<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
--------------------------------------------------
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.
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(Exact name of registrant as specified in its charter)
Delaware 13-3159796
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
106 Charles Lindbergh Boulevard, Uniondale, New York 11553
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(Address of principal executive offices) (Zip Code)
516-222-0023
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(Registrant's telephone number, including area code)
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(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 July 31, 1997 the registrant had outstanding 22,220,455 shares of common
stock $.01 par value.
<PAGE> 2
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION - UNAUDITED.......................................3
Item 1. Financial Statements
Consolidated Balance Sheets
- June 30, 1997 and September 30, 1996..................................3
Consolidated Statements of Operations
- Three months ended June 30, 1997 and 1996.............................5
Consolidated Statements of Operations
- Nine months ended June 30, 1997 and 1996..............................6
Consolidated Statements of Cash Flows
- Nine months ended June 30, 1997 and 1996..............................7
Notes to Consolidated Financial Statements..............................9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................................11
PART II - OTHER INFORMATION.....................................................15
Item 1. Legal Proceedings......................................................15
Item 2. Changes in Securities..................................................15
Item 3. Defaults Upon Senior Securities........................................15
Item 4. Submission of Matters to a Vote of Security Holders....................15
Item 5. Other Information......................................................15
Item 6. Exhibits and Reports on Form 8-K.......................................17
SIGNATURES......................................................................18
EXHIBIT INDEX...................................................................19
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION - UNAUDITED
ITEM 1. FINANCIAL STATEMENTS
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
Assets 1997 1996
- ------ -------- -------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,698,198 $13,409,866
Short-term investments 27,350,499 34,132,879
Receivables, including
trade receivables of $275,533 and
$215,201 at June 30,1997 and
September 30, 1996, respectively 1,054,427 2,031,950
Interest receivable 439,564 480,050
Grants receivable 278,118 331,014
Prepaid expenses and other 1,300,939 623,827
----------- -----------
Total current assets 37,121,745 51,009,586
----------- -----------
Property, equipment and leasehold
improvements - net 7,370,792 6,495,112
Compound library assets - net 6,822,076 5,048,584
Loans to officers and employees 34,660 37,342
Other assets 944,971 300,949
Intangible assets - net 9,549,927 10,645,481
----------- -----------
$61,844,171 $73,537,054
=========== ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 3,498,302 $ 3,686,638
Current portion of unearned revenue 642,409 141,541
----------- -----------
Total current liabilities 4,140,711 3,828,179
----------- -----------
Other liabilities:
Long-term portion of unearned revenue 61,504 104,497
Loan payable 181,487 83,244
Deferred acquisition costs 620,766 590,675
Accrued postretirement benefits cost 756,396 643,500
----------- -----------
Total liabilities 5,760,864 5,250,095
----------- -----------
</TABLE>
(continued)
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<PAGE> 4
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
June 30, September 30,
Liabilities and Stockholders' Equity (cont'd) 1997 1996
- ------------------------------------ -------- -------------
(unaudited)
<S> <C> <C>
Stockholders' equity:
Common stock, $.01 par value;
50,000,000 shares authorized,
22,220,455 and 22,175,214
issued and outstanding at
June 30, 1997 and
September 30, 1996, respectively 222,205 221,752
Additional paid-in capital 104,582,524 104,347,231
Accumulated deficit (42,361,301) (36,071,476)
Cumulative translation adjustments (32,855) (5,355)
Unrealized holding loss on
short-term investments (42,400) (205,193)
Treasury stock, at cost 897,838 shares at
June 30, 1997 (6,284,866) --
------------- -------------
Total stockholders' equity 56,083,307 68,286,959
------------- -------------
Commitments and contingencies
$ 61,844,171 $ 73,537,054
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 5
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Revenues:
Collaborative program revenues,
principally from related parties $ 3,082,993 $ 1,877,059
Other research revenue 500,448 312,085
------------ ------------
3,583,441 2,189,144
------------ ------------
Expenses:
Research and development 4,430,170 3,497,585
Selling, general and administrative 1,849,149 1,323,156
Amortization of intangibles 365,188 363,189
------------ ------------
6,644,507 5,183,930
------------ ------------
Loss from operations (3,061,066) (2,994,786)
Other income(expense):
Net investment income 480,520 732,393
Other (24,140) (12,992)
------------ ------------
Net loss $ (2,604,686) $ (2,275,385)
============ ============
Weighted average number of shares
of common stock outstanding 21,299,407 21,452,937
============ ============
Net loss per weighted share of
common stock outstanding $ (.12) $ (.11)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 6
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
-----------------
1997 1996
------------ ------------
<S> <C> <C>
Revenues:
Collaborative program revenues,
principally from related parties $ 9,563,656 $ 6,163,166
Other research revenue 1,502,029 848,439
------------ ------------
11,065,685 7,011,605
------------ ------------
Expenses:
Research and development 12,374,413 9,414,556
Selling, general and administrative 5,435,527 4,036,059
Amortization of intangibles 1,095,554 1,089,566
------------ ------------
18,905,494 14,540,181
------------ ------------
Loss from operations (7,839,809) (7,528,576)
Other income (expense):
Net investment income 1,617,505 1,487,458
Other (67,521) 1,611
------------ ------------
Net loss $ (6,289,825) $ (6,039,507)
============ ============
Weighted average number of shares
of common stock outstanding 21,699,641 18,967,524
============ ============
Net loss per weighted share of
common stock outstanding $ (.29) $ (.32)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 7
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
-----------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (6,289,825) $ (6,039,507)
Adjustments to reconcile net loss
to net cash used by operating activities:
Gain (loss) on sale of investments 16,775 (61,276)
Depreciation and amortization 1,942,874 1,133,566
Amortization of intangibles 1,095,554 1,079,155
Foreign exchange (gain) loss (27,500) 55,669
Changes in assets and liabilities:
Receivables 977,523 (2,164,992)
Interest receivable 40,486 (200,668)
Grants receivable 52,896 (56,942)
Prepaid expenses and other (677,112) (295,590)
Other receivables -- 262,703
Other assets (644,022) (127,963)
Accounts payable
and accrued expenses (188,336) (232,460)
Unearned revenue 457,875 (143,014)
Accrued postretirement
benefits cost 112,896 102,504
------------ ------------
Net cash used by
operating activities $ (3,129,916) $ (6,688,815)
------------ ------------
Cash flows from investing activities:
Additions to short-term
investments $ (3,942,582) $(18,489,093)
Maturities and sales of short-term
investments 10,870,979 11,286,155
Additions to Compound Library (99,624) --
Acquisition of MYCOsearch -- (1,862,247)
Additions to property,
equipment and leasehold
improvements (1,992,422) (716,392)
Net change in loans to officers
and employee 2,683 173
------------ ------------
Net cash provided by (used in)
investing activities $ 4,839,034 $ (9,781,404)
------------ ------------
</TABLE>
(continued)
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<PAGE> 8
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
-----------------
1997 1996
------------ -----------
<S> <C> <C>
Cash flows from financing activities:
Net proceeds from issuance
of common stock $ -- $30,329,484
Proceeds from exercise
of stock options and
employee stock purchase plan 200,880 1,630,614
Net proceeds from loans payable 98,243 --
Other 30,091 --
Purchase of treasury stock (8,750,000) --
------------ -----------
Net cash (used in) provided by
financing activities $ (8,420,786) $31,960,098
Net (decrease) increase in cash
and cash equivalents (6,711,668) 15,489,879
Cash and cash equivalents at
beginning of period 13,409,866 17,919,609
------------ -----------
Cash and cash equivalents
at end of period $ 6,698,198 $33,409,488
============ ===========
Non-cash transactions:
Issuance of treasury stock for
acquisition of license to the Dow
Compound Library $ 2,500,000 --
============ ===========
Issuance of common stock, including
treasury stock, and warrants
for acquisition of MYCOsearch $ -- $ 3,433,000
Liabilities assumed with acquisition
of MYCOsearch -- 225,170
------------ -----------
$ -- $ 3,658,170
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
-8-
<PAGE> 9
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 financial position of Oncogene
Science, Inc. and its subsidiaries (the "Company") as of June 30, 1997 and
September 30, 1996, its results of operations for the three and nine months
ended June 30, 1997 and 1996 and its cash flows for the nine months ended June
30, 1997 and 1996. Certain reclassifications have been made to the prior period
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) are not
included in the computation for the three months and nine months ended June 30,
1997 and 1996 since their inclusion would be anti-dilutive.
(2) Treasury Stock
On February 18, 1997, the Company repurchased all 1.25 million shares of the
Company's common stock held by Becton, Dickinson and Company ("Becton") for an
aggregate price of $8.75 million. The Company's collaborative research agreement
with Becton had ended on its scheduled expiration date of September 30, 1996.
See Note (3).
(3) Compound Library License
On March 18, 1997, the Company entered into a license agreement with The Dow
Chemical Company ("Dow") giving the Company exclusive worldwide rights to use
more than 140,000 compounds for screening and potential development of small
molecule drugs and cosmeceuticals. The initial payment for the license was
approximately 350,000 shares of the Company's common stock. Dow is also entitled
to royalty payments from any new drug products that may result from the
screening of the compound library. The common stock issued to Dow was from the
shares held in treasury as a result of the Becton repurchase. The Company will
amortize the license agreement cost on a straight-line basis over a five-year
period, which represents the estimated period over which the compounds will be
used in the Company's research and development efforts.
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<PAGE> 10
(4) Subsequent Events
In July, 1997, the Company, Cold Spring Harbor Laboratory and Hoffman-La Roche
Inc.("Roche") formed Helicon Therapeutics, Inc., a new Delaware corporation
("Helicon"). In exchange for 28% of Helicon's outstanding capital stock, the
Company will contribute to Helicon $1 million of molecular screening services
and a royalty-free, nonexclusive license with respect to certain screening
technology. The molecular screening services are to be performed within one
year. The parties have entered into various collaborative research and license
agreements pursuant to which they will jointly pursue the discovery,
development and commercialization of novel drugs for the treatment of long-term
memory disorders and other central nervous system dysfunctions. All research
activities conducted by the Company pursuant to this program beyond its $1
million capital contribution will be funded by Helicon (which will receive the
funding from Roche). See "Formation of Helicon Therapeutics, Inc." under Item 5
of this Report.
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<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THREE AND NINE MONTHS ENDED JUNE 30, 1997 AND 1996
REVENUES
Revenues for the three and nine months ended June 30, 1997 were approximately
$3.6 million and $11.1 million, respectively, representing increases of $1.4
million and $4.1 million or 64% and 58%, respectively, compared to revenues of
$2.2 million and $7.0 million, respectively, reported for the three and nine
months ended June 30, 1996. Collaborative program revenues increased
approximately $1.2 million and $3.4 million or 64% and 55%, respectively. This
was largely due to new collaborative research and license agreements with each
of: (1) Hoechst Marion Roussel, Inc. ("HMRI"), to develop orally active, small
molecule drugs for the treatment of chronic anemia; (2) Sankyo Company,
Ltd.("Sankyo") of Japan to discover and develop novel pharmaceutical products to
treat influenza; and (3) Bayer Corporation ("Bayer") for the continuing
development of serum-based cancer diagnostics. Included in the revenue for the
nine-month period was a $1.0 million initiation fee from HMRI in connection with
the chronic anemia program which was recorded in the quarter ended March 31,
1997. The increase in revenues was partially offset by a decrease in revenues
related to the completion on December 31, 1996 of the funded discovery phase of
the Company's collaborative program with Wyeth-Ayerst Laboratories relating to
the discovery and development of drugs for the treatment of diabetes and
osteoporosis. Other research revenues, representing primarily service revenue
from the pharmaceutical division of the Company's Aston Molecules Ltd. ("Aston")
subsidiary and government and other grants, increased approximately $188,000 and
$654,000, respectively. The increases were due to the inclusion of the service
revenues of Aston, which the Company acquired in September 1996. Aston's service
business is supplemental to the Company's internal medicinal chemistry
operations.
EXPENSES
The Company's operating expenses increased by approximately $1.5 million and
$4.4 million or 28% and 30%, respectively, for the three and nine months ended
June 30, 1997, compared to the three and nine months ended June 30, 1996.
Research and development expenses increased approximately $0.9 million and $3.0
million or 27% and 31%, respectively. This increase was attributable in part to
the expansion of the Company's joint ventures with BioChem Pharma
(International) Inc. ("BioChem Pharma") and Anaderm Corporation, and the new
collaborative agreements with Sankyo and HMRI. Although the Company incurred
expense in connection with its serum-based cancer diagnostics collaboration with
Bayer, these expenses generally were offset (relative to the comparable periods
in the prior fiscal year) by the elimination of expenditures with respect to the
Company's former tissue-based cancer diagnostics collaboration with Becton,
which expired on September 30, 1996. Also contributing to the increase in
expenses were costs associated with the expansion of the
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<PAGE> 12
Company's natural products discovery and medicinal chemistry operations at its
MYCOsearch, Inc. ("MYCOsearch") and Aston subsidiaries as well as amortization
of MYCOsearch's library of fungal cultures. The Company acquired MYCOsearch in
April 1996. Selling, general and administrative expenses increased approximately
$526,000 and $1,399,000, respectively. 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 EXPENSE
Investment income decreased approximately $252,000 or 34% and increased
approximately $130,000 or 9%, respectively, for the three and nine months ended
June 30, 1997 compared to the three and nine months ended June 30, 1996. The
decrease for the three-month period relates to the decrease in the principal
balance invested. The increase for the nine-month period was largely due to the
investment of the proceeds of approximately $30.3 million from the Company's
public sale of common stock in April 1996.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, working capital (representing primarily cash, cash equivalent
and short-term investments) aggregated approximately $33.0 million. 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.
