research Product.
1.34 "Research Program" means the research conducted pursuant to the terms
and conditions of this Agreement.
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<PAGE> 12
1.35 "Technology" means Patent Rights and all know-how, trade secrets and
confidential technical information and material, including, without limitation,
all laboratory notebooks, research plans, inventions, cultures, strains,
vectors, genes and gene fragments and other sequences, cell lines, hybridomas,
monoclonal and polyclonal antibodies, proteins and protein fragments, assay
methodology, processes, materials and methods for production, recovery and
purification of natural products, formulae, plans, specifications,
characteristics, marketing surveys and plans and business plans.
1.36 "Third Person" means a Person other than OSI or Bayer, or other than
any employee of, or consultant to, OSI or Bayer.
1.37 "Valid Claim" means a claim in an active, unexpired patent within
Patent Rights, so long as such claim shall not have been disclaimed or held
invalid in a final decision rendered by a tribunal of competent jurisdiction
from which no appeal has been or can be taken.
2. Collaborative Research Program
2.1 OSI/Bayer Annual Operating Plan and Budget. The OSI/Bayer Annual
Operating Plan and Budget for the initial Commitment Year is set forth in
Exhibit B and attached hereto. For each Commitment Year after the initial
Commitment Year, the OSI/Bayer Annual Operating Plan and Budget shall be
prepared by the Joint Management Committee no later than ninety (90) days before
the end of the prior Commitment Year. The OSI/Bayer Annual Operating Plan and
Budget for each Commitment Year shall be appended to and made part of this
Agreement.
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<PAGE> 13
2.1.1 Exclusivity as to Research Activities.
(a) OSI agrees that, during the Contract Period, OSI shall not conduct
research itself, sponsor any research with a Third Person, engage in any
research sponsored by any Third Person, or acquire (by license, purchase or
otherwise) Technology from a Third Person, in the Field. If OSI becomes
aware, during the Contract Period, of an opportunity to conduct or sponsor
research relating to the Field or to engage in such research sponsored by a
Third Person in the Field, it shall promptly notify the Joint Management
Committee of such opportunity. The Joint Management Committee then shall
determine whether the opportunity is worth pursuing. If it is determined
that the opportunity is worth pursuing, Bayer and OSI shall negotiate, in
good faith, for a period not to exceed one hundred eighty (180) days, an
agreement by which such opportunity can be incorporated into this Agreement
or otherwise used to their mutual advantage. If the Joint Management
Committee cannot agree concerning the incorporation of such opportunity as
part of this Agreement, OSI shall be free to pursue such opportunity with
such Third Person without further obligation to Bayer, provided that the
opportunity shall not detract from or delay the work to be performed by OSI
under the OSI/Bayer Annual Operating Plan and Budget or make use of Bayer
or Bayer/OSI Technology.
(b) Bayer agrees that during the Contract Period, Bayer shall not
conduct research itself, sponsor any research with a Third Person, engage
in any research sponsored by any Third Person, or acquire (by license,
purchase or otherwise) Technology
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<PAGE> 14
from a Third Person in the Field if the objectives of such research are in
conflict with the Research Program. In all other respects, Bayer shall be free
to conduct research itself, sponsor any research with a Third Person, engage in
any research sponsored by any Third Person or acquire (by license, purchase or
otherwise) Technology from a Third Person, in the Field.
2.2 Joint Management Committee.
2.2.1 Purpose. The Joint Management Committee shall:
(a) prepare the OSI/Bayer Annual Operating Plan and Budget (including
the Annual Commitment) for each Commitment Year;
(b) review, evaluate progress under and modify the OSI/Bayer Annual
Operating Plan and Budget for each Commitment Year;
(c) coordinate and monitor publications of research results obtained
from, and the exchange of information and materials that relate to,
Bayer/OSI Technology;
(d) discuss matters relating to the activities set forth in Section 7
hereof;
(e) with respect to each Licensed Diagnostic Product or Licensed
Research Product prior to commercialization, discuss whether a license(s)
need be obtained from a Third Person(s) in order to make, use or sell such
Licensed Diagnostic Product or Licensed Product;
(f) determine priority of assays for the Clinical Diagnostic Market to
be commercialized by Bayer;
(g) determine priority of assays for the Clinical Research Market to
be established by OSI;
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<PAGE> 15
(h) determine funding breakdown of the Research Program pursuant to
this Agreement;
(i) discuss in-licensing of technology or products that have the
potential to benefit the objectives of Bayer and OSI under this Agreement;
and
(j) discuss the patent/intellectual property strategy and
implementation plan for internal development and external
commercialization.
2.2.2 Membership. Bayer and OSI each shall appoint, in its sole
discretion, three members to the Joint Management Committee. Substitutes
may be appointed at any time upon written notice.
The members initially shall be:
Appointees:
-----------
<TABLE>
<CAPTION>
For Bayer: For OSI:
<S> <C>
* *
* *
* *
</TABLE>
2.2.3 Chair. The Joint Management Committee shall be chaired by one
member appointed by Bayer.
2.2.4 Meetings. The Joint Management Committee shall meet at least
quarterly at mutually agreeable dates and places. Representatives of Bayer
or OSI or both, in addition to members of
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* This portion redacted pursuant to a request for confidential treatment.
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<PAGE> 16
the Joint Management Committee, may attend such meetings at the invitation
of either party.
2.2.5 Minutes. The Joint Management Committee shall keep accurate
minutes which record all proposed decisions and all actions recommended or
taken. The minutes shall be delivered to all Joint Management Committee
members within five (5) business days after each meeting. The party hosting
the meeting shall be responsible for the preparation of the minutes.
2.2.6 Decisions. Subject to the provisions of 2.1.1, decisions of the
Joint Management Committee shall be made by majority vote of the members.
In the case of a tie vote, the vote of the chair shall control.
2.2.7 Expenses. Bayer and OSI shall each bear all expenses of their
respective members related to the participation of the Joint Management
Committee.
2.3 Reports and Materials.
2.3.1 Reports. During the Contract Period, Bayer and OSI each shall
furnish to the Joint Management Committee:
(a) summary reports within fifteen (15) days after the end of each
three-month period, commencing with the period ending March 31, 1997,
describing its progress under the OSI/Bayer Annual Operating Plan and
Budget; and
(b) comprehensive written reports within thirty (30) days after the
end of each Commitment Year describing in detail the work accomplished by
it under the OSI/Bayer Annual Operating Plan and Budget during the
Commitment Year and discussing and evaluating the results of such work.
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<PAGE> 17
2.3.2 Materials. OSI and Bayer shall, during the Contract Period as a
matter of course as described in the OSI/Bayer Annual Operating Plan and
Budget, or upon each other's written request, furnish to each other samples
of biochemical, biological or chemical materials which are part of the OSI,
Bayer or Bayer/OSI Technology and which are necessary for each party to
perform in accordance with the OSI/Bayer Annual Operating Plan and Budget.
To the extent that the quantities of materials requested by either party
exceed the quantities set forth in the OSI/Bayer Annual Operating Plan and
Budget, the requesting party shall reimburse the other party for the
reasonable costs of such materials if they are furnished.
2.4 Laboratory Facilities and Personnel. OSI and Bayer shall each provide
suitable laboratory facilities, equipment and personnel for the work to be done
in carrying out the OSI/Bayer Annual Operating Plan and Budget.
2.5 Clinical Diagnostic Products and Clinical Research Products.
2.5.1 Bayer shall have the exclusive right to commercialize Clinical
Diagnostic Products. It is understood that Bayer also has rights to
immunohistochemical and flow cytometric assays for certain analytes
otherwise not included in the definition of Clinical Diagnostic Products
which are not exclusive, but rather co-exclusive (as a minimum right), in
view of prior rights of Becton (as defined elsewhere herein).
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<PAGE> 18
2.5.2 OSI shall have the exclusive right to commercialize, itself or
through a Third Person, Clinical Research Products.
2.6 Diligent Efforts. Bayer and OSI each shall use reasonably diligent
efforts to achieve the objectives of the OSI/Bayer Annual Operating Plan and
Budget. Specifically, OSI shall use diligent efforts to allocate those resources
necessary (i.e., manpower, facilities, equipment) to meet the objectives of
OSI/Bayer Annual Operating Plan and Budget at the funding levels set forth
therein. Bayer shall use diligent efforts consistent with products of like
potential and consistent with reasonable commercial judgment to commercialize
Clinical Diagnostic Products.
3. Funding of the OSI/Bayer Annual Operating Plan and Budget.
3.1 Amount. The Annual Commitment for each of the first two (2) Commitment
Years shall be $1,500,000, and for each subsequent Commitment Year shall be at
least $1,000,000 to be determined by Bayer, which such Annual Commitments shall
be adjusted annually for inflation as determined by the Joint Management
Committee.
3.2 Funding Payments. So long as this Agreement is in effect, Bayer shall
provide to OSI the Annual Commitment. In no event shall Bayer be obligated to
fund more than the Annual Commitment if expenses in any Commitment Year exceed
the Annual Commitment for that year.
3.2.1 The Annual Commitment shall be paid in equal quarterly
installments in advance. Each quarterly payment shall be paid within five
(5) business days of the first day of the
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<PAGE> 19
applicable quarter. The first quarterly payment due under this Agreement
shall be paid within two (2) business days of the Effective Date.
3.2.2 In addition to the Annual Commitment provided by Bayer and
commencing with the third Commitment Year, the research conducted or
managed by OSI pursuant to this Agreement shall also be funded with a
maximum amount of $500,000 per such third or subsequent Commitment Year by
any "net revenue" that is received by OSI during the first two (2)
Commitment Years from the following:
(a) out-licensing of the OSI Technology in the Field;
(b) profit margins (determined in accordance with generally accepted
accounting principles) of Clinical Research Products sold by OSI; and
(c) royalties received by OSI from the sale of Clinical Diagnostic
Products by Bayer.
Any "net revenue" from the aforementioned sources that exceeds in the
aggregate $500,000 per Commitment Year shall not be used to fund the OSI
research conducted pursuant to this Agreement and shall belong to OSI
exclusively. For purposes of this Section 3.2.2 and for Section 3.2.3
below, "net revenue" shall mean the net income received by OSI from the
enumerated sources, determined in accordance with generally accepted
accounting principles.
3.2.3 In addition to the Annual Commitment provided by Bayer and
commencing with the third Commitment Year, the difference, if any, between
(i) the actual amount of funding
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<PAGE> 20
provided by OSI per such Commitment Year pursuant to Section 3.2.2 and (ii)
the maximum amount of funding by OSI of $500,000 per such Commitment Year,
shall be funded by any revenue, net of costs and expenses, that is received
by OSI, commencing with the third Commitment Year, from the following:
(a) out-licensing of the OSI Technology in the Field;
(b) profit margins (determined in accordance with generally accepted
accounting principles) of Clinical Research Products sold by OSI; and
(c) royalties received by OSI from the sale of Clinical Diagnostic
Products by Bayer.
Any "net revenue" from the aforementioned sources that exceeds in the
aggregate $500,000 per Commitment Year shall not be used to fund the OSI
research conducted pursuant to this Agreement and shall belong to OSI
exclusively.
3.2.4 Bayer shall fund any assay clinical trials conducted in
connection with its commercialization of Clinical Diagnostic Products. Any
reagent components, products or materials supplied by OSI to Bayer for such
trials shall be paid for by Bayer at OSI's actual fully absorbed cost plus
10%.
3.2.5 In the event of early termination of this Agreement, any portion
of a Funding Payment advanced to OSI and not spent shall be returned to
Bayer.
3.2.6 For three (3) years after each Commitment Year, OSI shall keep
complete and accurate records of its expenditures of Funding Payments under
the OSI/Bayer Annual Operating Plan and
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<PAGE> 21
Budget for such Commitment Year. Bayer shall have the right, at its own
expense, during the term of this Agreement and during the subsequent
three-year period, to appoint an independent certified public accountant to
examine such records, during regular business hours at the place or places
where such records are customarily kept, upon reasonable notice from Bayer,
to the extent reasonably necessary to verify the accuracy of the
expenditures and required reports. This right of inspection shall not be
exercised more than once in any calendar year and not more than once with
respect to records covering any specific period of time. Bayer agrees to
hold in confidence all information concerning such expenditures, other than
their total amounts, and all information learned in the course of any audit
or inspection, except to the extent that it is necessary for Bayer to
reveal the information in order to enforce any rights it may have pursuant
to this Agreement or if disclosure is required by law. Failure by Bayer to
request verification of any expenditures after the three-year period shall
be considered acceptance of the accuracy of such expenditures, and OSI
shall have no obligation to maintain any records pertaining to such report
or statement beyond the three-year period.
4. Treatment of Confidential Matter.
4.1 Confidentiality.
4.1.1 Bayer and OSI each recognize that the other's Confidential
Matter constitutes highly valuable proprietary information. Subject to the
terms and conditions of the License Agreement, the disclosure obligations
set forth in Sections 4.3 and 4.4 and publication rights set forth in
Section 4.2, Bayer and
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<PAGE> 22
OSI agree that for five (5) years from the termination of this Agreement,
they will keep confidential, and will cause their Affiliates to keep
confidential, all Confidential Matter that is disclosed or provided to them
or to any of their Affiliates pursuant to this Agreement. Neither Bayer nor
OSI nor any of their Affiliates shall use the other's Confidential Matter
except as expressly permitted in this Agreement or the License Agreement.
4.1.2 Bayer and OSI agree that any disclosure or provision of
Confidential Matter to any officer, employee or agent of the other or of
any of the other's Affiliates shall be made only to the extent necessary to
carry out its responsibilities under this Agreement. The receiving party
agrees not to disclose the other's Confidential Matter to any Third Persons
under any circumstance without written permission. Both Bayer and OSI shall
take such action to preserve the confidentiality of each other's
Confidential Matter as they would customarily take to preserve the
confidentiality of their own Confidential Matter. Each party, upon the
other's request, will return all the Confidential Matter disclosed or
provided pursuant to this Agreement, including all copies and extracts of
documents, within sixty (60) days of the request after the termination of
this Agreement, except for one (1) copy, which shall be retained for
archival purposes only.
4.2 Publication. Notwithstanding Section 4.1, any results obtained in the
course of this Agreement may be submitted for publication following scientific
review by the Joint Management Committee and subsequent approval by OSI's and
Bayer's managements. After receipt of the proposed publications by both
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<PAGE> 23
Bayer's and OSI's managements, written approval or disapproval shall be provided
within thirty (30) days for a manuscript or within fourteen (14) days for a
transcript of an oral presentation to be given at a scientific meeting. Bayer
and OSI agree to delay any publication if the Joint Management Committee
determines that Patent Rights are involved and additional time is needed to file
patent applications(s).
4.3 Disclosure of Inventions. Each party shall promptly inform the Joint
Management Committee about all inventions within OSI Patent Rights, Bayer Patent
Rights and OSI/Bayer Patent Rights.
4.4 Restrictions on Transferring Materials. Bayer and OSI recognize that
the biological, chemical and biochemical materials which are part of OSI
Technology, Bayer Technology or Bayer/OSI Technology represent valuable
commercial assets. Accordingly, throughout the Contract Period and for five (5)
years thereafter, OSI and Bayer agree not to transfer to any Third Person any
such material which constitute Technology owned solely by the other party.
Additionally, throughout the Contract Period and for six (6) months thereafter,
or for the life of any License Agreement applicable thereto, whichever is later,
OSI and Bayer agree not to transfer to any Third Person any biological, chemical
or biochemical materials which are part of Bayer/OSI Technology and which
comprise, consist of or are useful in the manufacture of any Product, unless
prior consent for any such transfer is obtained from the other party, which
consent may not be unreasonably withheld and unless such Third Person agrees as
a condition of any
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<PAGE> 24
such transfer not to transfer the material further and to use the material for
research purposes not directed toward the development of Clinical Diagnostic
Products. The provisions of this Section 4.4 specifically do not apply to any
transfer to any of the Other Companies pursuant to the agreements between OSI
and any of the Other Companies in effect prior to the Effective Date, as set
forth in Exhibit A, attached hereto.
5. Licenses.
5.1 License Granted to Bayer.
5.1.1 Exclusive License. OSI hereby grants to Bayer the exclusive,
worldwide license, including the right to grant sublicenses to parties
reasonably acceptable to OSI, to use OSI Technology (i) during the Contract
Period, to carry out the Research Program and (ii) during the Contract
Period and thereafter, to make, have made for itself, use and sell Clinical
Diagnostic Products based upon analytes with respect to which Bayer
commenced development during the Contract Period, subject to the following
conditions:
(a) Such license shall be subject to the prior rights granted to and
held by the Other Companies to any OSI Technology and OSI Patent Rights as
set forth on Exhibit A, attached hereto.
(b) OSI and/or its licensees shall retain the exclusive right to make,
have made for itself, use and sell Clinical Research Products for all
applications, including, without limitation, for use in developing clinical
research data in support of product development programs.
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The exclusive license granted in clause (ii) above shall (i) with
respect to OSI Patent Rights, continue for the life of such patents and
(ii) with respect to unpatented OSI Technology, continue in perpetuity
provided, however, that in the event that Bayer does not introduce a
commercial Clinical Diagnostic Product based upon a particular analyte
within five (5) years of the termination of this Agreement, then the
license under OSI Technology with regard to such Clinical Diagnostic
Product based upon such analyte shall become non-exclusive.
5.1.2 Non-exclusive License. In the event that Bayer desires to extend
this Agreement upon expiration of the initial 5-year term or any extension
period thereafter pursuant to Section 10.2 hereof and OSI desires not to
renew, upon expiration of such initial 5-year term or any extension period
thereafter, as the case may be, OSI grants to Bayer a nonexclusive license
to use the OSI Technology to make, have made for itself, use and sell
Clinical Diagnostic Products other than those based upon analytes with
respect to which Bayer has been granted the exclusive license pursuant to
Section 5.1.1 above, subject to the prior rights granted to and held by the
Other Companies to any OSI Technology and OSI Patent Rights as set forth on
Exhibit A, attached hereto.
5.2 License Granted to OSI. Bayer hereby grants to OSI the exclusive,
worldwide license, including the right to grant sublicenses to parties
reasonably acceptable to Bayer, to use Bayer Technology and Bayer/OSI Technology
(i) during the Contract Period, to carry out the Research Program and (ii)
during the Contract Period and thereafter, to make, have made for itself, use
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<PAGE> 26
'
and sell Clinical Research Products based upon analytes with respect to which
OSI commenced development during the Contract Period.
The license granted in clause (ii) above shall (i) with respect to
Bayer and Bayer/OSI Patent Rights, continue for the life of such patents
and (ii) with respect to unpatented Bayer and Bayer/OSI Technology,
continue in perpetuity; provided, however, that in the event that OSI does
not introduce a commercial Clinical Research Product based upon a
particular analyte within five (5) years of the termination of this
Agreement, then the license under Bayer Technology and Bayer/OSI Technology
with regard to such Clinical Research Product based upon such analyte shall
become non-exclusive.
6. Royalties, Payments of Royalties, Accounting for Royalties and
Recordkeeping .
6.1 Royalties to be Paid by Bayer.
Bayer shall pay to OSI a royalty of * of Net Sales by Bayer of any
Clinical Diagnostic Product (net of all other royalties) utilizing
Bayer/OSI Patent Rights or OSI Patent Rights in countries where such sales
are covered by a Valid Claim. Such royalty shall be paid for two (2) full
years from the date of first commercial sale of each of such products and,
thereafter, such royalty shall be *, continuing for the life of such
patents. For sales of Clinical Diagnostic Products utilizing OSI
Technology or Bayer/OSI Technology in countries and not
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* This portion redacted pursuant to a request for confidential treatment.
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<PAGE> 27
covered by a Valid Claim, the royalty rate (net of all other royalties)
shall be * of Net Sales for two (2) full years from the date of first
commercial sale of each of such products and, thereafter, such royalty
shall be * of Net Sales until the expiration of ten (10) years from the
date of first commercial sale of each of such Products.
6.2 Royalties to be Paid by OSI.
6.2.1 OSI shall pay to Bayer a royalty of * of Net Sales by OSI of
Clinical Research Products based on Bayer/OSI Patent Rights or Bayer Patent
Rights in countries where such sales are covered by a Valid Claim. Such
royalty shall be paid for two (2) full years from the date of first
commercial sale of each of such products and, thereafter, such royalty
shall be *, continuing for the life of such patents. For sales of Clinical
Research Products utilizing Bayer/OSI Technology or Bayer Technology in
countries not covered by a Valid Claim, the royalty rate shall be * of Net
Sales for two (2) full years from the date of first commercial sale of each
of such products and, thereafter, such royalty shall be * of Net Sales
until the expiration of ten (10) years from the date of first commercial
sale of each of such Products.
6.2.2 With respect to royalties received by OSI from Third Persons
pursuant to permitted licenses under Bayer or Bayer/OSI Technology, OSI
shall pass on to Bayer * of all revenues in whatever form received
(earned royalties,
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* This portion redacted pursuant to a request for confidential treatment.
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<PAGE> 28
licensing fees and the like) from such Third Persons; provided, however,
that the foregoing obligation shall not take effect until OSI shall have
received the amounts provided for in Sections 3.2.2 and 3.2.3 hereof from
the sources listed therein, i.e., $500,000 per each Commitment Year.
6.3 Single Royalty. The parties acknowledge that only one royalty rate, the
highest one applicable, will apply to Net Sales of each Clinical Diagnostic
Product or Clinical Research Product regardless of the number of patents (or
patent applications) within the Patent Rights or the extent of Technology
licensed under this Agreement which may apply.
6.4 Payment Dates. Within sixty (60) days after March 31, June 30,
September 30 and December 31 of each year during the term of this Agreement
occurring after the date of the first commercial sale of its first Licensed
Product, each party shall deliver to the other party a true and accurate report
stating for each royalty-bearing Clinical Diagnostic Product or Clinical
Research Product, as the case may be, for the preceding three (3) calendar
months (a) Net Sales, (b) the royalties payable thereon, and (c) the amount of
any credit taken against royalties payable not already taken in computing Net
Sales. Except as otherwise provided, simultaneously with the delivery of each
such report, each party shall pay to the other party the amount, if any, due for
the period of such report. If no payments are due, it shall be so reported.
6.5 Accounting. All amounts payable hereunder shall be payable in United
States Dollars; provided, however, that if any
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payment on account of Net Sales by a party, its Affiliates or sublicensees is
received in a foreign currency, such amount shall be converted monthly to United
States funds at the rate set by the party's finance department for internal
financial reporting purposes.
6.6 Records. During the term of this Agreement, each party shall keep
complete and accurate records of Net Sales in sufficient detail to enable the
other party to determine payments owed to it under this Agreement for a period
of three (3) years after such payments are due. Each party shall permit an
independent certified public accountant, acceptable to the other party and
appointed by the requesting party and at the requesting party's expense, to
examine its books, ledgers and records covering Net Sales during regular
business hours for the purpose of verifying, and only to the extent necessary to
verify, the amount of royalty due and payable but in no event more than once per
calendar year. The accountant shall maintain all information received during
such examination in confidence, and shall report to the party requesting
examination only with respect to the accuracy of any report. Any report not
examined within three (3) years of its having been made shall be deemed true and
accurate. In the event the records examined reveal that a party has paid less
than ninety-five percent (95%) of the amount due to the other party, the party
being examined shall pay the costs of the audit and shall pay the additional
amount due plus accrued interest at the rate of ten percent (10%) per annum.
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<PAGE> 30
7. Legal Action.
7.1 Actual or Threatened Disclosure or Infringement. If information comes
to the attention of Bayer or OSI to the effect that any Patent Rights relating
to a Clinical Diagnostic Product, have been or are threatened to be infringed,
Bayer shall have the right, at its expense, to take such action as it may deem
necessary to prosecute or prevent such infringement, including the right to
bring or defend any suit, action or proceeding involving any such infringement.