Effective as of April 1, 1997, the Company and HMRI entered into an agreement
that consolidated and extended 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. In accordance with
this agreement, HMRI is to provide up to $12.5 million in research funding
through March 31, 2002.
The Company commenced a serum-based cancer diagnostic products research
collaboration with Bayer in January 1997. Bayer is to provide annual research
funding of $1.5 million for the first two years of this five-year program and
$1.0 million for each subsequent year.
In connection with the formation of Helicon in July 1997, the Company will
contribute $1 million of molecular screening services to Helicon through
approximately July 1998. Helicon is to provide research funding to the Company
for the second and third years of the initial three-year term of this program.
See "Formation of Helicon Therapeutics, Inc." under Item 5 of this Report.
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 approximately the next
four years based on its current business
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<PAGE> 13
plan even if no milestone payments or royalties are received during this period.
However, the Company's capital requirements may vary as a result of a number of
factors, including, but not limited to, competitive and technological
developments, funds required for further expansion or enhancement of the
Company's technology platform, (including possible additional joint ventures,
collaborations and acquisitions), potential milestone payments, and the time and
expense required to obtain governmental approval of products, some of which
factors are beyond the Company's control.
One of the Company's strategic objectives is to manage its financial resources
and the growth of its drug discovery and development programs so as to balance
its proprietary efforts and co-ventures with its funded collaborations. In
pursuing this objective, the Company in fiscal 1997 has expanded the scope of
its discovery and development activities without significantly increasing its
rate of cash consumption. An example of this was the conversion of the
Company's chronic anemia program from an exclusively proprietary effort to a
funded collaboration with HMRI in the second quarter of fiscal 1997. This made
additional resources formerly allocated to the proprietary chronic anemia
program available for other proprietary programs and co-ventures without
requiring an increase in the rate of cash consumption. 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.
Examples of the Company's co-ventures with pharmaceutical companies include the
formation of Helicon in July 1997 with Cold Spring Harbor Laboratory and Roche,
the formation of Anaderm Research Corporation in April 1996 with Pfizer Inc.
and New York University, the Company's co-ventures with BioChem Pharma, which
commenced in May 1996, and with Sepracor, Inc., which commenced in March 1997.
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 royalties on sales of commercialized products. If the developmental
activities on which one or more of these ventures are focused are successful,
then the Company will be required to make substantial additional capital
investment in such venture(s) in order to maintain its percentage
participation.
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, that milestone payments will be
made, 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.
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<PAGE> 14
FORWARD LOOKING STATEMENTS
A number of the matters and subject areas discussed in this report 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. The discussions
contained herein that may deal with potential future circumstances and
developments are 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.
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<PAGE> 15
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
FORMATION OF HELICON THERAPEUTICS, INC.
In July 1997, the Company, Cold Spring Harbor Laboratory and Hoffman-La Roche
Inc.("Roche") formed Helicon Therapeutics, Inc., a new Delaware corporation
("Helicon"). In exchange for approximately 28% of Helicon's outstanding capital
stock, the Company will contribute to Helicon $1 million of molecular screening
services and a royalty-free, nonexclusive license with respect to certain
screening technology. Such services are to be performed within one year. Cold
Spring Harbor Laboratory contributed a royalty-free license to commercialize
certain technology relating to genes associated with long-term memory in
exchange for a portion of Helicon's outstanding capital stock. Roche contributed
cash for a portion of Helicon's outstanding capital stock. Certain individuals
associated with Cold Spring Harbor Laboratory hold the remaining outstanding
capital stock of Helicon.
The parties have entered into various collaborative research and license
agreements pursuant to which they will jointly pursue the discovery, development
and commercialization of novel drugs for the treatment of long-term memory
disorders and other central nervous system dysfunctions. The initial term of the
collaborative program is three years, commencing as of July 1, 1997, subject to
extension for successive one-year periods upon agreement of the parties. Roche,
however, will have the right to terminate the program at the end of the second
year, or otherwise if certain milestones identified by the research committee
are not achieved. The Company and Cold Spring Harbor Laboratory are to conduct
research under the program, which will be funded by Helicon (except for the $1
million of molecular screening the Company is contributing to Helicon). Helicon
is to receive this funding from Roche, up to a maximum of $1.35 million in year
one (excluding the Company's contribution) and $2.85 million in year two. If the
program is not previously terminated, Roche is to provide a
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<PAGE> 16
minimum of $2 million in funding for the third year of the program, with the
actual amount to be determined by a research committee established to oversee
the collaborative program. Roche is obligated to use reasonably diligent efforts
to commercialize products derived from the program.
Helicon has granted to Roche a worldwide license to commercialize pharmaceutical
products resulting from the collaborative program in exchange for certain
milestone payments and royalties on Roche's sales of such products. Each of
Helicon, the Company, Cold Spring Harbor Laboratory and Roche have various
rights and obligations to prosecute and maintain patent rights related to
specified developments and areas of the research under the collaborative
program. Helicon is prohibited from independently conducting or sponsoring
research related to the objectives of this collaborative program.
ALLIANCE WITH XENOMETRIX, INC.
On June 27, 1997, the Company and Xenometrix, Inc. entered into an agreement
pursuant to which they will jointly seek a corporate partner to fund a
technology collaboration for the development of automated systems to generate
and analyze certain data relating to toxicological, metabolic and undesirable
systemic effects of drug candidates. The parties have cross licensed certain of
their respective assay technologies on a worldwide, royalty-free, nonexclusive
basis. The agreement is for a period of nine months, with automatic successive
three month renewal periods. Each party is prohibited from negotiating
independently with any potential corporate partner with respect to the subject
matter of this agreement without the consent of the other party. No assurance
can be given that the parties will identify or contract with an appropriate
corporate partner.
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<PAGE> 17
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 Amended and Restated Collaborative Research and License Agreement
effective as of April 1, 1997, by and among the Company, Hoechst
Marion Roussel, Inc. and Hoechst Aktiengesellschaft
27 Financial Data Schedule
- -------------------
(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.
* Portions of this exhibit have been redacted and are the subject of
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.
(B) REPORTS ON FORM 8-K
Not Applicable.
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<PAGE> 18
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: August 14, 1997 /s/ Gary E. Frashier
----------------------------------------
Gary E. Frashier
Chief Executive Officer
Date: August 14, 1997 /s/ Robert L. Van Nostrand
----------------------------------------
Robert L. Van Nostrand
Vice President and Chief Financial Officer
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<PAGE> 19
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
3.1 Certificate of Incorporation, as amended (1)
3.2 By-Laws, as amended (1)
*10.1 Amended and Restated Collaborative Research and License
Agreement effective as of April 1, 1997, by and among the
Company, Hoechst Marion Roussel, Inc. and Hoechst
Aktiengesellschaft
27 Financial Data Schedule
--------------------
(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.
* Portions of this exhibit have been redacted and are the subject
of 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.
19
<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
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AMENDED AND RESTATED COLLABORATIVE
RESEARCH AND LICENSE AGREEMENT
BY AND AMONG
HOECHST MARION ROUSSEL, INC.,
HOECHST AKTIENGESELLSCHAFT
AND
ONCOGENE SCIENCE, INC.
EFFECTIVE AS OF APRIL 1, 1997
================================================================================
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
1. Definitions ........................................................................ 2
1.1 "Affiliate" ................................................................ 2
1.2 "Allocated Overhead"....................................................... 3
1.3 "Compound". ................................................................ 3
1.4 "Contract Period Research Plan"............................................ 4
1.5 "Contract Period" .......................................................... 4
1.6 "Effective Date". .......................................................... 4
1.7 "Event of Termination"...................................................... 4
1.8 "Funding Payments"......................................................... 4
1.9 "HMRI Identified Target".................................................... 4
1.10 "HMRI Patents" ............................................................. 4
1.11 "HMRI Product". ............................................................ 5
1.12 "HOECHST Identified Target"................................................. 5
1.13 "HOECHST Patents" .......................................................... 5
1.14 "HOECHST Product"........................................................... 5
1.15 "HOECHST Technology"........................................................ 6
1.16 "HOECHST Group Confidential Information".................................... 6
1.17 "HOECHST Group Identified Target"........................................... 6
1.18 "HOECHST Group Patents"..................................................... 6
1.19 "HOECHST Group Product"..................................................... 7
1.20 "HOECHST Group Technology".................................................. 8
1.21 "HRPI Identified Target".................................................... 8
1.22 "HRPI Patents" ............................................................. 8
1.23 "HRPI Product". ............................................................ 8
1.24 "HRPI Technology" .......................................................... 9
1.25 "Identified Targets"........................................................ 9
1.26 "Improvements" ............................................................. 9
1.27 "Joint Technology"..........................................................10
1.28 "Net Sales" ................................................................10
1.29 "OSI Confidential Information"..............................................11
1.30 "OSI Option Patents"........................................................11
1.31 "OSI Patents" ..............................................................11
1.32 "Products". ................................................................12
1.33 "OSI Option Technology".....................................................12
1.34 "OSI Technology": ..........................................................12
1.35 "Research Committee"........................................................12
1.36 "Research Program"..........................................................13
1.37 "Technology". ..............................................................13
1.38 "Third Party". .............................................................13
</TABLE>
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<TABLE>
<S> <C>
1.39 "Valid Claim" .................................................................................13
2. Collaborative Research Program ........................................................................14
2.1 Research Plan. ................................................................................14
2.2 Exclusivity. ..................................................................................14
2.3 Research Committee.............................................................................15
2.3.1 Purpose:...............................................................................15
2.3.2 Membership.............................................................................16
2.3.3 Chair..................................................................................17
2.3.4 Meetings...............................................................................17
2.3.5 Minutes................................................................................17
2.3.6 Decisions..............................................................................17
2.3.7 Expenses...............................................................................18
2.3.8 Subcommittees..........................................................................18
2.4 Reports and Materials..........................................................................18
2.4.1 Reports:...............................................................................18
2.4.2 Materials..............................................................................18
2.5 Laboratory Facilities and Personnel............................................................19
2.6 Diligent Efforts: .............................................................................19
3. Funding of the Research Program. ......................................................................20
3.1 Contract Period Funding........................................................................20
3.1.1. .......................................................................................21
3.1.2. .......................................................................................21
3.1.3 .......................................................................................21
3.1.4 .......................................................................................22
3.1.5 .......................................................................................22
3.1.6 .......................................................................................23
3.2 Commercialization Fees.........................................................................23
4. Treatment of Confidential Information..................................................................23
4.1 Confidentiality. ..............................................................................23
4.1.1 ......................................................................................23
4.1.2. ......................................................................................24
4.1.3 ......................................................................................25
4.2 Publication ...................................................................................25
4.3 Publicity .....................................................................................25
4.4 Disclosure of Inventions.......................................................................25
4.5 Restrictions on Transferring Materials.........................................................26
4.6 Permitted Use of Confidential Information:.....................................................26
5. Licenses and Royalties. ...............................................................................28
5.1 Grant of Licenses..............................................................................28
5.2 Paid-Up License ...............................................................................28
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C>
5.3 Obligations. ................................................................................29
5.4 Sublicenses .................................................................................29
5.5 Rights to Product Improvements...............................................................29
5.6 Technical Assistance.........................................................................30
5.7 Royalties, Payments of Royalties, Accounting for Royalties, Records..........................30
5.7.1 HOECHST Group Patented Products.....................................................30
5.7.2 HMRI Patented Products..............................................................32
5.7.3 Technology..........................................................................32
5.7.4 Single Royalty......................................................................33
5.7.5 Third Party Royalties...............................................................33
5.7.6 Payment Dates.......................................................................34
5.7.7 Accounting..........................................................................34
5.7.8 Records.............................................................................34
5.7.9 Withholding Taxes...................................................................35
5.8 Representation and Warranty..................................................................36
5.9 Option for License...........................................................................36
5.10 Definitions..................................................................................37
6. Provisions Concerning the Filing, Prosecution and Maintenance of Patent Rights.......................40
6.1 OSI Filing, Prosecution and Maintenance......................................................40
6.2 HOECHST Group Filing, Prosecution and Maintenance............................................41
6.3 Reimbursement of Expenses....................................................................43
6.4 Patent Extensions ...........................................................................44
6.5 Legal Action. ...............................................................................44
6.5.1 Actual or Threatened Disclosure or Infringement.....................................44
6.5.2 Defense of Infringement Claims......................................................45
6.5.3 Hold Harmless.......................................................................47
6.5.4 Third Party Licenses................................................................47
7. Other Rights of the Parties. ........................................................................48
7.1 Other OSI Ventures...........................................................................48
7.2 Acquisition of Rights from Third Parties.....................................................49
8. Term, Extension, Termination and Disengagement.......................................................49
8.1 Term ...........................................................................49
8.2 Events of Termination........................................................................49
8.3 Termination. ................................................................................50
8.3.1 ...........................................................................50
8.3.2 ...........................................................................50
8.4 Termination by the HOECHST Group.............................................................51
9. Representations and Warranties ......................................................................51
9.1..................................................................................................51
9.2..................................................................................................51
</TABLE>
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<TABLE>
<S> <C>
9.3...................................................................................................52
9.4...................................................................................................52
9.5...................................................................................................52
10. Covenants of OSI. ....................................................................................52
10.1 Affirmative Covenants of OSI Other Than Reporting Requirements.................................53
10.1.1 .....................................................................................53
10.1.2 .....................................................................................53
11. Dispute Resolution. ..................................................................................53
11.1 Mediation Committee............................................................................53
11.2 Non-Arbitrable Issues..........................................................................54
11.3 Scope of Arbitration...........................................................................54
11.4 Arbitration Panel..............................................................................54
11.4.1 Selection............................................................................55
11.4.2 Qualifications.......................................................................55
11.4.3 Failure to Name......................................................................55
11.4.4 Right to Select Replacement..........................................................55
11.5 Designation of Rules, Situs, Governing Law.....................................................56
11.5.1 Designation of Rules.................................................................56
11.5.2 Situs................................................................................56
11.5.3 Governing Law........................................................................56
11.6 Procedure. ....................................................................................56
11.6.1 Conciliation Period .................................................................56
11.6.2 Notice of Arbitration ...............................................................57
11.6.3 Response ...........................................................................57
11.6.4 Discovery ...........................................................................57
11.6.5 Record ...........................................................................58
11.6.6 Attendance at Hearing ...............................................................58
11.6.7 Postponement of Hearing .............................................................58
11.6.8 Post-Hearing Filings ................................................................59
11.6.9 Award Opinion .......................................................................59
11.6.10 Rehearing ..........................................................................59
11.6.11 Confidentiality .....................................................................59
11.6.12 Waiver ..............................................................................60
11.7 Authority of Arbitrators.......................................................................60
11.7.1 Awards...............................................................................60
11.7.2 Modification of Article 11...........................................................60
11.8 Awards. .......................................................................................60
11.8.1 Judgment.............................................................................60
11.8.2 Fees and Expenses ...................................................................60
12. Notices ..............................................................................................61
</TABLE>
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<TABLE>
<S> <C>
13. Governing Law ........................................................................................62
14. Termination of HRPI-OSI Agreement and HOECHST-OSI Agreement...........................................62
15. Miscellaneous. .......................................................................................62
15.1 Binding Effect ................................................................................62
15.2 Headings ......................................................................................63
15.3 Counterparts ..................................................................................63
15.4 Amendment; Waiver; etc.........................................................................63
15.5 No Third Party Beneficiaries...................................................................63
15.6 Assignment and Successors......................................................................63
15.7 Compliance with Antitrust/Competition Law......................................................64
</TABLE>
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<PAGE> 8
AMENDED AND RESTATED COLLABORATIVE RESEARCH
AND LICENSE AGREEMENT
This AMENDED AND RESTATED COLLABORATIVE RESEARCH AND LICENSE
AGREEMENT (the "Agreement") effective as of April 1, 1997, by and among HOECHST
MARION ROUSSEL, INC. ("HMRI"), a Delaware corporation, formerly named MARION
MERRELL DOW INC. ("MMD"), with its principal offices at 10236 Marion Park Drive,
Kansas City, Missouri 64137-1406, HOECHST AKTIENGESELLSCHAFT ("HOECHST"), a
German company with the address of D-65926 Frankfurt am Main, Germany (HOECHST
and HMRI are sometimes together referred to herein as the "HOECHST Group"), and
ONCOGENE SCIENCE, INC. ("OSI"), a Delaware corporation, with its principal
office at 106 Charles Lindbergh Boulevard, Uniondale, New York 11553.
WHEREAS, HMRI and OSI are the original parties to this agreement as
of December 11, 1992 (the "HMRI-OSI Agreement");
WHEREAS, HOECHST and OSI are parties to that certain Collaborative
Research Agreement dated as of January 4, 1993 (the "HOECHST-OSI Agreement");
WHEREAS, HOECHST-ROUSSEL PHARMACEUTICALS, INC. ("HRPI"), the
corporate existence of which terminated as the result of a merger of HRPI with
and into HMRI effective January 1, 1996, and OSI are parties to that certain
Collaborative Research Agreement dated as of October 1, 1993 (the "HRPI-OSI
Agreement");
<PAGE> 9
WHEREAS, OSI has certain proprietary technology for identifying the
effect of compounds on genes and gene products which is useful in the process of
developing products for the treatment of human diseases;
WHEREAS, the HOECHST Group has the capability to undertake research
for the discovery and evaluation of agents for treatment of disease and also the
capability for clinical analysis, manufacturing and marketing of such agents;
WHEREAS, the HOECHST Group and OSI wish to collaborate in research
described in this Agreement; and
WHEREAS, the HOECHST Group and OSI wish to consolidate the
HOECHST-OSI Agreement, the HRPI-OSI Agreement and the HMRI-OSI Agreement by
amending and restating the HMRI-OSI Agreement to include such agreements, as
well as certain new agreements between the HOECHST Group and OSI, thereby
terminating each of the HOECHST-OSI Agreement and the HRPI-OSI Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained in this Agreement, the parties agree
as follows:
1. Definitions
Whenever used in this Agreement, the terms defined in this Article 1
shall have the meanings specified.
1.1 "Affiliate" means any corporation or other legal entity owning,
directly or indirectly, fifty percent or more of the voting capital shares or
similar voting securities of HOECHST, HMRI or OSI; any corporation or other
legal entity fifty percent or
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<PAGE> 10
more of the voting capital shares or similar voting rights of which is owned,
directly or indirectly, by HOECHST, HMRI or OSI; or any corporation or other
legal entity fifty percent or more of the voting capital shares or similar
voting rights of which is owned, directly or indirectly, by a corporation or
other legal entity which owns, directly or indirectly, fifty percent or more of
the voting capital shares or similar voting securities of HOECHST, HMRI or OSI.
Notwithstanding the foregoing, an Affiliate shall not be deemed to include a
corporation or legal entity which is not actually controlled by HOECHST or HMRI,
on the one hand (for example, without limitation, Copley Pharmaceutical, Inc. or
its respective subsidiaries), or OSI, on the other hand.
1.2 "Allocated Overhead" means the amount of overhead, including
general and administrative costs, determined in accordance with generally
accepted accounting principles, incurred by OSI and allocated to the Research
Program in the same proportion that the total man-hours of work performed in the
Research Program bears to the total man-hours of work performed in all OSI
research programs, or such other customary allocation basis or overhead recovery
basis that may be agreed in writing between the parties.
1.3 "Compound" shall mean any compound or derivative thereof, the
human therapeutic use of which has been identified or discovered in the course
of conducting the Research Program.
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1.4 "Contract Period Research Plan" means the written research plan
to be carried out during the Contract Period by OSI pursuant to this Agreement
as described in Section 2.1.
1.5 "Contract Period" means the period beginning at the Effective
Date and continuing for sixty months, unless terminated as provided in this
Agreement.
1.6 "Effective Date" is April 1, 1997.
1.7 "Event of Termination" has the meaning set forth in Section 8.2.
1.8 "Funding Payments" has the meaning set forth in Article 3.
1.9 "HMRI Identified Target" means a HMRI target which has been
identified to be the subject of research carried out under the Research Program,
as set forth on Exhibit A-1.
1.10 "HMRI Patents" shall mean the patents and patent applications
owned or filed by HMRI or HOECHST both foreign and domestic, arising (i) in the
course of conducting the Research Program with respect to the HMRI Identified
Targets or (ii) from the use of drug discovery technology developed in the
course of conducting the Research Program with respect to the HMRI Identified
Targets, which relate to the research, development, manufacture, composition of
compounds and derivatives, use or sale of Compounds, including, without
limitation, all substitutions, extensions, Supplementary Protection
Certificates, reissues, renewals, divisions, continuations, continuations in
part, utility models
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and certificates of invention thereof, all of which shall be from time to time
identified to the Research Committee.
1.11 "HMRI Product" means a product containing a Compound sold for
the treatment or management of any disease state in a human patient or any other
human therapeutic indication directed to an HMRI Identified Target; provided,
however, that HMRI Product shall not include a chemical compound identified by
HMRI as effective for an indication by means other than the Research Program
even if such compound is tested as part of Research Program (a "HMRI Prior
Compound"). If an HMRI Prior Compound is included for testing in the Research
Program by mutual agreement, the applicable royalty shall be ** the normal
royalty.
1.12 "HOECHST Identified Target" means a HOECHST target which has
been identified to be the subject of research carried out under the Research
Program, as set forth on Exhibit A-2.
1.13 "HOECHST Patents" shall have the meaning set forth in Section
5.10(g) herein.
1.14 "HOECHST Product" means any product for the treatment or
management of any disease state in a human patient or any other human
therapeutic indication directed to a HOECHST Identified Target identified in the
course of the Research Program.
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** This portion redacted pursuant to a request for confidential treatment.
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1.15 "HOECHST Technology" has the meaning set forth in
Section 5.10(c) herein.
1.16 "HOECHST Group Confidential Information" means all
information about any element of HOECHST Group Technology, HRPI Technology or
HOECHST Technology which is disclosed by HMRI, HOECHST or HRPI to OSI and
designated "Confidential" in writing at the time of such disclosure to the
extent that such information as of the date of such disclosure is not (i) known
to OSI other than by virtue of a prior confidential disclosure to OSI by HMRI,
HOECHST or HRPI, as the case may be, or (ii) disclosed in the published
literature, or otherwise generally known to the public, or (iii) obtained from a
Third Party that has no obligation of confidentiality to HMRI, HOECHST or HRPI.
The HOECHST Group Confidential Information shall also include all HOECHST
Improvements and HMRI Improvements.
1.17 "HOECHST Group Identified Target" means a target of
either member of the HOECHST Group that has been identified to be the subject of
research carried out under the Research Program during the Contract Period. The
initial HOECHST Group Identified Targets are set forth in Exhibit A-3, as the
same may be modified from time to time.
1.18 "HOECHST Group Patents" shall mean the patents and
patent applications owned or filed by either member of the HOECHST Group, both
foreign and domestic, arising (i) in the course of conducting the Research
Program with respect to the HOECHST Group Identified Targets or (ii) from the
use of drug discovery technology
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<PAGE> 14
developed in the course of conducting the Research Program with respect to the
HOECHST Group Identified Targets, which relate to the research, development,
manufacture, composition of compounds and derivatives, use or sale of Compounds,
including, without limitation, all substitutions, extensions, Supplementary
Protection Certificates, reissues, renewals, divisions, continuations,
continuations in part, utility models and certificates of invention thereof, all
of which shall be from time to time identified to the Research Committee.
1.19 "HOECHST Group Product" means a product containing a
Compound sold for the treatment or management of any disease state in a human
patient or any other human therapeutic indication directed to a HOECHST Group
Identified Target; provided, however, that HOECHST Group Product shall not
include a chemical compound identified by either member of the HOECHST Group as
effective for an indication by means other than the Research Program even if
such compound is tested as part of the Research Program (a "HOECHST Group Prior
Compound"). If a HOECHST Group Prior Compound is included for testing in the
Research Program by mutual agreement, the applicable royalty shall be ** the
normal royalty.
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** This portion redacted pursuant to a request for confidential treatment.
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1.20 "HOECHST Group Technology" means Technology that is
or was:
(a) developed by employees of, or consultants
to, either member of the HOECHST Group alone or jointly with Third Parties prior
to January 1, 1993 or since that date in the course of activities not related to
the Research Program; or
(b) acquired by purchase, license, assignment or
other means from Third Parties by either member of the HOECHST Group prior to
January 1, 1993 or since that date that would not be otherwise part of Joint
Technology, but only to the extent that such member of the HOECHST Group is
legally entitled to disclose such acquired Technology and use it in the Research
Program.
1.21 "HRPI Identified Target" means a HRPI target which
has been identified to be the subject of research carried out under the Research
Program, as set forth on Exhibit A-4.
1.22 "HRPI Patents" shall have the meaning set forth in
Section 5.10(f) herein.
1.23 "HRPI Product" means a product for the treatment or
management of any disease state in a human patient or any other human
therapeutic indication directed to a HRPI Identified Target identified in the
course of the Research Program.
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1.24 "HRPI Technology" has the meaning set forth in
Section 5.10(d) herein.
1.25 "Identified Targets" means collectively the HOECHST
Group Identified Targets, the HMRI Identified Targets, the HOECHST Identified
Targets and the HRPI Identified Target. If an Identified Target is subsequently
abandoned by a decision of the Research Committee, it will no longer be
considered an Identified Target or be subject to this Agreement.