Bayer shall notify OSI promptly of the receipt of any such information and of
the commencement of any such suit, action or proceeding. If Bayer determines
that it is necessary or desirable for OSI to join any such suit, action or
proceeding, OSI shall execute all papers and perform such other acts as may be
reasonably required to permit Bayer to act in OSI's name. In the event that
Bayer brings a suit, it shall be entitled to all sums recovered in such suit or
in its settlement without any further obligation to OSI. If Bayer does not,
within 120 days after giving notice to OSI of the above-described information,
notify OSI of Bayer's intent to bring suit against any infringer, OSI shall have
the right to bring suit for such alleged infringement, but it shall not be
obligated to do so. OSI may join Bayer as party plaintiff, if appropriate, in
which event OSI shall hold Bayer free, clear and harmless from any and all costs
and expenses of such litigation, including reasonable attorneys' fees, and all
sums recovered in any such suit or in its settlement shall belong to OSI without
any further obligation to Bayer. Each party shall always have the right to be
represented by counsel of its
- 29 -
<PAGE> 31
own selection and at its own expense in any suit instituted by the other for
infringement, under the terms of this Section. If Bayer lacks standing to bring
any such suit, action or proceeding, then OSI shall do so at the request of
Bayer and at Bayer's expense. If neither party brings suit, then the applicable
royalty rate set forth in Section 6.1 hereof shall be reduced by fifty percent
(50%) with regard to Net Sales made 60 days after expiration of the 120-day
notice period set forth above.
If information comes to the attention of Bayer or OSI to the effect that
any Patent Rights relating to a Product to which rights have been retained by
OSI pursuant to this Agreement or to a Clinical Research Product have been or
are threatened to be infringed, OSI shall have the right, at its expense, to
take such action as it may deem necessary to prosecute or prevent such
infringement, including the right to bring or defend any suit, action or
proceeding involving any such infringement. OSI shall notify Bayer promptly of
the receipt of any such information and of the commencement of any such suit,
action or proceeding. If OSI determines that it is necessary or desirable for
Bayer to join any such suit, action or proceeding, Bayer shall execute all
papers and perform such other acts as may be reasonably required to permit OSI
to act in Bayer's name. In the event that OSI brings a suit, it shall be
entitled to all sums recovered in such suit or in its settlement without any
further obligation to Bayer. Bayer shall always have the right to be represented
by counsel of its own selection and at its own expense in any suit instituted by
OSI for infringement, under the terms of this Section. If OSI
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<PAGE> 32
lacks standing to bring any such suit, action or proceeding, then Bayer
shall do so at the request of OSI and at OSI's expense.
7.2 Infringement Claims.
7.2.1 Defense of Infringement Claims. Each party will cooperate with
the other in the defense of any suit, action or proceeding against either
such party or any sublicensee of such party alleging the infringement of
the intellectual property rights of a Third Person by reason of the use of
Patent Rights or other Technology in the manufacture, use or sale of a
Clinical Diagnostic Product or a Clinical Research Product. Each party
shall give the other party prompt written notice of the commencement of any
such suit, action or proceeding or claim of infringement and will furnish
the other party with a copy of each communication relating to the alleged
infringement. The party defending any such suit or action shall have full
authority (including the right to exclusive control of defense of any such
suit, action or proceeding and the exclusive right to compromise, litigate,
settle or otherwise dispose of any such suit, action or proceeding), to
defend or settle any such suit, action or proceeding. If the parties agree
that the other party should institute or join any suit, action or
proceeding pursuant to this Section 7.2.1, the non-moving party may join
the other party as a defendant if necessary or desirable, and each such
party shall execute all documents and take all other actions, including
giving testimony, which may reasonably be required in connection with the
prosecution of such suit, action or proceeding.
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<PAGE> 33
7.2.2 Costs of Infringement Claims. In any given year, with regard to
a suit, action or proceeding brought against Bayer, OSI will be responsible
for the lesser of (a) 50% of the costs incurred under Section 7.2.1 above
("Infringement Litigation Costs") for such year or (b) 50% of total amount
of royalties due to OSI for such year (such amount being herein referred to
as "OSI's Share"). Bayer shall recoup from the royalties due to OSI in such
year 50% of the OSI Share and shall recoup the remaining 50% in the
succeeding year. If additional Infringement Litigation Costs are incurred
in the next year, the formula set forth above shall be applicable to such
costs; provided, however, the amount carried over from the preceding year
shall not be included in the determination of the OSI Share for such year.
Bayer shall be responsible for the Infringement Litigation Costs in excess
of OSI's Share.
7.3 Licenses under Patents. If Bayer obtains a license under a patent owned
by a Third Person, which patent in the opinion of Bayer would be infringed by
the manufacture, use or sale of a Clinical Diagnostic Product, then one-half
(1/2) of any payments made by Bayer to such Third Person during a reporting
period shall be fully creditable under Section 6.1 hereof against royalty
payments due from Bayer to OSI under Section 6.1 hereof for such reporting
period or subsequent reporting periods, but in no event during a reporting
period shall the royalty payment be reduced by more than fifty percent (50%) in
any reporting period. If OSI is of the opinion that such manufacture, use or
sale would not infringe such patent owned by a Third Person, OSI may, at its
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<PAGE> 34
election, bring suit against such Third Person seeking a declaration that such
patent is invalid or not infringed by Bayer's manufacture, use or sale of the
Product involved, or may bring opposition, nullity or other proceedings against
such patent, as appropriate. If OSI is successful in such suit, Bayer shall
resume paying royalties in such country as provided in Section 6.1. If OSI does
not bring such suit or is unsuccessful in such suit, it shall join Bayer in an
attempt to obtain a license under such patent, and one-half (1/2) of any
payments made by Bayer to such Third Person for such license shall be fully
creditable under Section 6.2 hereof against royalty payments due from Bayer to
OSI as to that patent and that country pursuant to this Agreement but in no
event shall the royalty payment be reduced by more than fifty percent (50%) in
any reporting period.
8. Provisions Concerning the Filing, Prosecution and Maintenance of Patent
Rights.
8.1 The Joint Management Committee shall decide whether (and where) to file
any patent application within the Bayer/OSI Patent Rights. The Joint Management
Committee also shall select counsel, reasonably acceptable to both parties, to
prepare and prosecute such applications. Counsel selected shall report to the
Joint Management Committee or its designees. Bayer shall be responsible for in
all expenses incurred by such counsel.
8.2 In the event the Joint Management Committee elects not to file or
elects not to continue prosecution of an application on any invention covered by
Section 8.1, Bayer may file and prosecute any such application(s) at its own
expense.
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<PAGE> 35
8.3 In the event that OSI determines that it is no longer interested in
prosecuting or maintaining a particular patent application or granted patent
included in OSI Patent Rights, OSI shall so inform Bayer in sufficient time to
permit Bayer to assume the responsibility and expense for the further
prosecution and/or maintenance of such application or patent. If Bayer assumes
such responsibility and expense, any royalty thereafter due OSI from Bayer based
on such application or patent shall cease.
9. Other Rights of the Parties.
9.1 Research Outside the Field. During the Contract Period, OSI shall have
the right to apply for and receive grants or contracts from public or private
sources, including, without limitation, the National Institutes of Health, the
American Cancer Society and the National Science Foundation, for research to be
performed outside the Field. OSI shall also have the right to enter into
co-venture arrangements, whether written or oral, with Third Persons, including,
without limitation, the National Institutes of Health, the American Cancer
Society and the National Science Foundation, to develop any product for use
outside the Field. In any contract or arrangement entered into by OSI outside
the Field, OSI shall take all steps necessary to prevent the use of any Bayer
Technology or Bayer/OSI Technology. OSI shall have no right to disclose any
Bayer Technology or Bayer/OSI Technology to a Third Person with whom it may
contract.
9.2 No Rights to Technology or Products Outside the Field. Bayer and OSI
acknowledge that neither party is granting to the
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<PAGE> 36
other, pursuant to this Agreement, any rights or licenses to Technology or
Products outside the Field.
10. Term Extension, Termination and Disengagement.
10.1 Term. This Agreement shall commence as of the Effective Date and shall
expire five (5) years from the Effective Date unless sooner terminated or unless
extended under Section 10.2.
10.2 Extension. After the initial five (5) year term, this Agreement shall
be automatically extended for additional successive one-year terms unless a
party gives six months' written notice to the other party of its intent not to
renew.
10.3 Event(s) of Termination. The following events shall constitute Events
of Termination under this Agreement:
(a) Any representation or warranty by OSI or Bayer, or any of its
officers, under or in connection with this Agreement shall prove to have
been incorrect in any material respect when made; or
(b) OSI or Bayer shall fail in any material respect to perform or
observe any term, covenant or understanding contained in this Agreement or
in any of the other documents or instruments delivered pursuant to, or
concurrently with, this Agreement, and any such failure shall remain
unremedied for ninety (90) days after written notice to the failing party.
10.4 Termination. Upon the occurrence of any Event of Termination, the
party not responsible shall have the right, by written notice to the other
party, to immediately terminate this Agreement.
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<PAGE> 37
10.5 Early Termination. Bayer shall have the right to terminate this
Agreement for any reason to be effective at any time after this Agreement has
been in effect for a period of twenty-four (24) months from the Effective Date,
provided that Bayer has given (12) months' prior written notice to OSI.
10.6 Survival. Without limitation, the rights and obligations arising from
the following provisions shall survive any expiration or termination of this
Agreement: Articles 1, 4, 5, 7 and 13-16.
11. Representations and Warranties. OSI and Bayer each represent and warrant as
follows:
11.1 It is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and Indiana, respectively. It
is qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification. It has all requisite power and
authority, corporate or otherwise, to conduct its business as now being
conducted, to own, lease and operate its properties and to execute, deliver and
perform this Agreement.
11.2 The execution, delivery and performance by it of this Agreement has
been duly authorized by all necessary corporate action and does not and will not
(a) require the consent or approval of its stockholders, (b) violate any
provision of any law, rule, regulation, order, write, judgment, injunction,
decree, determination or award presently in effect having applicability to it or
any provision of its charter or by-laws or (c) result in a
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<PAGE> 38
breach of or constitute a default under any material agreement, mortgage, lease,
license, permit or other instrument or obligation to which it is a party or by
which it or its properties may be bound or affected.
11.3 This Agreement is a legal, valid and binding obligation of it
enforceable against it in accordance with its terms and conditions, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws, from time to time in effect,
affecting creditors' rights generally.
11.4 It is not under any obligation to any Person, contractual or
otherwise, that is conflicting or inconsistent in any respect with the terms of
this Agreement or that would impede the diligent and complete fulfillment of its
obligations.
11.5 It has good and marketable title to or valid leases or licenses for,
all of its properties, rights and assets necessary for the fulfillment of its
responsibilities under this Agreement, subject to no claim of any Third Person
other than the relevant lessors or licensors.
12. Covenants of OSI and Bayer. Throughout the Contract Period, each of OSI
and Bayer shall:
(a) Maintain and preserve its corporate existence, rights, franchises
and privileges in the jurisdiction of its incorporation, and qualify and
remain qualified as a foreign corporation in good standing in each
jurisdiction in which such qualification is from time to time necessary or
desirable in view
- 37 -
<PAGE> 39
of its business and operations or the ownership of its properties; and
(b) Comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any government authority
to the extent necessary to conduct the OSI/Bayer Annual Operating Plan and
Budget.
13. Dispute Resolution. The parties recognize that disputes arise from time to
time regarding either party's rights or obligations under this Agreement. The
parties agree to follow the procedures set forth below in this Article in order
to facilitate the speedy resolution of any disputes under this Agreement. The
parties agree to cooperate and attempt in good faith to resolve any dispute
between them. Any dispute that cannot be resolved by good faith negotiation
shall be referred, by written notice from either party or to the other, to the
respective officers of the parties designated below (or their successors):
For Bayer: Senior Vice President
Finance and Administration
For OSI: Vice President
Finance
These executive officers shall negotiate in good faith to achieve a resolution
of the dispute within thirty (30) days after they are notified of the dispute.
If the designated officers are not able to resolve the dispute within this
thirty (30) day period, either party may then initiate binding arbitration
proceedings to resolve the dispute in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
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<PAGE> 40
rendered by the arbitrator may be entered in any court having jurisdiction
thereof; provided, however, any claim for consequential, special, or punitive
damages shall not be heard or considered by the arbitrator and any finding or
award of consequential, special, or punitive damages shall be null, void and
unenforceable as if never having been made.
14. Notices. All notices shall be mailed via certified mail, return receipt
requested, or courier, addressed as follows, or to such other address as may be
designated from time to time:
If to Bayer: To Bayer at its address as set
forth at the beginning of this
Agreement,
Attention:
with a copy to: Legal Department
If to OSI: To OSI at its address as set forth
at the beginning of this Agreement,
Attention: President
with a copy to: *
Services shall be deemed given as of the date of receipt.
15. Governing Law. This Agreement shall be construed in accordance with the laws
of the State of New York.
- --------
* This portion redacted pursuant to request for confidential treatment.