1.26 "Improvements" means any and all inventions,
discoveries, methods, ideas, works of authorship, know-how, show-how, data,
clinical and preclinical results, information, and any physical, chemical or
biological material, including any replication or any part of such material,
techniques and Technology, whether or not patentable or subject to other forms
of protection, which (i) are made, created, developed, written, conceived, or
reduced to practice, or which are licensed or otherwise acquired from Third
Parties (to the extent the agreeing party is legally enabled to disclose and use
the same in the Research Program), in the course of, arising out of, or as a
result of any party's research (a) in the course of conducting the Research
Program or (b) using drug discovery technology developed in the course of
conducting the Research Program, and (ii) are related to HMRI Identified Targets
or HOECHST Group Identified Targets. Improvements includes all rights relating
to the protection of trade secrets and confidential information, and any right
analogous
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<PAGE> 17
to those set forth herein, which relate to, are embodied in or are appurtenant
to such discoveries, methods, ideas, etc.
In accordance with the United States laws of inventorship,
OSI, HMRI and HOECHST, shall each own the entire right, title and interest in
and to any Improvements made or discovered solely by its respective employees
(the "OSI Improvements," the "HMRI Improvements," and the "HOECHST Improvements"
respectively) and OSI, on the one hand, and either or both of HMRI and HOECHST,
on the other hand, shall own jointly all Improvements made or discovered jointly
by their respective employees (the "Joint Improvements"). Each party represents
and agrees that all employees and other persons acting on its behalf in
performing its obligations under this Agreement shall be obligated to assign to
such party or as such party shall direct, all Improvements made or developed by
such employee or other person. In the case of Joint Improvements, OSI, HMRI and
HOECHST, as the case may be, agree to undertake to enforce such obligations
(including, where appropriate, by legal action) considering, among other things,
the commercial value of such Joint Improvements.
1.27 "Joint Technology" shall mean Joint Improvements as
defined in Section 1.26.
1.28 "Net Sales" means the gross amount invoiced by a
member of the HOECHST Group or its Affiliate or sublicensee for arm's-length
sales to a Third Party of HOECHST Group Products or HMRI Products after
deducting normal and customary trade discounts actually allowed or taken
including Prime Vendor and Medicaid rebates and profit
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<PAGE> 18
drawback taxes such as are imposed in the United Kingdom, returns, credits,
customs duties, or taxes the legal incidence of which is on the purchaser and
separately shown on the member of the HOECHST Group's or its Affiliate's or
sublicensee's invoices and transportation, insurance and postage charges, if
prepaid by the member of the HOECHST Group or its Affiliate or sublicensee and
billed on the member of the HOECHST Group's or its Affiliate's or sublicensee's
invoices as a separate item.
1.29 "OSI Confidential Information" means all information
about any element of the OSI Technology or OSI Option Technology which is
disclosed by OSI to HMRI, HOECHST or HRPI and designated "Confidential" in
writing by OSI at the time of such disclosure to the extent that such
information as of the date of such disclosure is not (iii) known to HMRI,
HOECHST or HRPI, as the case may be, other than by virtue of a prior
confidential disclosure to HMRI, HOECHST or HRPI, as the case may be, by OSI or
(iv) disclosed in the published literature, or otherwise generally known to the
public, or (v) obtained from a Third Party that has no obligation of
confidentiality to OSI. OSI Confidential Information shall also include all OSI
Improvements.
1.30 "OSI Option Patents" shall have the meaning set forth
in Section 5.10(e) herein.
1.31 "OSI Patents" shall mean the patents and patent
applications owned or filed by OSI, both foreign and domestic, arising (i) in
the course of
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<PAGE> 19
conducting the Research Program or (ii) from the use of drug discovery
technology developed in the course of conducting the Research Program, which
relate to the research, development, manufacture, use or sale of Compounds,
including, without limitation, all substitutions, extensions, Supplementary
Protection Certificates, reissues, renewals, divisions, continuations,
continuations in part, utility models and certificates of invention thereof, all
of which shall be from time to time identified to the Research Committee;
provided, however, that OSI Patents shall not include OSI Option Patents.
1.32 "Products" means collectively the HOECHST Group
Products, the HMRI Products, the HOECHST Products and the HRPI Products.
1.33 "OSI Option Technology" has the meaning set forth in
Section 5.10(a) herein.
1.34 "OSI Technology" means Technology that is or was:
(a) developed by employees of, or consultants
to, OSI alone or jointly with Third Parties prior to January 1, 1993 or since
that date in the course of activities not related to the Research Program; or
(b) acquired by purchase, license, assignment or
other means from Third Parties by OSI prior to January 1, 1993 or since that
date that would not be otherwise part of Joint Technology, but only to the
extent that OSI is legally entitled to disclose such acquired Technology and use
it in the Research Program.
1.35 "Research Committee" has the meaning specified in
Section 2.3.
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1.36 "Research Program" is the collaborative research
program conducted by HMRI, HOECHST and OSI pursuant to this Agreement, the
HMRI-OSI Agreement or the HOECHST-OSI Agreement or the HRPI-OSI Agreement.
1.37 "Technology" means and includes all tangible or
intangible know-how, trade secrets, inventions (whether or not patentable),
data, clinical and preclinical results and any physical, chemical or biological
material that pertain to the development of human therapeutic products,
including all laboratory notebooks, research plans, cultures, strains, vectors,
genes and gene fragments and their sequences, cell lines, hybridoma cell lines,
monoclonal and polyclonal antibodies, proteins and protein fragments,
non-protein chemical structures and methods for synthesis, structure-activity
relationships, computer models of chemical structures, computer software, assay
methodology, processes, materials and methods for production, recovery and
purification of nature products, formulas, plans, specifications,
characteristics, equipment and equipment designs, marketing surveys and plans,
business plans, know-how, experience and trade secrets.
1.38 "Third Party" means any individual, estate, trust,
partnership, joint venture, association, firm, corporation, company or other
entity, other than the parties hereto and their respective Affiliates and
predecessors.
1.39 "Valid Claim" means a claim of an issued patent so
long as such claim shall not have been disclaimed by both (i) HMRI or HOECHST
and (ii) OSI, or shall
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<PAGE> 21
not have been held invalid or unenforceable 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 Research Plan. The Contract Period Research Plan for
the next succeeding year shall be prepared each year and approved by the
Research Committee, and set forth with the minutes of a meeting of the Research
Committee, held prior to the end of the current year. The Contract Period
Research Plan for calendar year 1996 is set forth with minutes of the meeting of
the Research Committee held on March 6, 1997.
2.2 Exclusivity.
(a) OSI agrees that during the Research Program
neither OSI nor any of its Affiliates shall conduct research itself or sponsor
any other research, or engage in any research sponsored by any Third Party if
the research relates to an Identified Target, unless agreed to and confirmed in
writing by the Research Committee. If OSI becomes aware during the Contract
Period of an opportunity which it desires to pursue to sponsor other research
having any of the objectives of the Research Program or to engage in such
research sponsored by a Third Party, it shall promptly notify the HOECHST Group
of such opportunity, and the HOECHST Group and OSI shall consider whether such
opportunity can be incorporated into the Research Program or otherwise used to
further the purposes of the Research Program to their mutual advantage.
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(b) The HOECHST Group agrees that during the
Contract Period neither HMRI, HOECHST nor any of their Affiliates shall sponsor
any other research, or engage in any research involving any Third Party, using
the gene transcription method described in the Contract Period Research Plan to
an Identified Target, if the objectives of such research are the discovery of
novel human therapeutic products, unless agreed to and confirmed in writing by
the Research Committee. If the HOECHST Group becomes aware during the Contract
Period of an opportunity which it desires to pursue to sponsor other research
having any of the objectives of the Research Program or to engage in such
research sponsored by a Third Party, it shall promptly notify OSI of such
opportunity, and the HOECHST Group and OSI shall consider whether such
opportunity can be incorporated into the Research Program or otherwise used to
further the purposes of the Research Program to their mutual advantage.
(c) The provisions of this Section 2.2 shall not
apply to Identified Targets that have been eliminated from the Research Program
by the Research Committee.
2.3 Research Committee.
2.3.1 Purpose. The parties shall establish a
Research Committee for the following purposes:
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(a) to review and evaluate progress
under the Contract Period Research Plan;
(b) to direct the implementation of the
Contract Period Research Plan;
(c) to modify the Contract Period
Research Plan as appropriate, to add or delete Identified Targets and to
coordinate and monitor publication of research results obtained from the
exchange of information and materials that relate to the Research Program;
(d) to prepare and approve the Contract
Period Research Plan for each calendar year in advance of the beginning of such
calendar year during the Contract Period; and
(e) to determine the origination and
derivation of a HOECHST Group Product for purposes of Section 5.7.1 hereof.
2.3.2 Membership. The HOECHST Group and OSI each
shall appoint, in its sole discretion, four members to the Research Committee.
Substitutes may be appointed at any time. The members initially shall be:
HOECHST Group Appointees OSI Appointees
** **
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2.3.3 Chair. The Research Committee shall be
chaired by one of the members appointed by the HOECHST Group. The co-chair shall
be appointed by OSI. The chair and the co-chair shall work together to establish
the agenda for meetings and to coordinate the Research Program and follow-up
actions.
2.3.4 Meetings. The Research Committee shall meet
at least three times per year, at places and on dates selected by each party in
turn. Representatives of the HOECHST Group or OSI or both, in addition to
members of the Research Committee, may attend such meetings at the invitation of
either party.
2.3.5 Minutes. The Research Committee shall keep
accurate minutes of its deliberations which record all proposed decisions and
all actions recommended or taken. The minutes shall be delivered in draft form
to all Research Committee members within five (5) working days after each
meeting. The party hosting the meeting shall be responsible for the preparation
of the minutes. Draft minutes shall be edited by the chair and shall be issued
in final form only with the chair's approval and agreement. The minutes for each
calendar year shall include the approved Contract Period Research Plan for the
next succeeding calendar year and a report on progress under the Contract Period
Research Plan then in effect.
2.3.6 Decisions. All technical decisions of the
Research Committee shall be made by majority of the members. In the event of a
tie vote the chair shall have an additional determinative vote.
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2.3.7 Expenses. The HOECHST Group and OSI shall
each bear all expenses of their respective members related to the participation
on the Research Committee.
2.3.8 Subcommittees. The Research Committee shall
have authority to appoint subcommittees and delegate to such subcommittees
powers and duties determined by the Research Committee.
2.4 Reports and Materials
2.4.1 Reports. During the Research Program, OSI
shall furnish to the Research Committee:
(a) summary reports within fifteen (15) days
after the end of each three-month period, commencing on the Effective Date,
describing its progress under the Research Program; and
(b) comprehensive written reports within thirty
(30) days after the end of each calendar year, describing in detail the work
accomplished by it under the Research Program during the year and discussing and
evaluating the results of such work.
2.4.2 Materials. OSI and the HOECHST Group shall,
during the Contract Period as a matter of course as described in the Contract
Period Research Plan or upon the oral or written request of a party, furnish to
the requesting party samples of
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biochemical, biological or synthetic chemical materials (hereafter "Materials")
which are part of the Joint Technology, or which are part of OSI Technology, OSI
Option Technology, HOECHST Group Technology, HOECHST Technology or HRPI
Technology, and which are necessary for each party to carry out its
responsibilities under the Contract Period Research Plan. To the extent that the
quantities of Materials requested by a party exceed the quantities set forth in
the Contract Period Research Plan, the requesting party shall reimburse the
party that furnished the Materials for the reasonable costs of such Materials.
2.5 Laboratory Facilities and Personnel. OSI shall
provide suitable laboratory facilities, equipment and personnel for the work to
be done by OSI in carrying out the Research Program.
2.6 Diligent Efforts. The HOECHST Group and OSI each
shall use diligent efforts to achieve the objectives of the Research Program. To
achieve the objectives of the Research Program, the HOECHST Group will
specifically use diligent efforts consistent with products of like potential and
consistent with reasonable commercial judgment:
(a) to advance the pharmacological assessment of
Compounds identified by OSI or either member of the HOECHST Group in order to
select those worthy of further investigation;
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(b) to determine the chemical structure of each
Compound and to make related compounds to determine the relationship between
structure and activity and to identify potential development candidates;
(c) to select development candidates;
(d) to assess safety and efficacy of the
selected development candidates in animals and in human patients under
conditions designed to yield data suitable for inclusion in approval
applications to be submitted to the U.S. Food and Drug Administration; and
(e) to develop manufacturing methods and
pharmaceutical formulations for those selected candidates.
3. Funding of the Research Program.
3.1 Contract Period Funding. The HOECHST Group shall pay
OSI's total actual research costs in carrying out the Contract Period Research
Plan, plus Allocated Overhead, plus ** of the sum of the actual research costs
and the Allocated Overhead (the "Funding Payments"). In addition to the Funding
Payments, the HOECHST Group shall pay to OSI (a) the amount of ** on each
of October 1, 1997 and October 1, 1998, which amount represents deferred
payments under the HRPI-OSI Agreement, and (b) the amount of ** on
February 28, 1998, which amount represents a deferred payment
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under the HOECHST-OSI Agreement (all three payments collectively, the "Deferred
Payments"). The total amount of Funding Payments and Deferred Payments shall not
exceed ** in any calendar year (unless agreed to by all parties), which amount
shall be prorated for partial years.
3.1.1 Prior to the beginning of each calendar year
(or part thereof) during the Contract Period, the Research Committee shall
approve a budget which shall set forth the work to be accomplished during each
calendar quarter and the payment to be made. The budget so created will be in
form and detail as the Research Committee shall determine and shall be delivered
to both parties in time to be included in each party's internal budgeting
process.
3.1.2 All Funding Payments shall be made quarterly
in advance for work scheduled to be performed by OSI during any calendar
quarter, against OSI's invoice for such budgeted amount. Adjustments as
necessary to reflect the work actually performed by OSI shall be made at the end
of each calendar quarter. Within 30 days of the close of a calendar quarter, OSI
shall invoice the HOECHST Group for the amount actually spent by OSI during the
quarter. If actual expenditures are less than the prepayment, OSI shall pay the
HOECHST Group at the date of the invoice the difference. If actual expenditures
as approved by the Research Committee exceed the prepayment, the HOECHST Group
shall pay OSI the difference within 30 days of the date of the invoice.
3.1.3 The amount of the Funding Payment for each
quarter shall be based on the work in progress pursuant to the Contract Period
Research Plan and the
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associated annual budget; provided, however, that the aggregate amount of
Funding Payments and Deferred Payments made in any calendar year shall not
exceed **.
3.1.4 Each Funding Payment shall be paid on the
first day of the quarter or ten (10) days after receipt of invoice, whichever is
later.
3.1.5 OSI shall keep for three (3) years from the
expiration of this Agreement complete and accurate records of its expenditures
of Funding Payments received by it. The records shall conform to generally
accepted accounting principles as applied to a similar company similarly
situated. The HOECHST Group shall have the right at its own expense during the
term of this Agreement and during the subsequent three-year period to obtain
from the independent certified public accountant employed by OSI for public
reporting purposes an audit of said records to verify the accuracy of such
expenditures, pursuant to the Contract Period Research Plan. OSI shall make its
records available for inspection by the independent certified public accountant
during regular business hours at the place or places where such records are
customarily kept, upon reasonable notice from the HOECHST Group 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. The HOECHST Group agrees to hold in strict confidence
all information concerning such expenditure, 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 the HOECHST Group to reveal the information in
order to enforce any rights it may have pursuant to this
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Agreement or if disclosure is required by law. The failure of the HOECHST Group
to request verification of any expenditures before or during 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.
3.1.6 The parties agree that all payments made to
OSI pursuant to this Section 3.1 constitute contract research expenses under
Section 41 of the Internal Revenue Code of 1986.
3.2 Commercialization Fees. OSI acknowledges that HMRI
paid OSI a commercialization fee of ** for the right to commercialize in the
United States, its territories and possessions the first Product. The
commercialization fee was deemed earned by OSI and was payable ** at the
execution of the HMRI-OSI Agreement and ** within 30 days of the beginning of
the Contract Period (as defined in the HMRI-OSI Agreement) of the HMRI-OSI
Agreement. Such payments when made were non-refundable.
4. Treatment of Confidential Information.
4.1 Confidentiality.
4.1.1 The HOECHST Group and OSI recognize that
Confidential Information constitutes highly valuable proprietary, confidential
information.
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Subject to the disclosure obligations set forth in Sections 4.3 and 4.4 and
publication rights set forth in Section 4.2, (i) each of HMRI and HOECHST agrees
that during the period of the Research Program and for five (5) years
thereafter, they will keep confidential, and will cause its Affiliates to keep
confidential, all OSI Confidential Information, nor shall HMRI, HOECHST or any
of their Affiliates use OSI Confidential Information except as expressly
permitted in this Agreement and (ii) OSI agrees that during the period of the
Research Program and for five (5) years thereafter, it will keep confidential,
and will cause its Affiliates to keep confidential, all HOECHST Group
Confidential Information, nor shall OSI or any of its Affiliates use HOECHST
Group Confidential Information except as expressly permitted in this Agreement.
4.1.2 The HOECHST Group and OSI acknowledge that
the OSI Confidential Information and HOECHST Group Confidential Information is
highly valuable, proprietary, confidential information, and each party agrees
that any disclosure of another party's Confidential Information to any officer,
employee, agent or of any of its Affiliates shall be made only if and to the
extent necessary to carry out its responsibilities under this Agreement and
shall be limited to the maximum extent possible consistent with such
responsibilities. Each party agrees not to disclose the other's Confidential
Information to any Third Parties (other than consultants) under any circumstance
without written permission. Each party shall take such action, and shall cause
its Affiliates to take such action, to preserve the confidentiality of each
other's Confidential Information as they would customarily take to preserve the
confidentiality of their own confidential information.
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4.1.3 Each party represents that all of its
employees participating in the Research Program who shall have access to the
other party's Confidential Information are bound, by agreement to maintain such
information in confidence. Consultants will be similarly bound.
4.2 Publication. Section 4.1 to the contrary
notwithstanding, the results obtained in the course of the Research Program may
be submitted for publication following scientific review by the Research
Committee and subsequent approval by OSI's, HMRI's and HOECHST's managements, as
applicable. After receipt of the proposed publication by HMRI's, HOECHST's and
OSI's managements, as applicable, written approval or disapproval shall be
provided within thirty (30) days for a manuscript, within fourteen (14) days for
an abstract for presentation at, or inclusion in the proceedings of, a
scientific meeting, and within fourteen (14) days for a transcript of an oral
presentation to be given at a scientific meeting.
4.3 Publicity. Except as required by law, no party may
disclose the existence of this Agreement nor the research described in it except
with the written consent of the other parties, which consent shall not be
unreasonably withheld.
4.4 Disclosure of Inventions. Each party shall promptly
inform the other parties about all inventions concerning the Identified Targets
that are conceived, made or developed in the course of carrying out the Research
Program by employees of, or consultants to, any party solely, or jointly with
employees of, or consultants to the other parties. This
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Agreement shall not be construed to obligate a party to disclose to the other
parties any invention which does not concern the Identified Targets.
4.5 Restrictions on Transferring Materials. The HOECHST
Group and OSI recognize that the Materials which are part of OSI Technology, OSI
Option Technology, HOECHST Group Technology, HOECHST Technology, HRPI
Technology, or Joint Technology represent valuable commercial assets. Therefore,
throughout the Contract Period and for five (5) years thereafter, OSI and the
HOECHST Group agree not to transfer to any Third Party any such Materials which
constitute Technology or Option Technology owned solely by a member of the
HOECHST Group or OSI, respectively. Additionally, throughout the Contract Period
and for six (6) months thereafter, OSI and the HOECHST Group agree not to
transfer to any Third Party any Materials which are part of Joint Technology or
Option Technology owned solely by OSI or a member of the HOECHST Group, unless
prior consent for any such transfer is obtained from the other parties, which
consent shall not be unreasonably withheld, and unless such Third Party agrees
as a condition of any such transfer not to transfer the Materials further and to
use the Materials only for research purposes not directed toward the development
of Products.
4.6 Permitted Use of Confidential Information. Nothing
contained herein will in any way restrict or impair any party's right to use,
disclose or otherwise deal with any Confidential Information which:
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(a) at the time of disclosure is properly in the
public domain or thereafter becomes part of the public domain by publication or
otherwise through no breach of this Agreement by the party receiving such
information;
(b) the party receiving such information can
establish by competent evidence that such information was properly in its
possession prior to the time of the disclosure;
(c) is independently and properly made available
as a matter of right to the party receiving such information by a Third Party
who is not thereby in violation of a confidential relationship with the other
party;
(d) is information which is required to be
included in patent applications filed under Article 6 or required to be provided
to a government agency in order for a member of the HOECHST Group to obtain
approvals to market Products, or for OSI to make a Product for a member of the
HOECHST Group hereunder; provided, however, that no HOECHST Group or OSI
Confidential Information shall be disclosed in any such patent application or
otherwise without the prior written consent of the other party which consent
shall not be unreasonably withheld;
(e) is information which is required to be
disclosed to customers, users and prescribers of a Product, or which is
reasonably necessary to disclose in connection with the ethical marketing of a
Product; provided, however, that no OSI Confidential Information or HOECHST
Group Confidential Information will be so disclosed
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without the prior written consent of OSI or the HOECHST Group, respectively,
which consent will not be unreasonably withheld; or
(f) is information required to be disclosed by
law or by a court order, in each of which cases the disclosing party shall
timely inform the other and use its best efforts to limit the disclosure and
maintain confidentiality to the extent possible and will permit the other party
to limit such disclosure.
5. Licenses and Royalties.
5.1 Grant of Licenses. OSI hereby grants to the HOECHST
Group a worldwide license including the right to sublicense under the OSI
Technology, the OSI Patents, the OSI Improvements, and OSI rights in the Joint
Technology to develop, make, have made, use, and sell HMRI Products and HOECHST
Group Products, which license shall be exclusive (even as to OSI) for so long as
the HOECHST Group is obligated to pay a royalty under Sections 5.7.1, 5.7.2 or
5.7.3. The HOECHST Group agrees that OSI shall be identified on the packaging of
all HMRI Products and HOECHST Group Products on which the HOECHST Group is
obligated to pay royalties.
5.2 Paid-Up License. Provided that the HOECHST Group has
satisfied all of its obligations to pay royalties hereunder, HOECHST and HMRI
shall have a paid-up license permitting royalty-free manufacture, use, and sale
of each HOECHST Group Product or HMRI Product in each country after the
expiration of the HOECHST Group's last
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obligation to pay royalties on Net Sales of each such HOECHST Group Product or
HMRI Product, respectively, in each such country.
5.3 Obligations. The HOECHST Group shall use reasonably
diligent efforts to exploit HOECHST Group Products and HMRI Products
commercially. This requirement shall be deemed satisfied if the HOECHST Group
uses the same degree of diligence it uses with respect to products developed by
the HOECHST Group outside of this Agreement. If the HOECHST Group elects to
discontinue development of a Compound, it shall so notify OSI. The parties shall
discuss the possibility of the HOECHST Group licensing the Compound to OSI. The
HOECHST Group shall not license such Compound to any other party on terms more
favorable than those offered to OSI.
5.4 Sublicenses. If the HOECHST Group grants a sublicense
pursuant to Article 5, the HOECHST Group shall guarantee that any sublicensee
fulfills all of the HOECHST Group's obligations under this Agreement. In the
event the HOECHST Group or OSI grants sublicenses under Article 5 to others to
make, use, or sell products, such sublicenses shall include an obligation of the
sublicensees to account for and report all Net Sales of such products on the
same basis as if such sales were Net Sales of products by the HOECHST Group, and
the HOECHST Group shall pay royalties to OSI under this Agreement as if the Net
Sales of the sublicensee were Net Sales of the sublicensor.
5.5 Rights to Product Improvements. For a period of five
(5) years from the termination of the Research Program, the HOECHST Group shall
acquire an
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exclusive, (nonexclusive in the countries of the world in which this section
might otherwise be deemed to violate restrictive trade practices laws)
worldwide, royalty-free license to any product improvements made by OSI to any
HOECHST Group Products or HMRI Products, but only to the extent necessary to
guarantee that the HOECHST Group can fully enjoy all the rights granted to it
pursuant to Article 5. OSI shall promptly and fully notify the HOECHST Group of
any such product improvements made by OSI, including costs. All such
improvements shall be included within the scope of this Agreement.
5.6 Technical Assistance. OSI shall provide to the
HOECHST Group or any Affiliate or sublicensee of the HOECHST Group, at the
HOECHST Group's request and expense, any assistance reasonably necessary to
enable the HOECHST Group or such Affiliate or sublicensee to manufacture, use,
or sell each HOECHST Group Product and HMRI Product and to enjoy fully all the
rights granted to the HOECHST Group pursuant to this Agreement.
5.7 Royalties, Payments of Royalties, Accounting for
Royalties, Records.
5.7.1 HOECHST Group Patented Products. The HOECHST
Group shall pay OSI a royalty at the applicable following rate with respect to
Net Sales of each HOECHST Group Product, the manufacture, use, or sale of which
is covered by a Valid Claim of a HOECHST Group Patent, OSI Patent or patent
involving Joint Improvements; provided, that the HOECHST Group shall pay OSI a
royalty pursuant to this Section 5.7.1 for
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a HOECHST Group Product that employs OSI Patents only to extent the OSI Patent
arises out of research directed to a HOECHST Group Identified Target: ** of Net
Sales of each HOECHST Group Product if the HOECHST Group Product originated from
an OSI developed transcription assay pursuant to the Research Program; ** of Net
Sales of each HOECHST Group Product if such HOECHST Group Product originated
from an OSI developed bio assay pursuant to the Research Program; ** of Net
Sales of each HOECHST Group Product if such HOECHST Group Product originated
from a bio assay developed by the HOECHST Group using OSI transcription
technology with OSI screening pursuant to the Research Program; ** of Net Sales
of each HOECHST Group Product if such HOECHST Group Product originated from a
bio assay developed by the HOECHST Group with OSI screening pursuant to the
Research Program; or ** of Net Sales of each HOECHST Group Product if the
HOECHST Group Product originated from a HOECHST Group non bio "in vitro" assay
with OSI screening pursuant to the Research Program. An additional ** of Net
Sales will be paid to OSI if the HOECHST Group Product is derived from a
proprietary compound of OSI, as previously disclosed in writing to the members
of the HOECHST Group, as the same may be amended from time to time, as set forth
in the minutes of the Research Committee. The Research Committee shall determine
the origination and derivation of a HOECHST Group Product for purposes of this
Section 5.7.1. The HOECHST Group shall continue to pay royalties on sales of
each HOECHST Group Product on a country by country basis as long as
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the manufacture, use and/or sale of such HOECHST Group Product would infringe a
Valid Claim of an applicable patent pursuant to this Agreement.