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<PAGE> 41
16. Miscellaneous.
16.1 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective legal representatives, successors
and permitted assigns.
16.2 Headings. Paragraph headings are inserted for convenience of reference
only and do not form a part of this Agreement.
16.3 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original.
16.4 Amendment; Waiver; etc. This Agreement may be amended, modified,
superseded or cancelled, and any of the terms may be waived, only by a written
instrument executed by each party 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 shall in no manner affect the
rights at a later time to enforce the same.
16.5 No Third Party Beneficiaries. No Person not a party to this Agreement,
including any employee of any party to this Agreement, shall have or acquire any
rights by reason of this Agreement. Neither party shall enter into or incur, or
hold itself out to third parties as having authority to enter into or incur on
behalf of the other party, any contractual obligation, expense, or liability
whatsoever. The performance of each party hereunder is undertaken as an
independent contractor, and nothing contained in this Agreement shall be deemed
to constitute the parties partners with each other or any Person.
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<PAGE> 42
16.6 Assignment and Successors. This Agreement may not be assigned by
either party, except that either party may assign this Agreement and the rights
and interests of such party to an Affiliate or a purchaser of substantially all
of the assets of such party's business to which this Agreement pertains, upon
notice to the other party.
16.7 Severability. If performance of this Agreement or any part hereof by
either party shall be rendered unenforceable or impossible under, or in conflict
with any law, regulation, or official action by any government agency having
jurisdiction over such party, then such party shall not be considered in default
by reason of failure to perform and the validity of all remaining provisions
hereof shall not be affected by such result.
16.8 Unforeseen Circumstances. Neither party shall be liable in damages
for, nor shall this Agreement be terminable or cancelable by reason of, any
delay or default in any such party's performance hereunder if such default or
delay is caused by events beyond such party's reasonable control including,
without limitations, acts of God, regulation or law or other action of any
government or agency thereof, war or insurrection, civil commotion, destruction
of production facilities or materials by earthquake, fire, flood or storm, labor
disturbances, epidemic, or failure of suppliers, public utilities or common
carriers. Each party agrees to endeavor to resume its performance hereunder if
such performance is delayed or interrupted by reason of such forces majeure as
listed above.
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<PAGE> 43
16.9 Integration. This writing constitutes the entire agreement between the
parties relating to the subject matter hereof. There are no understandings,
representations, or warranties of any kind except as expressly set forth herein.
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<PAGE> 44
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives.
BAYER CORPORATION
By:
-----------------------------
Title:
--------------------------
ONCOGENE SCIENCE, INC.
By:
-----------------------------
Title:
--------------------------
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<PAGE> 1
Portions of this Exhibit 10.2 have been redacted and are the subject of a
confidential treatment request filed with the Secretary of the Securities and
Exchange Commission.
<PAGE> 2
COLLABORATIVE RESEARCH, DEVELOPMENT
AND COMMERCIALIZATION AGREEMENT
BETWEEN: BIOCHEM PHARMA (INTERNATIONAL) INC., a
corporation incorporated under the laws of Canada and
having its registered office at Commerce Court West,
Suite 5300, Toronto, Ontario, M5L 1B9 (hereinafter
called "BioChem").
AND: ONCOGENE SCIENCE, INC., a corporation
incorporated under the laws of Delaware and having its
principal place of business at 106 Charles Lindbergh
Boulevard, Uniondale, New York, 11553 (hereinafter
called "Oncogene").
WHEREAS each of BioChem and its Affiliates and Oncogene and its Affiliates is
currently conducting research in respect of antiviral agents which target
certain illnesses;
WHEREAS BioChem and its Affiliates, on the one hand, and Oncogene and its
Affiliates, on the other hand, have decided to collaborate and combine their
efforts in connection with the research, development and commercialization of
antiviral agents which primarily target protein/nucleic interactions for the
treatment of certain illnesses;
WHEREAS BioChem and its Affiliates and Oncogene and its Affiliates are willing
to use their research facilities, scientists, research assistants, technicians
and other personnel to conduct their obligations under this Agreement.
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:
ARTICLE 1
INTERPRETATION
1.1 Defined terms. In this Agreement, unless the context or subject matter is
inconsistent therewith, the following terms and expressions shall have the
following meanings:
(a) "Acquisition" shall have the meaning ascribed thereto at Section
8.2(f) hereof.
(b) "Affiliate" shall mean, with respect to any Person (including a
Party), any other Person which directly or indirectly controls or is
controlled by, or is under direct or indirect common control with,
such first mentioned Person or any Person which is directly or
indirectly controlled by a Person which controls
<PAGE> 3
the first mentioned Person; for the purpose of this definition,
"control" shall mean, with respect to any Person (including any
Party), the ownership of more than 50% of the voting shares or other
voting equity of that Person.
(c) "Agreement" shall mean this collaborative research, development and
commercialization agreement and all instruments supplemental hereto or
in amendment or in confirmation hereof; "herein", "hereof", "hereto",
"hereunder" and similar expressions mean and refer to this Agreement
and not to any particular article, section, subsection or other
subdivision; "article", "section", "subsection" or other subdivision
of this Agreement shall mean and refers to the specific article,
section, subsection or other said subdivision of this Agreement.
(d) "BioChem Confidential Information" shall mean all confidential
information disclosed to Oncogene verbally and subsequently confirmed
in writing as "confidential" or designated as "confidential" by
Biochem or its Affiliates at the time of disclosure to Oncogene, to
the extent that such information as of the date of disclosure to
Oncogene is not (i) demonstrably known to Oncogene as evidenced by
written documentation other than by virtue of a prior confidential
disclosure to Oncogene by BioChem or its Affiliates, or (ii) disclosed
in the published literature or otherwise to the public through no
fault of Oncogene, its Affiliates, employees or consultants, or (iii)
obtained from an independent Third party without binder of secrecy,
provided that such independent Third Party has no obligation of
confidentiality to BioChem or its Affiliates.
(e) "BioChem Technology" shall mean and include all technology and
technical information willing to a Lead Compound or used or furnished
by BioChem and/or its Affiliates in respect of the performance by it
of its obligations hereunder, including all inventions, chemical
structures and methods for synthesis, structure-activity
relationships, assay methodology, methods, processes, formulae, plans,
specifications, characteristics, equipment and equipment designs, know
how, trade secrets, discoveries, results, formulations and biological,
toxicological and clinical data and physical, chemical or biological
material which are developed by employees of, or consultants to,
BioChem and/or its Affiliates, prior to or during the term of this
Agreement or acquired by purchase, license, assignment or other means
from third parties prior to or during the term of this Agreement that
is not Joint Technology, but only to the extent that BioChem or its
Affiliates is legally entitled to disclose such Technology and
technical information and use it in connection with the performance by
it of its obligations hereunder.
(f) "Commercial Product" shall mean any and all products in Final
Pharmaceutical Form emanating from Lead Compounds and any and all
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<PAGE> 4
formulations, mixtures or compositions thereof emanating from the
Research Program pursued pursuant to this Agreement, the making or use
of which embodies any of BioChem Technology, Oncogene Technology or
Joint Technology and in respect of which BioChem and Oncogene each has
rights to commercialize pursuant to this Agreement or any other
agreement executed between the Parties in furtherance to this
Agreement.
(g) "Commercialization Agreement" shall have the meaning ascribed thereto
at Section 6.2 hereof.
(h) "Commitment Year" shall mean each calendar year during the term of
this Agreement and, in respect of the First Commitment Year, the
period commencing on the Effective Date and terminating on December
31, 1996.
(i) "Compound" shall mean any compound in connection with the Field being
analyzed by the Parties pursuant to the Research Program or developed
by BioChem and Oncogene and/or their respective Affiliates pursuant to
the provisions of this Agreement.
(j) "Confidential Information" shall mean BioChem Confidential Information
or Oncogene Confidential Information, as the case may be.
(k) "Deficiency Amount" shall have the meaning ascribed thereto at Section
2.4.1 hereof.
(l) "Development Candidate" shall mean a Lead Compound which has been
designated by the Joint Steering Committee as a potential Commercial
Product and which should be the subject of a Development Program.
(m) "Development Program" shall mean the written development plan to be
prepared and approved by the Joint Steering Committee describing the
development and other obligations of each Party in respect of the
development of any Compound for preclinical and clinical development,
which plan shall be approved by the Joint Development Committee no
later than ninety (90) days following the declaration by the Joint
Steering Committee that a Lead Compound has been designated as a
Development Candidate, failing which the matter shall be referred to
the President of BioChem and the Chief Executive Officer of Oncogene
for discussion and resolution.
(n) "Effective Date" shall mean May 1, 1996.
(o) "Electing Party" shall have the meaning ascribed thereto at Section
9.1 hereof.
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<PAGE> 5
(p) "Election Notice" shall have the meaning ascribed thereto at Section
9.1 hereof.
(q) "Event of Termination" shall have the meaning ascribed thereto at
Section 8.2 hereof.
(r) "FDA" shall mean the United States Food and Drug Administration.
(s) "Field" shall mean, unless otherwise determined by the Joint Steering
Committee pursuant to Section 2.2, Hepatitis C ("HCV") and Human
Immunodeficiency Virus ("HIV") and such other viral targets designated
by the Joint Steering Committee.
(t) "Final Pharmaceutical Form" shall mean any presentation of a
Commercial Product in any final packaged and labelled pharmaceutical
dosage form suitable for sale to and use by an end user.
(u) "Full Development" shall mean the first of the two events described at
Section 6.2 to occur.
(v) "Indemnified Party" shall have the meaning ascribed thereto at Section
5.10 hereof.
(v) "Indemnified Party" shall have the meaning ascribed thereto at Section
5.10 hereof.
(w) "Indemnifying Party" shall have the meaning ascribed thereto at
Section 5.10 hereof.
(x) "Independent Third Party" shall mean any Person other than BioChem,
Oncogene and/or any of their respective Affiliates.
(y) "Initial Term" shall have the meaning ascribed thereto at Section 8.1
hereof.
(z) "Joint Development Committee" or "JDC" shall have the meaning ascribed
thereto at Section 6.1 hereof.
(aa) "Joint Research Committee" or "JRC" shall have the meaning ascribed
thereto at Section 2.4 hereof.
(ab) "Joint Steering Committee" or "JSC" shall have the meaning ascribed
thereto at Section 2.4 hereof.
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<PAGE> 6
(ac) "Joint Technology" shall mean and include all technology and
information including all inventions, chemical structures and methods
for synthesis, structure-activity relationships, assay methodology,
methods, processes, formulae, plans, specifications, characteristics,
equipment and equipment designs, know how, trade secrets, discoveries,
formulations and biological, toxicological and clinical data which are
developed jointly by employees of, or consultants to, BioChem and
Oncogene, or, solely in respect of the Field, licensed by either of
the Parties or on behalf of the Parties during the term of this
Agreement, such that BioChem and Oncogene, each having contributed to
the development of such technology and technical information, owns an
undivided interest therein.
(ad) "Lead Compound" shall mean, subject to the provisions of Section 2.16,
any Compound designated as a Lead Compound by the Joint Steering
Committee and which has demonstrated such properties of chemical
structure, potency, mechanism of action, selectivity and
non-cytotoxicity as deemed necessary by the JSC for such Compound to
be a potential candidate for chemical optimization studies.
(ae) "Net Invoiced Sales Value" shall mean the gross invoice price charged
for Commercial Products sold by BioChem, Oncogene and/or their
respective Affiliates and sublicensees to Independent Third Parties,
less all allowances or credits granted on such sales, including those
in respect of rejected or returned goods, recalls, transportation
charges or allowances, insurance charges, normal and customary trade,
quantity and trade discounts, and taxes or other governmental charges
on, or measured by, the sale, transportation, or use of Commercial
Products, which BioChem, Oncogene and/or their respective Affiliates
and sublicensees have to pay or absorb on such sales.
(af) "Net Sales" shall mean in the case of any Commercial Products sold in
a particular country by either Party and/or their respective
Affiliates and sublicensees in Final Pharmaceutical Form to an
Independent Third Party:
(i) uncompounded with any other active ingredient, the Net Invoiced
Sales Value of such Commercial Products;
(ii) compounded with any other active therapeutic ingredient, the
value of the total declared amount of the Commercial Product
contained therein, as agreed by discussions between BioChem and
Oncogene; if the value cannot be agreed upon there it should be
decided by an independent accountant mutually acceptable to
BioChem and Oncogene, whose decision shall be binding upon them;
and
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<PAGE> 7
(iii) in bulk, the Net Invoiced Sales Value of such Commercial Product
sold to said Independent Third Party in Final Pharmaceutical
Form.