5.7.2 HMRI Patented Products. HMRI shall pay OSI a
royalty rate of ** of the Net Sales of each HMRI Product, the manufacture, use,
or sale of which is covered by a Valid Claim of an HMRI Patent, OSI Patent or
patent involving Joint Improvements; provided, that HMRI shall pay OSI a royalty
pursuant to this Section 5.7.2 for an HMRI Product that employs OSI Patents only
to the extent the OSI Patent arises out of research directed to an HMRI
Identified Target. HMRI shall continue to pay royalties on sales of each HMRI
Product on a country by country basis as long as the manufacture, use and/or
sale of such HMRI Product would infringe a Valid Claim of an applicable patent
pursuant to this Agreement.
5.7.3 Technology. HMRI shall pay OSI a royalty at
the rate of ** of the Net Sales of each HMRI Product which is not covered by a
Valid Claim of an HMRI Patent, OSI Patent or patent involving Joint
Improvements. The HOECHST Group shall pay OSI a royalty of ** of the Net Sales
of each HOECHST Group Product which is not covered by a Valid Claim of a HOECHST
Group Patent, OSI Patent or patent involving Joint Improvements. Such royalty
shall be paid in each country of the world for ten (10) years from the date of
first commercial sale of such HOECHST Group Product or HMRI Product, as
applicable, in each such country, except that in the case of countries signatory
to the Treaty
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of Rome said obligation to pay royalties shall terminate on the earlier of the
termination of said ten (10) year period or the date on which Joint Technology
enters the public domain.
5.7.4 Single Royalty. The parties acknowledge that only one
royalty rate, the highest one applicable, under either Section 5.7.1 or Section
5.7.2, as the case may be, and Section 5.7.3 will be applicable to Net Sales of
each HOECHST Group Product or HMRI Product, as applicable.
5.7.5 Third Party Royalties.
(a) Any royalty payable to any Third Party
including but not limited to royalties paid for licensed compounds (other than
royalties arising out of OSI Technology or HOECHST Group Technology), shall be
borne first by the HOECHST Group, provided that an amount equal to ** or less of
any such Third Party royalty may be offset against any royalties due OSI under
Section 5.7.1, 5.7.2, or 5.7.3, as the case may be, but only to the extent that
the amount paid to OSI is equal to or greater than ** of the total royalty that
would otherwise be due to OSI under Section 5.7.1, 5.7.2 or 5.7.3, as the case
may be, for the relevant period.
(b) Any royalty payable to any Third Party
arising out of OSI Technology or HOECHST Group Technology shall be payable
solely by OSI or the HOECHST Group, respectively.
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5.7.6 Payment Dates. Royalties shall be paid by the HOECHST
Group on Net Sales within ninety (90) days after the end of each calendar
quarter in which such Net Sales are made. Such payments shall be accompanied by
a statement showing the Net Sales of each HOECHST Group Product or HMRI Product
by the HOECHST Group in each country, the applicable royalty rate for such
HOECHST Group Product or HMRI Product, and a calculation of the amount of
royalty due.
5.7.7 Accounting. The Net Sales used for computing the
royalties payable to OSI by the HOECHST Group shall be computed and paid in U.S.
dollars. For purposes of determining the amount of royalties due with respect to
Net Sales in any foreign currency, the amount shall be computed generally by
converting the foreign currency amount into U.S. Dollars using for each month's
calculation the foreign currency exchange rate on the last day of the preceding
month or such other method as is consistent with the HOECHST Group's internal
foreign currency translation procedures, in any case, as actually used by the
HOECHST Group on a consistent basis in preparing its audited financial
statement.
5.7.8 Records. The HOECHST Group shall keep for three (3)
years from the date of each payment of royalties complete and accurate records
of sales by the HOECHST Group of each HOECHST Group Product or HMRI Product in
sufficient detail to allow the accruing royalties to be determined accurately.
OSI shall have the right for a period of three (3) years after receiving any
report or statement with respect to royalties due and payable to obtain at its
expense from the independent certified public accountant used by a
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member of the HOECHST Group for public reporting an audit of the relevant
records of the HOECHST Group to verify such report or statement. Each of the
members of the HOECHST Group shall make its records available for inspection by
such independent certified public accountant during regular business hours at
such place or places where such records are customarily kept, upon reasonable
notice from OSI, to the extent reasonably necessary to verify the accuracy of
the reports and payments. Such inspection right shall not be exercised more than
once in any calendar year nor more than once with respect to sales in any given
period. OSI agrees to hold in strict confidence all information concerning
royalty payments and reports, and all information learned in the course of any
audit or inspection, except to the extent necessary for OSI to reveal such
information in order to enforce its rights under this Agreement or disclosure is
required by law. The failure of OSI to request verification of any report or
statement during said three-year period shall be considered acceptance of the
accuracy of such report, and the members of the HOECHST Group shall have no
obligation to maintain records pertaining to such report or statement beyond
said three-year period. The results of the inspection shall be binding on both
parties.
5.7.9 Withholding Taxes. All amounts owing to OSI specified
in this Agreement shall be paid net of all applicable taxes, fees, and other
charges excluding only taxes on the HOECHST Group's income. The HOECHST Group
will assist OSI in minimizing the withholding tax applicable to any payment made
by the HOECHST Group hereunder and in claiming tax refunds at OSI's request.
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5.8 Representation and Warranty. OSI and the members of
the HOECHST Group represent and warrant to the others that they have the right
to grant to each other the licenses granted to them pursuant to this Agreement,
and that the licenses so granted do not conflict with or violate the terms of
any agreement between any of them and any Third Party.
5.9 Option for License. Upon the request of HMRI, HOECHST
or OSI, OSI and HMRI or HOECHST, as applicable, will enter into negotiations
with respect to a license agreement pursuant to which HMRI or HOECHST, or any of
their Affiliates, would acquire an exclusive, worldwide license, including the
right to grant sublicenses, to make, use and sell HRPI Products or HOECHST
Products, as applicable. The option hereinabove provided for will commence with
the Effective Date and expire four (4) years after the end of the Contract
Period unless such option is earlier terminated pursuant to the terms of this
Agreement. Such license agreement shall among other things provide for:
(i) payments by HMRI or HOECHST to OSI of a
royalty of ** of net sales for each HRPI Product or HOECHST Product,
respectively, employing OSI Option Patents or HRPI Patents, in the case of HRPI
Products, or OSI Option Patents or HOECHST Patents, in the case of HOECHST
Products, and ** of net sales for each HRPI Product or HOECHST Product,
respectively, employing only OSI Option Technology or HRPI Technology, in the
case of HRPI Products, or OSI Option Technology or HOECHST Technology, in the
case of HOECHST Products;
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** This portion redacted pursuant to a request for confidential treatment.
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(ii) if HRPI Patents, HOECHST Patents or
OSI Option Patents are involved, payments of the applicable royalty will be made
as long as the manufacture's use and/or sale of such HRPI Product or HOECHST
Product, as the case may be, would infringe a Valid Claim of an applicable
patent;
(iii) if Option Technology is involved
and there are no Valid Claims with respect thereto, payments of the applicable
royalty will be made with respect to sales in a Designated Country (as
hereinafter defined) until ten (10) years after the first commercial sale is
made in such Designated Country. The Designated Countries are USA, Canada,
Germany, United Kingdom, France, Spain, Italy and Japan; and
(iv) such other customary and other
terms as are negotiated between the parties.
5.10 Definitions. For purposes of this Agreement, the
following terms shall have the meanings specified herein:
(a) "OSI Option Technology" means all Option
Technology that pertains to an HOECHST Identified Target or HRPI Identified
Target and relates to transcriptional modulation of gene expression of the gene
encoding the HOECHST Identified Target or HRPI Identified Target, including all
improvements thereto and the use of such Option Technology to develop
transcription-based drugs, that is or was:
(i) developed by employees of, or
consultants to, OSI alone or jointly with third parties including HOECHST or
HRPI (or, if after January 1,
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1996 and with respect to a HRPI Identified Target or a HOECHST Identified
Target, HMRI); or
(ii) acquired by purchase, license,
assignment or other means from third parties by OSI. OSI Option Technology shall
include all such Option Technology other than HOECHST Technology or HRPI
Technology.
(b) "Option Technology" means and includes all
technology and technical information that pertains to the development of HRPI
Products or HOECHST Products, as the case may be, derived from the collaborative
research conducted pursuant to the HRPI-OSI Agreement or the HOECHST-OSI
Agreement, respectively, or the Research Program with respect to the HRPI
Identified Targets or HOECHST Identified Targets.
(c) "HOECHST Technology" means Option Technology
developed through the use of OSI Option Technology that pertains to a HOECHST
Identified Target and relates to specific chemical compounds or drugs or the
therapeutic use(s) of such compounds or drugs, that is or was:
(i) developed by employees of, or
consultants to, HOECHST (or if after January 1, 1996 and with respect to a
HOECHST Identified Target, HMRI) alone or jointly with third parties including
OSI; or
(ii) acquired by purchase, license,
assignment or other means from third parties by HOECHST (or, if after January 1,
1996 and with respect to a HOECHST Identified Target, either HOECHST or HMRI).
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(d) "HRPI Technology" means Option Technology
developed through the use of OSI Option Technology that pertains to specific
chemical compounds or drugs or the therapeutic use(s) of such compounds or
drugs, that is or was:
(i) developed by employees of, or
consultants to, HRPI (or, if after January 1, 1996 and with respect to a HRPI
Identified Target, HMRI or HOECHST) alone or jointly with third parties
including Affiliates of HRPI and OSI; or
(ii) acquired by purchase, license,
assignment or other means from third parties, including Affiliates of HRPI by
HRPI (or, if after January 1, 1996 and with respect to a HRPI Identified Target,
HMRI or HOECHST).
(e) "OSI Option Patents" shall mean all
applications for letters patent, whether domestic or foreign, which are
encompassed within OSI Option Technology, including all continuations,
continuations-in-part, divisions, renewals and patents and additions thereof,
all letters patent granted thereon, and all reissues and extensions thereof.
(f) "HRPI Patents" shall mean all applications
for letters patent, whether domestic or foreign, which are encompassed within
HRPI Technology, including all continuations, continuations-in-part, divisions,
renewals and patents and additions thereof, all letters patent granted thereon,
and all reissues and extensions thereof.
(g) "HOECHST Patents" shall mean all
applications for letters patent, whether domestic or foreign, which are
encompassed within HOECHST Technology, including all continuations,
continuations-in-part, divisions, renewals
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and patents and additions thereof, all letters patent granted thereon, and all
reissues and extensions thereof.
6. Provisions Concerning the Filing, Prosecution and Maintenance
of Patent Rights. The following provisions relate to the filing, prosecution and
maintenance of OSI Patents, OSI Option Patents, patents involving Joint
Improvements, HOECHST Group Patents, HOECHST Patents, HRPI Patents, and HMRI
Patents:
6.1 OSI Filing, Prosecution and Maintenance. OSI shall
have the exclusive right and obligation:
(a) to file applications for letters patent on
any patentable invention included in OSI Improvements, OSI Option Patents or in
Joint Improvements which relate to cell lines, cloning of cell lines and
methodologies for determining the effect of compounds on biochemical processes;
provided, however, that OSI shall provide to the HOECHST Group copies of all
patent applications prior to filing for the purpose of obtaining substantive
comment of the HOECHST Group patent counsel and consult with the HOECHST Group
regarding countries in which such patent applications should be filed and shall
file patent applications in those countries where the HOECHST Group requests
that OSI file; and further provided, that OSI, at its option and expense, may
file in countries where the HOECHST Group does not request that OSI file;
(b) to prosecute all pending and new patent
applications included within OSI Improvements, OSI Option Patents or Joint
Improvements
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which relate to cell lines, cloning of cell lines and methodologies for
determining effect of compounds on biochemical processes and to respond to
oppositions filed by Third Parties against the grant of letters patent for such
applications, provided that OSI shall also provide to the HOECHST Group copies
of all documents relating to prosecution of all patent applications and/or
oppositions filed by Third Parties in a timely manner for the purpose of
obtaining substantive comment of HOECHST Group patent counsel;
(c) to maintain in force any letters patent
included in OSI Patents and OSI Option Patents by duly filing all necessary
papers and paying any fees required by the patent laws of the particular country
in which such letters patent were granted;
(d) to notify the HOECHST Group in a timely
manner of any decision to abandon a pending patent application or an issued
patent included in OSI Patents and OSI Option Patents. Thereafter, the HOECHST
Group shall have the option, at its expense, of continuing to prosecute in its
own name any such pending patent application or of keeping the issued patent in
force; and
(e) to provide to the HOECHST Group every six
(6) months a report detailing the status of all patent applications that are
part of OSI Patents and OSI Option Patents.
6.2 HOECHST Group Filing, Prosecution and Maintenance.
The HOECHST Group shall have the exclusive right and obligation:
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(a) to file applications for letters patent on
any patentable invention included in HOECHST Improvements, HMRI Improvements,
HOECHST Patents, HRPI Patents or in Joint Improvements which relate to new
compounds and therapeutic uses or manufacturing processes of known compounds;
provided, however, that the HOECHST Group provide to OSI copies of all patent
applications prior to filing for the purpose of obtaining substantive comment of
OSI patent counsel and shall consult with OSI regarding countries in which such
patent applications should be filed and shall file patent applications in those
countries where OSI requests that the HOECHST Group file; and further provided,
that the HOECHST Group, at its option and expense, may file in countries where
OSI does not request that the HOECHST Group file;
(b) to prosecute all pending and new patent
applications included within HOECHST Improvements, HMRI Improvements, HOECHST
Patents, HRPI Patents or Joint Improvements which relate to new compounds and
therapeutic uses of known compounds and to respond to oppositions filed by Third
Parties against the grant of letters patent for such applications; provided that
the HOECHST Group shall also provide to OSI copies of all documents relating to
prosecution of all patent applications in a timely manner for the purpose of
obtaining substantive comment of OSI patent counsel;
(c) to maintain in force any letters patent
included in HOECHST Group Patents, HMRI Patents, HOECHST Patents and HRPI
Patents by duly
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filing all necessary papers and paying any fees required by the patent laws of
the particular country in which such letters patent were granted;
(d) to notify OSI in a timely manner of any
decision to abandon a pending patent application or an issued patent included in
HOECHST Group Patents, HMRI Patents, HOECHST Patents and HRPI Patents.
Thereafter, OSI shall have the option, at its expense, of continuing to
prosecute any such pending patent application or of keeping the issued patent in
force; and
(e) to provide to OSI every six (6) months a
report detailing the status of all patent applications that are part of HOECHST
Group Patents, HMRI Patents, HOECHST Patents and HRPI Patents.
6.3 Reimbursement of Expenses. The HOECHST Group will
reimburse OSI for its reasonable out-of-pocket costs incurred after the
Effective Date to file, prosecute, issue, maintain and extend patent
applications and patents within the OSI Patents and OSI Option Patents in
countries in which the HOECHST Group has requested OSI to file. OSI agrees to
utilize the in- house patent services and capabilities of the HOECHST Group
wherever practicable. OSI will reimburse the HOECHST Group for its reasonable
out-of-pocket costs incurred after the Effective Date to file, prosecute, issue,
maintain and extend patent applications and patents within the HOECHST Group
Patents, HMRI Patents, HRPI Patents and HOECHST Patents in countries in which
OSI has requested the HOECHST Group to file that the HOECHST Group would not
have otherwise filed. The HOECHST
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Group agrees to utilize the in-house patent services and capabilities of OSI
wherever practicable.
6.4 Patent Extensions. In the event any patent in the OSI
Patents, OSI Option Patents, HOECHST Group Patents, HMRI Patents, HRPI Patents
or HOECHST Patents is eligible for extension or Supplementary Protection
Certificate, the Research Committee shall determine for which patents,
applications for extension shall be filed.
6.5 Legal Action.
6.5.1 Actual or Threatened Disclosure or
Infringement. When information comes to the attention of the HOECHST Group to
the effect that any patent or Joint Technology relating to a Product have been
or are threatened to be unlawfully disclosed or that any of the exclusive rights
granted by this agreement has been or is threatened to be unlawfully infringed,
the HOECHST Group shall have the right at its expense to take such action as it
may deem necessary to prosecute or prevent such unlawful disclosure or
infringement, including the right to bring or defend any suit, action or
proceeding involving any such disclosure or infringement. The HOECHST Group
shall notify OSI promptly of the receipt of any such information and of the
commencement of any such suit, action or proceeding. If the HOECHST Group
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 the HOECHST Group to act in OSI's name.
In the event that the HOECHST Group brings a suit, it shall have the right first
to reimburse
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itself out of any sums recovered in such suit or in its settlement for all
reasonable costs and expenses of every kind and character, including reasonable
attorney's fees, involved in-the prosecution of any suit, and twenty-five
percent (25%) of any funds that shall remain from said recovery shall be
distributed to OSI and the balance of such funds shall be retained by the
HOECHST Group.
If the HOECHST Group does not, within one hundred twenty (120)
days after giving notice to OSI of the above-described information, notify OSI
of the HOECHST Group'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, and may cause the HOECHST Group to be joined as a party
plaintiff, if appropriate, in which event OSI shall hold the HOECHST Group free,
clear, and harmless from any and all costs and expenses of such litigation,
including attorney's fees, and any sums recovered in any such suit or in its
settlement shall belong to OSI. However, twenty-five percent (25%) of any such
sums received by OSI, after deduction of the costs and expenses of litigation,
including attorney's fees paid, shall be paid to the HOECHST Group. Each party
shall always have the right to be represented by counsel of its own selection
and at its own expense in any suit instituted by the other for infringement,
under the terms of this Section. If the HOECHST Group lacks standing to bring
any such suit, action, or proceeding, then OSI shall do so at the request of the
HOECHST Group and at the HOECHST Group's expense.
6.5.2 Defense of Infringement Claims. If OSI or
the HOECHST Group, any of their respective licensees or their customers shall be
sued by a
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Third Party for infringement of a patent because of the research, development,
manufacture, use or sale of Products, the party which has been sued shall
promptly notify the others in writing of the institution of such suit. OSI shall
give to the HOECHST Group all authority (including the right to exclusive
control of the 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), information and assistance necessary to defend or settle
any such suit, action, or proceeding. The parties shall share the expenses of
implementing the agreed defense on the following basis:
(a) If the alleged infringement is due to the
use of OSI Technology or OSI Option Technology, then the expenses shall be borne
equally by the HOECHST Group and OSI.
(b) If the alleged infringement is due to the
sale of a Product by the HOECHST Group, then the HOECHST Group shall bear 75% of
the expense and OSI shall bear 25% of the expense; provided that OSI's sole
obligation will be paid in the form of a 50% reduction during the pendency of
the action (but not after it has been concluded) in the royalty otherwise
payable by the HOECHST Group or a 50% credit against future royalties until
OSI's share of the expenses of such suit are recovered. If such suit results in
any award or settlement paid in favor of the HOECHST Group or OSI, such amount
shall be shared in the same proportion as the expenses of such suit have been
actually borne. OSI's sharing of the expense of any suit shall be limited to the
foregoing royalty reduction and if the royalty reduction and OSI's share of any
award shall not be sufficient to cover its share of the
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expenses of such suit, OSI shall not be obligated to make up the shortfall. If
it is agreed that if one party shall conduct the defense, the other shall have
the right to be represented by advisory counsel of its own selection, at its own
expense, and shall cooperate fully in the defense of such suit and furnish to
the other all evidence and assistance in its control.
6.5.3 Hold Harmless. OSI agrees to defend,
protect, indemnify, and hold harmless the HOECHST Group and any sublicensee of
the HOECHST Group, from and against any loss or expense arising from any proven
claim of a Third Party that it has been granted rights by OSI that the HOECHST
Group or any sublicensee of the HOECHST Group in exercising their rights granted
to the HOECHST Group by OSI pursuant to this Agreement, has infringed upon such
rights granted to such Third Party by OSI. The HOECHST Group agrees to defend,
protect, indemnify, and hold harmless OSI from and against any liability, claim,
loss, cost, or expense arising from any claim for product liability based upon
the HOECHST Group's manufacture, use, or sale of any Product.
6.5.4 Third Party Licenses. If the HOECHST Group
and OSI agree the manufacture, use, or sale by the HOECHST Group of a Product,
in any country would infringe a patent owned by a Third Party, the HOECHST Group
and OSI shall attempt to obtain a license under such patent. If the HOECHST
Group obtains a license under such patent, ** of any payments made by the
HOECHST Group to such Third Party shall be deductible from royalty payments due
from the HOECHST Group to OSI pursuant to this
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** This portion redacted pursuant to a request for confidential treatment.
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Agreement; provided, however, that in no event shall royalties payable to OSI be
reduced by more than ** as a result of all such deductions. All such
computations, payments, and adjustments shall be on a country by country and
patent by patent basis. If either the HOECHST Group or OSI is of the opinion
that such manufacture, use, or sale would not infringe such patent owned by a
Third Party, the HOECHST Group may, at its election, bring suit against such
Third Party seeking a declaration that such patent is invalid or not infringed
by the HOECHST Group's manufacture, use or sale of Product, involved, or may
bring opposition, nullity, or other proceedings against such patent, as
appropriate. If the HOECHST Group is successful in such suit, the HOECHST Group
shall continue to pay royalties in such country as provided in Article 5. If the
HOECHST Group does not bring such suit or is unsuccessful in such suit, it shall
join OSI in an attempt to obtain a license under such patent, and royalty
payments made by the HOECHST Group to such Third Party for such license shall be
as provided in paragraph 6.5.2.
7. Other Rights of the Parties.
7.1 Other OSI Ventures. Except as provided in paragraphs
2.4, OSI shall have the right to apply for, and receive grants or contracts
from, public and private sources, including without limitation, the National
Institutes of Health, the American Cancer Society, and the National Science
Foundation. Except as provided in paragraph 2.2, OSI shall also have the right
to enter into co-venture arrangements, whether written or oral, with Third
Parties to develop any product.
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** This portion redacted pursuant to a request for confidential treatment.
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7.2 Acquisition of Rights from Third Parties. During the
Contract Period, OSI and the HOECHST Group shall promptly notify each other in
writing of any and all opportunities to acquire in any manner from Third
Parties, technology or patents which may be useful in, or may relate to the
Research Program. The Research Committee shall decide if such rights should be
acquired and, if so, whether by OSI or the HOECHST Group. If acquired, such
rights shall become part of Joint Technology.
8. Term, Extension, Termination and Disengagement.
8.1 Term. Unless sooner terminated or extended, this
Agreement shall expire on the later of March 31, 2002 or the last to expire of
any obligation to pay royalties.
8.2 Events of Termination. The following events shall
constitute events of termination ("Events of Termination"):
(a) Any representation or warranty by OSI or the
HOECHST Group, or any of their officers, under or in connection with this
Agreement shall prove to have been incorrect in any material respect when made.
(b) OSI or the HOECHST Group 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 thirty
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(30) days after written notice to the failing party. Section 3.1.6 shall not be
the basis of an Event of Termination or the basis of any claim for monetary or
other relief.
(c) The occurrence of a change of control of one
of the parties. A change of control shall be deemed to have occurred if, after
the date of this Agreement, (i) any Third Party acquires a majority of the
shares of a party or acquires a right to control the voting of a majority of
shares of a party, (ii) any Third Party acquires sufficient shares or the right
to control the votes of sufficient shares to enable such Third Party to elect a
majority of the board of directors of a party, or (iii) any person acquires the
power through share ownership or otherwise to designate a majority of the board
of directors of a party.
8.3 Termination.
8.3.1 Upon the occurrence of any Event of
Termination, the party not responsible may, by notice to the other parties,
terminate this Agreement subject to compliance with the terms of Article 11.
8.3.2 If the HOECHST Group terminates this
Agreement pursuant to Section 8.3.1, (i) the license and the obligation to pay
royalties as provided in Section 5.7 shall continue and (ii) the option to
negotiate a license pursuant to Section 5.9 shall continue. If OSI terminates
this Agreement pursuant to Section 8.3.1, (i) the license and the obligation to
pay royalties as provided in Section 5.7 shall terminate and (ii) the option of
the HOECHST Group to negotiate a license pursuant to Section 5.9 shall
terminate.
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8.4 Termination by the HOECHST Group. After this
Agreement has been in effect for a period of thirty-six (36) months, the HOECHST
Group may terminate this Agreement, with or without cause, upon six (6) months
notice to OSI. Upon receipt of such notice, OSI may, at its sole option,
terminate all work under the Research Program unless otherwise agreed with the
HOECHST Group. If the HOECHST Group terminates this Agreement pursuant to this
Section, it will make the Funding Payments which would otherwise have been due
for such six-month period and will retain all rights set forth herein, subject
to the payment of royalties herein required.
9. Representations and Warranties. OSI, HMRI and HOECHST each
represents and warrants as follows:
9.1 It is a corporation duly organized, validly existing
and is in good standing under the laws of, in the case of OSI and HMRI, the
State of Delaware and in the case of HOECHST, Germany, 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 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.
9.2 The execution, delivery and performance by it of this
Agreement have been duly authorized by all necessary corporate action and do not
and will not (a) require any consent or approval of its stockholders, (b)
violate any provision of any law, rule,
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regulation, order, writ, 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 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.
9.3 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 creditor's rights generally.
9.4 It is not under any obligation to any Third Party,
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.
9.5 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 and the Research Program, subject to no
claim of any Third Party other than the relevant lessors or licensors.