(ag) "Non-Electing Party" shall have the meaning ascribed thereto at
Section 9.1 hereof.
(ah) "Notice" shall have the meaning ascribed thereto at Section 9.1
hereof.
(ai) "Notice of Opportunity" shall have the meaning ascribed thereto at
Section 9.1 hereof.
(aj) "Notifying Party" shall have the meaning ascribed thereto at Section
9.2 hereof.
(ak) "Oncogene Confidential Information" shall mean all confidential
information disclosed to BioChem verbally and subsequently confirmed
in writing as "confidential" or designated as "confidential" by
Oncogene or its Affiliates at the time of disclosure to BioChem, to
the extent that such information as of the date of disclosure to
BioChem is not (i) demonstrably known to BioChem as evidenced by
written documentation other than by virtue of a prior confidential
disclosure to BioChem by Oncogene or its Affiliates, or (ii) disclosed
in the published literature or otherwise to the public through no
fault of BioChem, its Affiliates, employees or consultants, or (iii)
obtained from an Independent Third Party without binder of secrecy,
provided that such Independent Third Party has no obligation of
confidentiality to Oncogene or its Affiliates.
(al) "Oncogene Technology" shall mean and include all technology and
technical information relating to a Lead Compound or used or furnished
by Oncogene and/or its Affiliates in respect of the performance by it
of its obligations hereunder, including all inventions, chemical
structures and methods for synthesis, structure-activity
relationships, assay methodology, methods, processes, formulae, plans,
specifications, characteristics, equipment and equipment designs, know
how, trade secrets, discoveries, results, formulations and biological,
toxicological and clinical data and physical, chemical or biological
material which are developed by employees of, or consultants to,
Oncogene and/or its Affiliates, prior to or during the term of this
Agreement or acquired by purchase, license, assignment or other means
from third parties prior to or during the term of this Agreement that
is not Joint Technology, but only to the extent that Oncogene or its
Affiliates is legally entitled to disclose such Technology and
technical information and use it in connection with the performance by
it of its obligations hereunder.
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(am) "Parties" shall mean BioChem and Oncogene; and "Party" shall mean any
one of them.
(an) "Patent Expenses" shall mean all external fees and costs incurred by a
Party in financing the activities relating to a Patent Right,
including, without limitation, fees and reasonable attorneys' charges
in connection with the preparation, filing, prosecution, maintenance
and defense of the Patent Rights and translation charges.
(ao) "Patent Rights" shall mean all patents and patent applications,
including any divisional, continuation, continuation-in-part, reissue,
renewal or extension thereof, or substitute therefor, and the letters
patent that may be issued thereon, any registration or confirmation of
such letters patent, relating to any Technology, Lead Compounds or
Commercial Products, their methods of manufacture or uses of
intermediates therefor, or formulations thereof. "Oncogene Patent
Rights" shall mean Patent Rights claiming inventions that are
conceived and reduced to practice solely by employees of Oncogene or
its Affiliates. "Joint Patent Rights" shall mean Patent Rights
claiming inventions that are conceived or reduced to practice jointly
by employees or consultants of Oncogene and employees or consultants
of BioChem and of their respective Affiliates. "BioChem Patent Rights"
shall mean Patent Rights claiming inventions that are conceived and
reduced to practice solely by employees or consultants of BioChem or
its Affiliates.
(ap) "Person" shall mean any individual, corporation, company, cooperative,
partnership, trust, unincorporated association or any other entity
which possesses a juridical personality, including any governmental
authorities or body of competent jurisdiction; and pronouns when
referring to a Person, shall have a similar extended meaning.
(aq) "Program Representative" shall mean an employee of a Party designated
by such Party as its representative for consultation and communication
with the other party. Any Party may change its Program Representative
at any time by written notice given to the other Party or designate
more than one Program Representative provided that each of its
representatives shall be assigned different responsibilities.
(ar) "Renewal Period" shall have the meaning ascribed thereto at section
8.1 hereof.
(as) "Research Program" shall mean the written research plan annexed hereto
as Schedule A, as subsequently revised or replaced by the Joint
Steering Committee, which plan describes the research and other
obligations to be
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carried out during each Commitment Year by each of BioChem and
Oncogene and their Affiliates.
(at) "Secret Information" shall have the meaning ascribed thereto at
Section 4.1 hereof.
(au) "Submitted License" shall have the meaning ascribed thereto at Section
9.1 hereof.
(av) "Target" shall have the meaning ascribed thereto at Section 8.2
hereof.
(aw) "Technology" shall mean, collectively, BioChem Technology, Oncogene
Technology and Joint Technology.
(ax) "Valid Claim" shall mean a claim included among the Joint Patent
Rights so long as such claim shall not have been irrevocably abandoned
or held invalid in a final decision of a court or other authority of
competent jurisdiction.
ARTICLE 2
RESEARCH PROGRAM
2.1 General. Subject to the terms and conditions of this Agreement, each of
BioChem and Oncogene agrees, as of the Effective Date, to undertake and to
cause its Affiliates to undertake, the Research Program and, in the Field,
to collaborate in respect thereof.
2.2 Scope. The scope of the Research Program shall comprise the identification,
research and development of Lead Compounds derived from BioChem Technology,
Oncogene Technology and Joint Technology or which may be contained in any
compound library prepared by or on behalf of any Party or to which the
Parties and their Affiliates hereto have access to in respect of the Field.
The scope of the Research Program shall also comprise any derivatives, or
families of derivatives, which may result from the research performed
during the term of this Agreement, pursuant to the Research Program and
extend to any other antiviral targets identified by the Joint Steering
Committee.
2.3 General Obligations of the Parties. During the term of this Agreement, the
Parties hereto hereby agree to diligently pursue, and to cause their
respective Affiliates to diligently pursue, the Research Program and to do
the following:
(a) Each of BioChem and Oncogene and/or their respective Affiliates has
synthesized and isolated and/or shall continue to synthesize and/or
isolate Compounds within the Field.
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<PAGE> 10
(b) Each of BioChem and Oncogene and/or their respective Affiliates shall
provide the other Party with information concerning, and, if required
by the JRC, with samples of, Compounds falling within the Field,
including those which pass primary screening in order that the other
Party may collaborate in the evaluation for potential activity as
antiviral agents which target the Field.
(c) Each of BioChem and Oncogene shall aid, and shall cause their
respective Affiliates to aid, the other Party in the fulfillment of
its obligations hereunder, provide structural chemistry analysis and
access to combinatorial chemistry technology and scale up potential
antiviral Compounds for in vitro and in vivo studies, as well as
provide through in vitro and in vivo evaluations, toxicity and
mechanisms of action studies in order to select, as promptly as
possible, Lead Compounds for development.
(d) Each of BioChem and Oncogene shall provide to the other Party access
to appropriate discovery technologies.
(e) Each of BioChem and Oncogene shall provide to the other Party access,
limited for use or access by such other Party in the Field to compound
libraries made by it or on its behalf or to which it has access to in
connection with the conduct of the Research Program.
(f) Each of BioChem and Oncogene shall provide to the other Party access
to all Technology within its control or within the control of its
Affiliates, including technology licensed from Independent Third
Parties to the extent permitted to do so.
(g) Each of BioChem and Oncogene shall, and each shall cause its
Affiliates to, conduct research and development activities in respect
of targets identified by the JSC.
(h) BioChem and Oncogene agree, on their behalf and on behalf of their
respective Affiliates, (i) to fulfil their respective obligations
under, and pursue the goals of, the Research Program and (ii) to
perform their responsibilities as outlined in the Research Program or
allocated to it by the Joint Steering Committee.
(i) Each of BioChem and Oncogene agrees to provide laboratory facilities
and equipment and research staff in accordance with the provisions
hereof to fulfil its obligations hereunder and to give effect to the
intention of the Parties to collaborate in the research and
development of Compounds.
(j) Oncogene shall provide BioChem and/or its Affiliates with technology
transfer and access to technological know how related to existing
robotic screening technology, to permit the implementation of
necessary screening infrastructures,
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the whole in accordance with the Technology Transfer and License
Agreement to be negotiated diligently and in good faith by the parties
and to be annexed hereto as Schedule B.
2.4 Joint Steering Committee.
2.4.1 Purpose. A steering committee (the "Joint Steering Committee" or
"JSC") is hereby established by BioChem and Oncogene to manage all
business and commercial aspects between the Parties pursuant to this
Agreement (including financial planning, resource allocation,
prioritization, addition of new targets within the Field), agree
upon and assign responsibilities (other than specific scientific
tasks) within the Research Program to each Party, approve the annual
budgets to be spent by each Party during any Commitment Year and
review and monitor work conducted by the Joint Research Committee
and to process and approve technical and scientific recommendations
of both the JRC and JDC. In particular, the JSC will be responsible,
throughout the term of this Agreement, for (i) reviewing the
Research Program and revising it as necessary, (ii) for preparing,
monitoring and revising on an annual basis the budgets necessary for
the performance by the Parties of their obligations pursuant to the
Research Program and this Agreement, (iii) monitoring the
fulfillment by each Party of its obligations pursuant to this
Agreement, (iv) designating any Compounds as Lead Compounds, (v)
determining the allocation between the Parties of their resources in
connection with the conduct of the Research Program, (vi)
designating Development Candidates, (vii) negotiating and
soliciting, if appropriate, third parties to collaborate for
purposes of conducting the Research Program, (viii) determining on
an annual basis the amount, if any, (the "Deficiency Amount") in
order that contributions of both Parties during any Commitment Year
referred to in Section 2.8 be approximately the same, and (ix)
determining the rules and principles applicable for purposes of the
accounting and maintenance of books and records by both Parties
including harmonization of the Canadian and American GAP. Either
Party may in committee propose that the Parties commence development
of a promising Lead Compound.
2.4.2 Expansion of Research Program. Save for the first Commitment Year,
in which case the Research Program is defined as set out in Schedule
A of this Agreement and a general outline in respect of the other
Commitment Years, the JSC shall define the Research Program in each
Commitment Year and amend, if it deems appropriate, the Field.
2.4.3 Composition. BioChem and Oncogene each shall appoint, in their sole
discretion, two (2) members to the JSC. Alternates or replacements
of any Party may be appointed by such Party at any time by notice to
the other Party. Initially the members shall be:
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for BioChem: *
for Oncogene: *
2.4.4 Voting. Each member of the JSC shall have one vote, and decisions
shall be made by unanimity. Where a vote on any decision does not
produce a consensus between all members, the matters at issue shall
be submitted to the President of BioChem and the Chief Executive
Officer of Oncogene for discussion and resolution.
2.4.5 Chair. A Chairperson shall be nominated alternatively by BioChem and
Oncogene for one year terms, the first term being served by a
nominee appointed by Oncogene.
2.4.6 Meetings. Meetings shall be convened at least two times a year at
locations and times determined by a JSC resolution. Representatives
of Oncogene, BioChem, or both, in addition to members of each of the
Parties on the JSC, may attend meetings but shall have no voting
rights. Meetings shall be held alternatively at each Party's
facilities. Minutes of each meeting shall, be prepared by a
representative of the Parties on an alternate basis and distributed
to all members of the JSC within thirty (30) days following any
meeting.
2.4.7 Expenses. The Parties will each bear their own expenses and those
expenses related to the participation of their appointees of the
JSC.
2.5 Joint Research Committee.
2.5.1 Purpose. A research committee (the "Joint Research Committee" or
"JRC") is hereby established by BioChem and Oncogene to (i) review
and discuss scientific questions which may arise in connection with
the execution of the Research Program and scientific inventions,
break throughs or developments in the Field made pursuant to the
Research Program, (ii) manage and deal with such other
responsibilities which may, from time to time, be delegated to it by
the Joint Steering Committee, (iii) recommend to the JSC any
Compound as Lead Compounds, and (iv) recommend to the JSC any Lead
Compounds as Development Candidates.
2.5.2 Composition. BioChem and Oncogene each shall appoint, in their sole
discretion, three (3) members to the JRC. Replacements of any Party
may be
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* This portion redacted pursuant to a request for confidential treatment.
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appointed by such Party at any time by notice to the other Party.