10. Covenants of OSI.
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10.1 Affirmative Covenants of OSI Other Than Reporting
Requirements. Throughout the Contract Period, OSI shall:
10.1.1 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 of its business and operations or the ownership
of its properties.
10.1.2 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.
11. Dispute Resolution.
11.1 Mediation Committee. The Chief Executive Officers of
the parties shall constitute the Mediation Committee. In the event OSI or the
HOECHST Group believes that the other has breached the Agreement or failed to
meet a condition or milestone required to be met, or a dispute has arisen
between the parties, the parties agree that, before any party initiates
arbitration proceedings pursuant to Section 11.6, it shall give the other
parties notice and shall demand that the members of the Mediation Committee
attempt to resolve the matter amicably. If the Mediation Committee is unable to
resolve a matter within five (5) days of submission of the matter to it via
telephone, telefax or other written or oral contact, the Committee shall meet in
person, not later than fifteen (15) days following
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submission of the matter to it, at a mutually convenient place to attempt in
good faith to resolve the dispute. If the Mediation Committee is unable to
resolve a dispute on any matter other than those set forth in Section 11.2
herein, unless a mutually acceptable extension is agreed upon by the Mediation
Committee, either side shall have the right, but not the obligation, to initiate
arbitration proceedings respecting the matter under review, in accordance with
Section 11.6.
11.2 Non-Arbitrable Issues. If the Mediation Committee is
unable to resolve any matters relating to modification of the Research Program,
such matter shall not be submitted to arbitration pursuant to Section 11.3
hereof but instead shall be resolved in accordance with the applicable provision
of this Agreement.
11.3 Scope of Arbitration. The parties agree that all
disputes except those set forth in Section 11.2 above arising under this
Agreement shall be resolved by arbitration in accordance with the provisions of
this Article 11; provided, however, that during the period of arbitration on any
dispute the parties shall continue to fulfill their obligations as set forth in
this Agreement.
11.4 Arbitration Panel. The arbitration shall be held
before a panel of three (3) persons (the "Arbitration Panel").
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11.4.1 Selection. Within fifteen (15) days of the
appointment of the two initial arbitrators, the two arbitrators so appointed
shall appoint the third arbitrator, who shall be an attorney and shall act as
chair of the Arbitration Panel.
11.4.2 Qualifications. The two arbitrators selected
by the parties hereto shall have experience in the pharmaceutical and/or
biotechnology industry. None of the arbitrators shall be employed or retained by
or otherwise related to OSI or the HOECHST Group.
11.4.3 Failure to Name. If a party fails to name
its arbitrator within thirty (30) days of the receipt of the Notice Arbitration,
then the arbitrator already named shall immediately select the second
arbitrator. The two arbitrators so appointed shall appoint the third arbitrator,
who shall be an attorney and shall act as chair of the Arbitration Panel.
11.4.4 Right to Select Replacement. In the event
that an arbitrator refuses or is otherwise unable to serve as such, the party or
the other arbitrator(s) as the case may be, who selected such arbitrator shall
have the right to select his/her replacement. Such replacement shall be selected
within fifteen (15) days of the refusal or inability by such arbitrator to
serve.
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11.5 Designation of Rules, Situs, Governing Law.
11.5.1 Designation of Rules. The parties agree that
the arbitrators shall apply the Federal Rules of Evidence as they are applied in
cases tried to a court sitting without a jury; unless the parties agree
otherwise, the opinions of expert witnesses shall not be admissible. The parties
agree that discovery proceedings shall be limited to: (a) the dispute; (b)
depositions of those persons having direct knowledge of the dispute; and (c)
submission of all documents which relate to the dispute.
11.5.2 Situs. The arbitration hearing shall be held
in New York unless otherwise mutually agreed.
11.5.3 Governing Law. The arbitrators shall
interpret the Agreement in accordance with the laws of New York.
11.6 Procedure.
11.6.1 Conciliation Period. No party shall send a
Notice of Arbitration in connection with a dispute under this Article 11 unless
at least thirty (30) days prior to the date of such Notice of Arbitration, such
party shall have furnished to the other parties written notice of its intent to
send a Notice of Arbitration in connection with a dispute. Such 30-day period is
referred to as the "Conciliation Period." During the Conciliation Period, the
parties shall attempt in good faith to settle the dispute.
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11.6.2 Notice of Arbitration. The party seeking to
institute arbitration (hereinafter, a "Claimant") shall do so by sending the
other parties (hereinafter, each a "Respondent") a written notice of arbitration
(the "Notice of Arbitration"). The Notice of Arbitration shall set forth in
detail the nature of the dispute. The Notice of Arbitration shall also designate
the arbitrator appointed by the Claimant and set forth a full Curriculum Vitae
or resume showing that the arbitrator meets the qualifications set forth in
Section 11.4 2.
11.6.3 Response. Within thirty (30) days of the
Notice of Arbitration, the Respondent shall send the Claimant a written Response
including any counterclaims (the "Response"). The Response shall also designate
the arbitrator appointed by the Respondent and set forth a full Curriculum Vitae
or resume showing that the arbitrator meets the qualifications set forth in
Section 11.4.2. If the Response sets forth a counterclaim, the Claimant may,
within fifteen (15) days of the receipt of the Response, deliver to the
Respondent and the arbitrators a Rejoinder (the "Rejoinder") answering such
counterclaim.
11.6.4 Discovery. Within sixty (60) days of the
date of the Response, each party shall submit to the other parties and to the
arbitrators one (1) copy of all documents in the possession, custody or control
of the party or its Affiliates, which are relevant for a settlement of the
dispute set forth in the Notice of Arbitration, Response or Rejoinder. Within
forty-five (45) days of the date of the Response, each party shall submit to the
other parties a list of all witnesses intended to be called at the hearing. Each
party shall use its best efforts to make available for deposition within thirty
(30) days after the delivery of the list of witnesses at each party's respective
location of its operations, all of its agents,
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<PAGE> 65
employees, and Affiliates who have direct knowledge of the dispute at such times
and places that shall not unreasonably disrupt the business of the other
parties. The Chair of the Arbitration Panel shall determine all discovery
disputes and may enforce a decision by imposing appropriate sanctions on the
non-complying party(s).
11.6.5 Record. A stenographic record of all
proceedings shall be made and oaths administered by a duly licensed and
qualified court reporter. The court reporter shall prepare five (5) copies of
the stenographic record of such proceeding and shall send one (1) copy to each
of the arbitrators and to each of the parties within seven (7) days of the
relevant proceeding under this Section.
11.6.6 Attendance at Hearing. Each party may be
represented by an attorney at all hearings before the Arbitration Panel. The
Arbitration Panel shall have the power to require the exclusion of any witness,
other than a party or other essential person, during the testimony of any other
witness. Unless the law provides to the contrary, the arbitration may proceed in
the absence of any party or representative who, after due notice, fails to be
present or fails to obtain a postponement. An award shall not be made solely on
the default of a party; the Arbitration Panel shall require the party who is
present to submit such evidence as it may require for the making of an award.
11.6.7 Postponement of Hearing. The Arbitration
Panel, for good cause shown, may postpone any hearing under any of the following
conditions: (i) upon
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the request of a party, (ii) upon its own initiative, and (iii) upon mutual
agreement by the parties.
11.6.8 Post-Hearing Filings. Any post-hearing
briefs shall be made by the parties to the Arbitration Panel and the other party
within fourteen (14) business days following the hearing. Each party shall be
afforded an opportunity to examine any post-hearing filings and to provide a
response to the Arbitration Panel within seven (7) business days of the receipt
of a post-hearing filing.
11.6.9 Award Opinion. The Arbitration Panel shall
issue an opinion with respect to any dispute. The arbitrators shall issue a
Final Decision within one (1) month from the final hearing on any dispute. Such
opinion shall be written in the form of "Findings of Fact" and "Conclusions of
Law," and shall include the reasons for a decision. A Final Decision shall be
binding on both parties.
11.6.10 Rehearing. The parties agree that a
rehearing shall only be allowed in the event that the Chair of the Arbitration
Panel is unable or unwilling to continue performance of the duties of an
arbitrator.
11.6.11 Confidentiality. All arbitration proceedings
hereunder shall be conducted on a confidential basis. The parties and the
arbitrators shall not disclose or otherwise make public any information revealed
during the proceedings or any Final Decision which may result from the
proceedings.
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<PAGE> 67
11.6.12 Waiver. Any arbitration proceeding hereunder
must be instituted within two (2) years after the controversy or claim arose.
Failure to send a Notice of Arbitration within such two-year period shall
constitute an absolute bar to the institution of any proceedings respecting such
controversy or claim, and a waiver thereof.
11.7 Authority of Arbitrators.
11.7.1 Awards. The arbitrators shall have the power
to award money damages and equitable relief such as rescission, specific
performance and injunctive relief. The arbitrators shall not award punitive or
exemplary damages nor any damages based on a claim for tortious conduct.
11.7.2 Modification of Article 11. The Arbitration
Panel shall not have the power to amend, change or alter any provision of this
Article 11 without the express written consent of all parties.
11.8 Awards.
11.8.1 Judgment. Judgment upon the award rendered
by the arbitrators shall be enforceable in any court of competent jurisdiction.
Each party agrees to submit to the personal jurisdiction of that court for
purposes of the enforcement of any such award.
11.8.2 Fees and Expenses. All fees of the
arbitrators and the court stenographer shall be paid by the party who does not
prevail in the arbitration as
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<PAGE> 68
determined by the arbitrators. In the event a settlement occurs before the
issuance of a Final Decision, the parties shall unless otherwise agreed, each
pay an equal portion of any fees of the arbitrators and the court stenographer
and the cost of any transcripts. All other arbitration-related expenses shall be
borne by the party incurring such expenses.
12. Notices. All notices shall be mailed via certified mail,
return receipt requested, telecopy or courier addressed as follows, or to such
other address as may be designated from time to time:
If to the HOECHST Group: To HMRI and HOECHST at its address as
set forth at the beginning of this Agreement
Telecopy:
Telecopy:
Attention: President
with copy to: Office of the General
Counsel
If to HOECHST: To HOECHST at its address as set forth at
the beginning of this Agreement
Telecopy:
Attention: President
with copy to: Office of the General
Counsel
Telecopy:
If to HMRI: To HMRI at its address as set forth at the
beginning of this Agreement
Telecopy:
Attention: President
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<PAGE> 69
with copy to: Office of the General
Counsel
Telecopy: (816) 966-3805
If to OSI: To OSI at its address as set forth at the
beginning of this Agreement
Telecopy:
Attention: Chief Executive Officer
Notices shall be deemed given as of the date of receipt.
13. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York.
14. Termination of HRPI-OSI Agreement and HOECHST-OSI Agreement.
Contemporaneously with the execution and delivery of this Agreement, the parties
acknowledge and agree that the provisions of the HRPI-OSI Agreement and the
HOECHST-OSI Agreement shall terminate. This Agreement constitutes the entire
understanding of the parties related to the subject matter hereof and supersedes
all prior agreements and understandings among the parties with respect to the
subject matter hereof.
15. Miscellaneous.
15.1 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.
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<PAGE> 70
15.2 Headings. Paragraph headings are inserted for
convenience of reference only and do not form a part of this Agreement.
15.3 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original.
15.4 Amendment; Waiver; etc. This Agreement may be
amended, modified, superseded or canceled, and any of the terms may be waived,
only by a written instrument executed by each party or, in the cause 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.
15.5 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. Nothing contained in
this Agreement shall be deemed to constitute the parties partners with each
other or any Third Party.
15.6 Assignment and Successors. This Agreement may not be
assigned by either party, except that the parties may assign this Agreement and
their rights and interests, in whole or in part, to any of their Affiliates, any
purchaser of all or substantially all of its assets or to any successor
corporation resulting from any merger or consolidation with or into such
corporation.
-63-
<PAGE> 71
15.7 Compliance with Antitrust/Competition Law. The
parties acknowledge and undertake that they shall use commercially reasonable
efforts to comply with all applicable antitrust/competition laws which may
relate to this Agreement from time to time.
-64-
<PAGE> 72
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
HOECHST MARION ROUSSEL, INC.
By:____________________________________
Name:_________________________
Title:________________________
HOECHST AKTIENGESELLSCHAFT
By:____________________________________
Name:_________________________
Title:________________________
By:____________________________________
Name:_________________________
Title:________________________
ONCOGENE SCIENCE, INC.
By:____________________________________
Name:_________________________
Title:________________________
-65-
<PAGE> 73
EXHIBIT A-1
HMRI IDENTIFIED TARGET
**
- -----------------
** This portion redacted pursuant to a request for confidential treatment.
<PAGE> 74
EXHIBIT A-2
HOECHST IDENTIFIED TARGET
**
- -----------------
** This portion redacted pursuant to a request for confidential treatment.
<PAGE> 75
EXHIBIT A-3
HOECHST GROUP IDENTIFIED TARGETS
**
- -----------------
** This portion redacted pursuant to a request for confidential treatment.
<PAGE> 76
EXHIBIT A-4
HRPI IDENTIFIED TARGET
**
- -----------------
** This portion redacted pursuant to a request for confidential treatment.
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