Initially, the members shall be:
for BioChem: *
for Oncogene: *
2.5.3 Decisions. Any decision of the JRC shall require consensus between
all members, failing which the matter of issue shall be submitted to
the Joint Steering Committee for discussion and resolution.
2.5.4 Meetings. Meetings of the JRC shall be held at least four times per
year at locations and times determined unanimously by the JRC.
Minutes of each meeting shall be prepared and distributed to all
members of the JRC.
2.5.5 Reports. During the term of this Agreement, each Party shall cause
its members of the JRC to prepare and submit to the Joint Steering
Committee summary reports within thirty (30) days following the end
of each calendar quarter, describing the progress under the Research
Program during the preceding calendar quarter and recommending any
qualified Compounds to be designated as Lead Compounds.
2.6 Reports. During the term of this Agreement, BioChem and Oncogene each shall
provide to the JSC and to the other Party access to primary data derived or
used in connection with the performance by it of its obligations hereunder
and the following:
(a) minutes of each JSC meeting to be distributed within fifteen (15) days
of each meeting;
(b) on an annual basis and no later than sixty (60) days following the end
of each Commitment Year, a statement of all costs and expenses
incurred by such Party and its Affiliates pursuant to Section 3.1; and
a summary written reports describing the work accomplished under the
Research Program and discussing and evaluating the results of such
work.
2.7 Laboratory Facilities. BioChem and Oncogene each agree to provide, or cause
their respective Affiliates, suitable laboratory facilities and equipment
for carrying out its obligations under the Research Program and this
Agreement.
2.8 Research Staff. Each of BioChem and Oncogene shall, no later than fifteen
(15) days following execution of this Agreement, appoint research team
comprised of such
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* This portion redacted pursuant to a request for confidential treatment.
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<PAGE> 14
number of suitably qualified Ph.D. scientists and other suitable qualified
scientists and other personnel as may be needed and agreed to between the
Parties from time to time each to achieve the goals of the Research
Program, it being understood that over the term of this Agreement, each
Party shall have contributed, in terms of out-of-pocket expenses incurred
by the Parties and their Affiliates (including salaries and such other
costs and expenses referred to in Section 3.1 hereof), approximately
equally in connection with the performance of their obligations under the
Research Program and this Agreement.
2.9 Inspection. BioChem and Oncogene shall each have the right to arrange for
its employees, external consultants, and such other persons as it may
reasonably delegate, to visit the other Party at its offices and
laboratories and to discuss work under the Research Program and its results
in detail with the other Party's Program Representative, the staff, and
consultants of the other Party; provided that such visits are during normal
business hours, have been arranged on not less than five (5) business days
notice and shall not unreasonably interrupt the operations of the other
Party.
2.10 Patent and Confidential Information Agreements. Each of BioChem and
Oncogene shall require all of its employees, all employees of its
Affiliates and all independent Third Parties involved in, or associated
with the Research Program to have executed an agreement for the assignment
of inventions and for the protection of Secret Information in such
reasonable form as may from time to time be used by BioChem and Oncogene
for such purpose.
2.11 Flexibility. In conducting its research and other obligations under this
Agreement, each of BioChem and Oncogene shall have and maintain sufficient
flexibility to allow a shift in effort and emphasis within the Research
Program that will, in the opinion of the JSC, achieve the best results in
the attainment of the objectives of the Research Program.
2.12 Arrangements with Independent Third Parties. Each of BioChem and Oncogene
shall have the right to contract with its Affiliates and Independent Third
Parties for the performance of work, or the provisions of consulting
services, in connection with the Research Program provided that the other
Party shall have the opportunity to review, comment on and approve any such
proposed contract with Independent Third Parties prior to its execution.
Approval of any such contract shall not be unreasonably withheld, and a
response to a request for approval shall be provided within thirty (30)
days after its receipt by the other Party. Each Party will provide the
other Party with a complete copy of each such executed contract. The costs
incurred by any of BioChem or Oncogene, as the case may be, in respect of
such contract and the work and consultation services to be performed
thereunder shall be borne by the Party having contracted with such
Affiliate or Independent Third Party. Each Party represents and warrants to
the other Party that, as at the date hereof, Schedule C
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annexed hereto contains a full list of all arrangements with Independent
Third Parties relating to Technology and hereby agrees to use its best
efforts to obtain consent, where required, to disclose to the other Party
such Technology.
2.13 No Independent Research within the Scope of the Research Program. During
the term of this Agreement, the Parties to this Agreement shall not
undertake independent research, either directly or indirectly through any
Affiliate or any other Person, in any area falling within the Field or
which competes with any Compound being developed pursuant to this Agreement
without the consent of the Joint Steering Committee.
2.14 Other Research Permitted. The Parties and their Affiliates have the right
to conduct research on Compounds and use Joint Technology outside the
Field, notwithstanding their potential utility in the treatment of
illnesses or disorders being the object of the Field, it being understood
that any such Party shall not, in the course of such use or conduct, take
or omit to take any action which would cause prejudice to the other Party.
2.15 Clinical Data. All clinical data obtained from studies conducted pursuant
to the Research Program and the Development Program shall be jointly owned
by BioChem and Oncogene and may be used by either Party and its Affiliates
outside the Field, it being understood that any such Party shall not, in
the course of such use or conduct, take or omit to take any action which
would cause prejudice to the other Party or to the Research Program.
2.16 Lead Compounds. Notwithstanding any provision of this Agreement, if a Lead
Compound is not designated as a Development Candidate within two (2) years
following its designation by the JSC as a Lead Compound, such Lead Compound
shall cease to be considered a Compound within the meaning of this
Agreement and all rights, title and interest to such Compound shall be
returned to the Party having contributed such Compound to the Research
Program and the other Party shall cease to have any right in respect of
such Compound.
ARTICLE 3
COSTS AND EXPENSES OF THE RESEARCH PROGRAM
3.1 Payment of Costs and Expenses. Each Party shall be responsible for all
expenses and costs incurred by it and its employees, its Affiliates and its
consultants in the performance of such Party's obligations hereunder,
including, without limitation, in respect of Patent Expenses relating to
its Patent Rights, salaries of its employees, fees of its consultants,
materials, equipment and administrative expenses and travel costs of its
employees, employees of its Affiliates and consultants. A Party shall
reimburse the other Party one-half of the Deficiency Amount within ninety
(90) days from the end of any year, except in respect of the first three
years of the term of this Agreement where
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such calculation and payment shall be made for such period within thirty
(30) days of the third anniversary date of this Agreement.
ARTICLE 4
SECRET INFORMATION
4.1 General. Each of BioChem and Oncogene recognizes that the other Party's
Confidential Information, BioChem Technology, Oncogene Technology, Joint
Technology and the results of the Research Program (collectively, the
"Secret Information") all constitute highly valuable proprietary
confidential information.
4.2 Treatment of Secret Information.
(a) Subject to the disclosure obligations set forth in this Article 4,
each of BioChem and Oncogene agree that, during the term of this
Agreement, each Party will maintain, and shall cause its Affiliates to
maintain, the Secret Information in confidence and shall not disclose,
divulge or otherwise communicate such Secret Information to
Independent Third Parties (except its own Confidential Information, or
its own Technology), or use it for any purpose except pursuant to, and
in order to carry out the terms and objectives of this Agreement.
Notwithstanding any provision of an Agreement, BioChem and Oncogene
hereby agree that they shall, together with their Affiliates, be
entitled to use, outside of the Field, know how obtained during the
term of this Agreement (other than any information relating to Lead
Compounds).
(b) Each Party further agrees to exercise, and shall cause its Affiliates
to exercise, every reasonable precaution to prevent and restrain the
unauthorized disclosure of such Secret Information by any of its
directors, officers, employees, consultants, subcontractors,
sublicensees or agents or those of its Affiliates.
(c) Each Party shall maintain, and shall cause its Affiliates to maintain,
the other Party's Confidential Information in confidence. During the
term of this Agreement and for a period of ten (10) years thereafter
each Party shall not disclose, divulge or otherwise communicate the
other Party's Confidential Information to Independent Third Parties
except in the event of an assignment by such Party of its rights
hereunder in accordance with the provisions hereof.
4.3 Press Releases and Announcements.
(a) Neither Oncogene or BioChem shall, and Oncogene and BioChem shall
cause their Affiliates not to, issue any press release or other public
announcement relating to or disclosing any Secret Information (other
that its own Confidential Information or its own Technology) without
the prior written consent of the
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other Party, except where such announcements or press releases are
required by law for the purposes of securing the registration of, and
or governmental approval to market, in accordance with this Agreement,
any Commercial Products, or for the procurement of patent protection
of a Joint Patent Right. Notwithstanding the foregoing, each Party
shall have the right to disclose the existence of this Agreement in
any prospectus, offering memorandum or other document or filing
required by applicable securities laws or other applicable law or
regulation.
(b) Where a press release or public announcement is required by law, the
Party required to disclose Secret Information shall inform the other
Party and provide it with a copy of any such press release or public
announcement.
(c) Each of BioChem and Oncogene shall inform the other Party of any
Secret Information which it is required to disclose.
4.4 Contracts with Independent Third Parties. If BioChem or Oncogene or any of
their Affiliates, enters into any contract with an Independent Third Party
involving disclosure of Secret Information, it shall first obtain the
approval of the other Party, and, after signing, provide a copy of such
contract to the other Party.
4.5 Publications. Notwithstanding the provisions of Sections 4.1, 4.2 and 4.3,
a Party or its Affiliates, following review by the JSC and the JRC, may
submit the results obtained in the course of the Research Program for
publication subject to the following applicable restrictions:
(a) the Party intending to publish, directly or indirectly, shall provide
the other Party with a copy of the manuscript (including any abstract)
for any proposed publication or presentation no later than thirty (30)
days prior to the submission of such proposed publication or
presentation to a journal, editor or other Independent Third Party for
the purpose of review and comment. The other Party shall have the
right to request modifications of any manuscript to be published or
presented, if such manuscript will jeopardize a Patent Right, patent,
trade secret, or other proprietary right related to this Agreement. If
the Party intending to publish does not agree with such modification,
the Parties shall consult independent patent counsel satisfactory to
both Parties whose determination shall be final and binding on the
Parties.
(b) If such other Party informs the publishing Party within thirty (30)
days of receipt of an advance copy of a proposed publication that such
publication in its reasonable judgement could be expected to have
material adverse effect on Joint Patent Rights or Secret Information,
the publishing Party shall delay or prevent such publication as
proposed. In the case of inventions, such Party shall delay or cause
the author to delay submission of the work for publication
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<PAGE> 18
or other public disclosure for up to six (6) months after filing of a
patent application.
ARTICLE 5
INTELLECTUAL PROPERTY RIGHTS
5.1 General. The following provisions relate to inventions and know how
developed, directly or indirectly through Affiliates, by BioChem or
Oncogene or BioChem and Oncogene, jointly, during the course of carrying
out the Research Program.
5.2 Research. Except for that which arises within or as a result of the
Research Program and this Agreement, all Technology, information, data,
discoveries and inventions arising and Programs of research carried out by
Oncogene and its Affiliates, on the one hand, or by BioChem and its
Affiliates, on the other hand, and all intellectual property rights
relating thereto shall be the exclusive property of Oncogene or BioChem and
their Affiliates, as the case may be, and shall be returned to such Party
upon termination of this Agreement, except as provided herein.
5.3 Maintenance of Joint Patent Rights. BioChem and Oncogene shall be jointly
responsible for taking all necessary actions to obtain, sustain and enforce
patent protection for joint Patent Rights [excluding patent applications
outside the Field] and for those inventions arising from the Research
Program including, without derogation from the foregoing:
(a) filing applications for patents on any patentable inventions included
within Joint Patent Rights; provided that any Party wishing to file
such application ding reform the other Party and the Joint Steering
Committee regarding countries in which such applications should be
filed; the JSC shall determine which countries where such applications
shall be made;
(b) prosecuting all pending and new patent applications included within
Joint Patent Rights and responding to opposition or any other form of
action for invalidity or revocation of Patent Rights filed by
Independent Third Parties against the grant of patents for such
applications; and
(c) maintaining in force any patents included within Joint Patent Rights
by duly filing all necessary papers and paying any fees required by
the patent laws of the particular country, in which such patents were
granted.
Each Party undertakes to provide all necessary assistance to the JSC and
the other Party to achieve the objectives of this Section 5.3. Both Parties
shall continue, through patent agents, to prosecute and maintain all
relevant patent property, including that in the U.S.A. and Canada, relating
to Technology within the Field in full
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consultation with the JSC. Each Party shall keep the other Party informed
as to all developments with respect to Joint Patent Rights by copying all
documents and correspondence related to such protection and maintenance.
If the JSC decides to abandon a patent application or an issued patent
included within Joint Patent Rights, any Party whose appointees on the JSC
shall have voted against such abandonment shall have the option, at its
expense, of continuing to prosecute any such patent application or of
keeping the issued patent in force. If a Party so elects to file, at its
own expense, patent applications in respect of Joint Patent Rights in
countries in which the JSC has elected not to file, such Party shall have
the unrestricted right to negotiate licenses with Independent Third Parties
in such non-elected countries or exploit it directly.
5.4 Infringement. Each Party shall promptly inform the other Party of any
suspected infringement of any Joint Patent Rights. During the term of this
Agreement, both Parties shall have the right to institute an action for
infringement of the Joint Patent Rights against such Independent Third
Party in accordance with the following:
(a) both Parties shall institute suit jointly, the suit shall be brought
in both their names and the out-of-pocket costs thereof shall be borne
equally. Any recovery or settlement received by a Party shall be
shared equally. The JSC shall decide upon the manner in which any
Party shall exercise control over such action. Any Party may, if it so
desires, also be represented by separate counsel of its own selection,
the fees for which counsel shall be paid by it.
(b) in the absence of agreement to institute a suit jointly, any Party may
institute suit, and, at its opinion, name the other Party as a
plaintiff. The Party instituting shall bear the entire costs of such
litigation, including defending any counterclaims brought against the
other Party and paying any judgments rendered against the other Party,
and shall be entitled to retain the entire amount of any recovery of
settlement.
(c) should either Party commence a suit under the provisions of this
Section 5.4 and thereafter elect to abandon such suit, the abandoning
Party shall give timely notice to the other Party who may, if it so
desires, continue prosecution of such suit, provided that the sharing
of expenses and any recovery in such suit shall be as agreed upon
between both Parties.
5.5 Costs for Applying, Prosecuting and Maintaining. The costs of applying for,
prosecuting and maintaining patent applications and patents as specified in
Section 5.3 shall be borne equally by BioChem and Oncogene.
5.6 Disclosure of Inventions. Each of BioChem and Oncogene shall promptly
inform the other Party of all inventions and Joint Technology that are
conceived, made or
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developed in the course of carrying out the Research Program by its
respective employees, its Affiliates or consultants, whether invented
solely or jointly with employees of or consultants to the other Party.
5.7 Ownership of Joint Intellectual Property. BioChem and Oncogene shall
jointly own the entire right, title and interest in all Technology,
patents, know how and other rights in any idea, design, invention,
discovery, improvement or other creation, including any Compound, method or
apparatus conceived, reduced to practice of developed by BioChem and
Oncogene, in the course of the Research Program. The commercial
exploitation by BioChem and Oncogene as joint owners of their rights is
subject to the provisions of Article 6 of this Agreement.
5.8 Copies of Patent Applications. [Each Party shall provide to the other Party
copies of all patent applications for Joint Patent Rights prior to filing,
for the purpose of obtaining comments and advice from the other Party's
patent advisors and the other Party's approval to so file which approval
shall be provided within a reasonable time. Upon the other Party's
approval, such Party shall be free to file said patent applications covered
by this Agreement. Such Party shall also consult with the other Party on
the prosecution of said applications and provide to such Party copies of
all documents relating to the prosecution of said applications. Such Party
shall provide to the other Party every six (6) months a report detailing
the status of all patent applications that are part of Joint Patent
Rights.]
5.9 Other Patent Rights. Each Party shall be responsible for taking all
necessary actions to obtain, sustain and enforce patent protection for
those of its Patent Rights which are not Joint Patent Rights or Patent
Rights of the other Party and those outside the scope of the Research
Program, including the following:
(a) filing applications for such patents on any patentable inventions;
(b) prosecuting all pending and new patent applications and responding to
opposition or any other form of action for invalidity or revocation or
Patent Rights filed by Independent Third Parties against the grant of
patents for such application;
(c) maintaining in force any patents by duly filing all necessary papers
and paying any fees required by the patent legislation of the
particular country in which such patents were granted.
In the event that a Party institutes suit to protect its own Patent Rights
against suspected infringement, it shall notify the other Party who shall,
have the option, to be exercised in writing no later than thirty (30) days
from receipt of the notice, to elect to assume 50% of all expenses relating
to such suit, including attorneys' fees, in which case any recovery or
settlement received by the Party having instituted suit shall be
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<PAGE> 21
shared equally by both Parties. The Party having instituted suit shall have
the authority to make all decisions concerning such suit, including without
limitation, the right to compromise the claim.
5.10 Indemnification. Each Party (the "Indemnifying Party") shall indemnify the
other Party, its directors, officers, employees and consultants (the
"Indemnified Party") from and against any and all claims, demands, losses,
liabilities, expenses or damages which the Indemnified Party may suffer,
pay or incur as a result of claims, demands or suits against the
Indemnified Party arising or alleged to arise by reason of or in connection
with any and all personal injury and property damage caused or contributed
to, in whole or in part, by the Indemnifying Party's actions or
infringement.
ARTICLE 6
DEVELOPMENT AND COMMERCIALIZATION
6.1 Decision to Commercialize. The Joint Steering Committee has the authority,
following recommendation from the JRC, to determine that a Lead Compound is
suitable for development and therefore qualifies as a Development
Candidate. This authority of the JSC is governed by Section 2.5. No later
than thirty (30) days following the determination that the first Compound
is suitable for development the Parties shall establish a development
committee (the "Joint Development Committee").
6.2 Commercialization Agreement. Where a Lead Compound has been designated as a
Development Candidate, the Parties shall enter into a commercialization
agreement (the "Commercialization Agreement") for the development and
commercialization of that Compound as soon as possible after the first to
occur of the following events: (i) the decision to enter into a full
clinical development program as approved by the JSC, or (ii) the beginning
of Phase III clinical studies, conducted to support the application for
marketing approval of the Development Candidate for an indication.
6.3 Content of Commercialization Agreement. The Commercialization Agreement
shall provide that the Parties will jointly exploit any Commercial Products
in the Field. The mechanism for commercialization will be negotiated
between the Parties through good faith negotiations and shall take into
account the respective contributions of the Parties pursuant to Section 2.8
which should, unless agreed to by the Parties, be essentially the same. The
Parties agree that they shall both have commercialization rights in the
United States of America and Europe and that BioChem shall have the
commercialization rights in Canada. The Commercialization Agreement shall
provide that rights thereunder may be sublicensed to a third party by
mutual agreement of the Parties.
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<PAGE> 22
6.4 Joint Development Committee.
6.4.1 Purpose. The Joint Development Committee purpose is to manage, agree
upon and assign specific responsibilities within the Development
Program to each party. The Joint Development Committee will be
responsible, throughout the duration of the Development Program, for
preparing and reviewing the Development Program and revising it as
necessary and will participate in all aspects of the planning and
development work carried out on any Development Candidate as well as
the information and data generated by that work. The Joint
Development Committee shall, when establishing the Development
Program, determine the responsibilities of each Party in seeking
regulatory approvals and in particular, notwithstanding that the JRC
will be responsible for nominating any Lead Compound for full
clinical development, and that such nomination will require approval
of the JSC.
6.4.2 Composition. BioChem and Oncogene each shall appoint, in their sole
discretion, three members to the Joint Development Committee.
Replacements of any Party may be appointed by such Party at any time
by notice to the other Party.
6.4.3 Voting. Each member of the Joint Development Committee shall have
one vote, and decisions shall be made by unanimity. Where a vote on
any decision does not produce a consensus between all members, the
matters at issue shall be submitted to the President of BioChem and
the Chief Executive Officer of Oncogene for discussion and
resolution.
6.4.4 Chair. A Chairperson shall be nominated alternatively by BioChem and
Oncogene for one year terms, the first term being served by a
nominee appointed by BioChem.
6.4.5 Meetings. Meetings shall be convened at least four times a year at
locations and times determined by a Joint Development Committee
resolution. Representatives of Oncogene, BioChem, or both, in
addition to members of each of the Parties on the Joint Development
Committee, may attend meetings but shall have no voting rights.
Meetings shall be held alternatively at each Party's facilities.
6.4.6 Expenses. The Parties will each bear their own expenses and those
expenses related to the participation of their appointees of the
Joint Development Committee.
6.5 No Support. If any Party's representatives on the JSC, JRC or the Joint
Development Committee declines to support the advancement of a Compound to
a Lead Compound stage or a Lead Compound to a development stage for reasons
which may include, but
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<PAGE> 23
are not limited to, the proposed market being outside the scope of its
interest or being too small, and the other Party's representatives on the
JSC, JRC or the Joint Development Committee support the advancement of said
Compound to a Lead Compound stage or of a Lead Compound to a development
stage with an objective of commercialization of said Compound, then the
JSC, JRC or the Joint Development Committee, as the case may be, shall
record a notice (a "Notice of Opportunity") in the minutes of the meeting
where the representatives express such positions. For a period of sixty
(60) days after the date of such Notice of Opportunity the Parties shall
negotiate in good faith to resolve the issue in a mutually agreeable
manner. If the Parties are unable to resolve the issue then for a period of
one hundred and twenty (120) days thereafter the other Party having
supported the advancement of the Compound or the Lead Compound (the
"Notifying Party") shall have a first right to undertake worldwide
development and commercialization of such Compound or Lead Compound. Upon
the Notifying Party exercising such right, such Party shall be granted a
worldwide royalty license from the other Party which shall contain usual
term and conditions for agreements of that type and provide for the payment
by the Notifying Party to the other Party of royalties of * of Net Sales to
be paid within thirty (30) days following the end of any calendar quarter.
If, at any time, a Party which has commenced development on a Compound or a
Lead Compound, halts such development, then the other Party shall have the
right to undertake development of said Compound or Lead Compound, under the
same mechanism and subject to the same conditions as described in this
Section 6.5.
ARTICLE 7
OTHER RESEARCH, VENTURES ETC.
7.1 Acquisition of Rights from Third Parties. During the term of this
Agreement, BioChem and Oncogene shall promptly notify the other in writing
of any and all opportunities to acquire from Independent Third Parties,
whether by license, assignment or otherwise, technology or patents which
may be useful in, or may relate to, the purposes of the Research Program.
BioChem and Oncogene shall work together in a manner mutually agreeable and
beneficial to secure technology or patents which they have determined would
be useful in or relate to the purpose of the Research Program. Each Party
shall (1) inform the other Party of all third party technology or patents
that may be useful or relate to the Research Program, (2) solicit the other
Party's participation and approval in the formulation and implementation of
a strategy for securing such technology or patents and, (3) provide status
reports on the progress of such strategy.
- --------
* This portion redacted pursuant to a request for confidential treatment.
-22-
<PAGE> 24
ARTICLE 8
TERM, EXTENSION, TERMINATION AND DISENGAGEMENT
8.1 Term. The initial term (the "Initial Term") of this Agreement shall be five
(5) years, commencing on the Effective Date; provided, however, that either
Party may terminate this Agreement at any time following the third
anniversary of the Effective Date by providing the other Party with one
hundred and eighty (180) days' prior written notice. Following the
expiration of the Initial Term, this Agreement shall be automatically
renewed for additional successive one-year periods (each, a "Renewal
Period") unless either Party gives the other notice of its intent not to
renew one hundred and twenty (120) days prior to the expiration of the
Initial Term or any Renewal Period, as the case may be.
8.2 Events of Termination. The following events shall constitute events of
termination (each an "Event of Termination"):
(a) Any representation or warranty by BioChem or Oncogene in this
Agreement proves incorrect, or inaccurate, in any material respect
when made or deemed made as determined by an independent arbitrator
and the defaulting Party does not remedy or cure such incorrect on
inaccurate representation or warranty within sixty (60) days following
written notice from the other Party of such breach.
(b) BioChem or Oncogene fails to perform or observe any term of this
Agreement or Schedules thereto and such failure remains unremedied for
a period of sixty (60) days following written notice thereof from the
non-defaulting Party or such longer period if the defaulting Party is
diligently taking action to remedy such failure.
(c) BioChem or Oncogene makes an assignment for the benefit of its
creditors, becomes insolvent, files a petition in bankruptcy,
petitions or applies to any tribunal for the appointment of a
custodian, receiver or any trustee for it or a substantial part of its
assets, or commences any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or if there has been filed any such petition or
application against BioChem or Oncogene, or any such proceeding has
been commenced against it, in which an order for relief is entered or
which remains undismissed for a period of thirty (30) days or more; or
BioChem or Oncogene by any act or omission indicates its consent to,
approval of or acquiescence in, any such petition, application or
proceeding or order for relief or the appointment of a custodian,
receiver or any trustee for it or any substantial part of any of its
properties, or is the subject of any such custodianship, receivership
or trusteeship that continues undischarged for a period of thirty (30)
days or more.
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<PAGE> 25
(d) BioChem or Oncogene generally fails to pay its debts as such debts
become due.
(e) Either of BioChem or Oncogene assigns this Agreement and that portion
of its business related to the Research Program to a company which
sells products or services, which are in the reasonable opinion of the
other Party, in direct competition with BioChem or Oncogene.
(f) In respect of any Party, if a Person acquires (the "Acquisition")
shares of such Party (the "Target"), directly or indirectly, which
carry the right to cast, in the aggregate, more than 50% of the votes
for the election of directors or, if such Person is, in the reasonable
opinion of the Party, a competitor of such other Party, more than 35%
of the votes for the election of directors.
For purposes of this Section 8.2, a Person shall be deemed to be a
competitor or to be in competition if such Person or its Affiliates is,
directly or indirectly, considered a biotechnological or pharmaceutical
company which carries research and development activities in the Field.
ARTICLE 9
CONSEQUENCES OF TERMINATION
9.1 Licenses upon Termination. Where this Agreement is terminated pursuant to
Section 8.1, each Party's intellectual property rights shall revert to such
Party and the Parties shall execute cross-licensing agreements for any
Joint Patent Rights or Joint Technology arising from this Agreement.
The Parties shall immediately following the delivery of a notice pursuant
to Section 8.1, negotiate in good faith such cross-licensing agreements. If
the Parties fail to negotiate and sign cross-licensing agreements before
the expiration of a period of one hundred and eighty (180) days following
delivery of the notice pursuant to Section 8.1, either Party (the "Electing
Party") may, by written notice (the "Notice") accompanied by a Submitted
License (as defined hereinafter) at its option offer to the other Party:
(i) to have an exclusive worldwide license for the Joint Patent Rights or
Joint Technology, the whole in accordance with the terms and conditions of
an agreement to be submitted by the Electing Party to the other Party (the
"Submitted License"); or (ii) to grant to the other Party (the
"Non-Electing Party") an exclusive worldwide license for the Joint Patent
Rights or Joint Technology in accordance with the Submitted License.
The Non-Electing Party shall have the option to either (i) grant to the
Electing Party a worldwide exclusive license for the Joint Patent Rights or
Joint Technology in accordance with the terms and conditions of the
Submitted License, or (ii) to have an
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<PAGE> 26
exclusive worldwide license for Joint Patent Rights or Joint Technology in
accordance with the terms of the Submitted License.
Such election may be made by the Non-Electing Party in writing, addressed
to the Electing Party (the "Election Notice") within ninety (90) days
following receipt of the Notice, failing which he shall be deemed to have
elected to grant the Electing Party a license upon the term of the
Submitted License. The Parties shall execute a license based on the
Submitted License within six (6) months following receipt by the Electing
Party of the Election Notice.
9.2 Termination upon the Occurrence of an Event of Termination. Upon the
occurrence of any Event of Termination set forth in Section 8.2, for a
period of sixty (60) days from the date of the occurrence of any Event of
Termination the Parties shall negotiate in good faith to resolve the issue
in a mutually agreeable manner and if the Parties are unable to resolve the
issue then the Party not responsible for such Event of Termination may, by
notice to the other Party, terminate this Agreement. In the event of any
termination by a Party (the "Notifying Party") pursuant to Section 8.2, all
information and data, including Joint Technology and Joint Patent Rights,
accumulated throughout the term of this Agreement shall become the sole
exclusive property of the Notifying Party, and the other Party shall
execute and perform all transfers and assignments to the Notifying Party
which are required by law. Notwithstanding the foregoing, upon the
occurrence of an Event of Termination described in Section 8.2(f), the
Party, the shall of which are not being acquired may, at its option, in
which case the other Party shall not be considered in default hereunder,
(i) require the Target to pay, in which event the Target shall pay,
royalties on Net Sales made by such Target and its Affiliates in the amount
of * for Commercial Products which where not, at the time of the
Acquisition, in Full Development or * for Commercial Products which where,
at the time of the Acquisition, in Full Development, and (ii) require the
Target to reimburse the other Party for all costs and expenses incurred by
such Party in the performance of its obligations under this Agreement in
respect of Commercial Products which have not reached Full Development.
9.3 Survival of Obligations: Return of Confidential Information.
Notwithstanding any termination of this Agreement, the obligations of the
Parties with respect to the protection and non-disclosure of Confidential
Information shall survive and continue to be enforceable. Upon any
termination of this Agreement, each Party shall promptly return to the
other Party all of that other Party's Confidential Information, and all
copies thereof. Biochem and Oncogene acknowledge that after termination of
this Agreement each Party will be free to use its own Confidential
Information and Technology without restriction.
- --------
* This portion redacted pursuant to a request for confidential treatment.
-25-
<PAGE> 27
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
Each of BioChem and Oncogene represents and warrants as follows:
(a) Good Standing. It is a corporation duly organized, validly existing
and is in good standing under the laws of its jurisdiction of
incorporation and has all requisite power and authority, corporate or
otherwise, to conduct its business as now being conducted, to own,
lease and operate its properties and to execute, deliver and perform
this Agreement.
(b) Proper Authorization. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action
and do not and win not (a) require any consent or approval of its
stockholders, (b) violate any provision of any law, rule, regulation,
order, writ, judgement, injunction, decree, determination or award
presently in effect having applicability to it or any provision of its
charter or by-laws or (c) result in a breach of or constitute a
default under any material agreement, mortgage, lease, license, permit
or other instrument or obligation to which it is a party or by which
it or its properties may be bound or affected.
(c) Binding Agreement. This Agreement is a legal, valid and binding
obligation of it enforceable against it in accordance with its terms
and conditions, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws, from time to time in effect, affecting creditors' rights
generally.
(d) Absence of Conflict. It is not under any obligation to any Person,
contractual or otherwise, that is conflicting or inconsistent in any
respect with the terms of this Agreement or that would impede the
diligent and complete fulfillment of its obligations hereunder.
(e) Title. Each of BioChem and Oncogene for itself represents it has good
and marketable title to or valid leases or licenses for, all of its
properties, rights and assets, excluding patent property, to be used
in the fulfillment of this responsibilities under the Research
Program, subject to no claim of any third party other than the
relevant lessors or licensors.
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<PAGE> 28
ARTICLE 11
COVENANTS
11.1 Affirmative Covenants Other than Reporting Requirements. Throughout the
term of this Agreement, each of BioChem and Oncogene shall:
(a) comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any government
authority to the extent necessary to conduct the Research Program;
(b) maintain and preserve all of its properties, rights and assets to be
used in the proper conduct of the Research Program in good working
order and condition in accordance with the general practice of other
companies of similar size and character;
(c) conduct all experiments related to the Research Program and maintain
all facilities used in connection therewith in accordance with Medical
Research Council Guidelines, where applicable, and with all applicable
federal, provincial, and local environmental requirements;
(d) pay to the other Party, if any, any Deficiency Amount determined by
the JSC.
ARTICLE 12
DISPUTE RESOLUTION
In the event BioChem and Oncogene cannot agree on any matter requiring agreement
between the Parties, the matter of differences shall be determined by
arbitration. Arbitration shall be conducted under the Commercial Arbitration
Rules of the American Arbitration Association by one (1) person appointed by the
Parties or, if the Parties cannot agree within thirty (30) days following
notification by one Party that it wishes to refer a matter to arbitration, by
such person empowered by the American Arbitration Association to so appoint an
arbitrator. Arbitration shall take place in a location agreed to by the Parties,
or absent such agreement, chosen by the arbitrator. The decision of the
arbitrator shall be final and binding on both Parties. The fees and expenses of
the arbitrator shall be borne equally by the Parties.
ARTICLE 13
NOTICES
Any notice, statement, payment or other document required to be given hereunder
shall be in writing and shall be given either personally, by mailing the same,
postage prepaid, by certified or registered mail (return receipt requested), in
the absence of an actual or apprehended disruption of mail service or delivered
by telecopier addressed as follows, or to
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<PAGE> 29
such other addresses as may be designated from time to time by notice given, in
the manner provided in this Article 13.
If to BioChem: BioChem Pharma (International) Inc.
c/o BioChem Therapeutic Inc.
Armand-Frappier Blvd.
Laval, Quebec
H7V 4A7
Attention: President
---------------------
Telecopier: (514) 978-7767
If to Oncogene: Oncogene Science, Inc.
106 Charles Lindbergh Blvd.
Uniondale, New York 11553-3649
Attention: Chief Executive Officer
-----------------------------------
Telecopier: (516) 745-6429
Notices given personally shall be deemed given as of the date delivered. Notices
given by telecopier shall be deemed given on the first business day following
the date of transmission. Mailed notices shall be deemed given on the fifth
business day following the date of such mailing.
ARTICLE 14
MISCELLANEOUS
14.1 Binding Effect. This Agreement shall be binding upon and enure to the
benefit of the Parties hereto and their respective legal representatives,
successors and permitted assigns.
14.2 Headings. The headings contained in this Agreement are for convenience of
reference only and do not form a part of this Agreement, and no
construction or inference shall be derived therefrom.
14.3 Entire Agreement. This Agreement and the documents and other agreements
referred to herein or signed concurrently herewith set forth the entire
agreement and understanding of the Parties.
14.4 Severability. In the event that any provision of this Agreement is held by
a court of competent jurisdiction to be unenforceable because it is invalid
or in conflict with any law of any relevant jurisdiction, the validity of
the remaining provisions shall be
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<PAGE> 30
construed and enforced as if the Agreement did not contain the particular
provisions held to be unenforceable.
14.5 Counterparts. This 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.
14.6 Amendment, Waiver, etc. This 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 affect the rights at a later time to enforce the same. No waiver
by any Party of any condition or of the breach of any term contained in
this Agreement, whether by conduct or otherwise, in any one or more
instance, 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 Agreement.
14.7 Force Majeure. In the event that either Party is prevented from or is
unable to perform any of its obligations under this Agreement due to any
act of God, fire, casualty, flood, war, strike, lockout, failure of public
utilities, injunction of any act, exercise, assertion or requirement of
governmental authority, including any governmental law, order, or
regulation permanently or temporarily prohibiting or reducing the level of
research and development work hereunder, epidemic, destruction or
production facilities, riots, insurrection, inability to procure or use
materials, labour, equipment, transportation or energy sufficient to meet
experimentation needs, or any other cause beyond the reasonable control of
the Party invoking this Article 14 if such Party shall have used its best
efforts to avoid such occurrence, such Party shall give notice to the other
Party in writing promptly, and thereupon the affected Party's performance
shall be excused and the time for performance shall be extended for the
period of delay or inability to perform due to such occurrence.
14.8 Independent Contractor. Nothing in this Agreement shall be construed as
constituting both Parties as partners or joint venturers with respect to
this Agreement. Both Parties are independent contractors under this
Agreement.
14.9 Assignment and Successors. This Agreement and the rights and interests
hereunder may not be assigned by either Party in whole or in part except to
an Affiliate, a purchaser of all or substantially all of the assets of a
Party or to any successor corporation resulting from any merger or
consolidation of either Party with or into such corporation.
14.10 Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of New York.
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<PAGE> 31
14.11 Language. The Parties hereto have expressly requested that this Agreement
and a related documents and notices be drafted in the English language.
Les parties aux presentes ont exige, de facon expresse, que la presente
convention de meme que tous les documents et avis qui s'y rattachent
soient rediges en langue francaise.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as a sealed instrument in their names by their properly and duly authorized
representatives as of the date first written above.
BIOCHEM PHARMA (INTERNATIONAL) INC.
By: /s/ Francois Legault
-----------------------------------
Francois Legault
By: /s/ Michael Grey
-----------------------------------
Michael Grey
ONCOGENE SCIENCE, INC.
By: /s/ Gary E. Frashier
-----------------------------------
Gary E. Frashier
-30-
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