<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 December 31, 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
OSI Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3159796
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
106 Charles Lindbergh Boulevard, Uniondale, New York 11553
(Address of principal executive offices) (Zip Code)
516-222-0023
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No___
APPLICABLE ONLY TO CORPORATE ISSUERS:
At January 31, 1998 the registrant had outstanding 21,369,283 shares of common
stock $.01 par value.
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OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONTENTS
Page No.
--------
PART I - FINANCIAL INFORMATION........................................... 3
Item 1. Financial Statements
Consolidated Balance Sheets
- December 31, 1997 and September 30, 1997...................... 3
Consolidated Statements of Operations
- Three months ended December 31, 1997 and 1996................. 5
Consolidated Statements of Cash Flows
- Three months ended December 31, 1997 and 1996................. 6
Notes to Consolidated Financial Statements...................... 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 12
PART II - OTHER INFORMATION.............................................. 13
Item 1. Legal Proceedings............................................... 13
Item 2. Changes in Securities........................................... 13
Item 3. Defaults Upon Senior Securities................................. 13
Item 4. Submission of Matters to a Vote of Security Holders............. 13
Item 5. Other Information............................................... 13
Item 6. Exhibits and Reports on Form 8-K................................ 13
SIGNATURES............................................................... 15
EXHIBIT INDEX............................................................ 16
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30,
Assets 1997 1997
----------- -----------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,988,035 $ 8,636,634
Short-term investments 20,974,690 23,198,035
Receivables, including
trade receivables of $257,626 and
$350,100 at December 31, 1997 and
September 30, 1997, respectively 1,857,264 1,215,672
Interest receivable 351,852 475,800
Grants receivable 260,994 179,740
Prepaid expenses and other 798,894 820,151
----------- -----------
Total current assets 32,231,729 34,526,032
----------- -----------
Property, equipment and leasehold
improvements - net 7,762,339 7,752,286
Compound library assets - net 6,496,902 6,800,406
Loans to officers and employees 34,317 34,317
Other assets 1,434,352 1,287,782
Intangible assets - net 8,819,556 9,184,742
----------- -----------
$56,779,195 $59,585,565
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 3,256,159 $ 4,180,039
Current portion of unearned revenue 1,207,884 733,377
----------- -----------
Total current liabilities 4,464,043 4,913,416
----------- -----------
Other liabilities:
Loan payable 134,263 151,985
Deferred acquisition costs 640,826 630,796
Accrued postretirement benefits cost 994,796 944,500
----------- -----------
Total liabilities 6,233,928 6,640,697
----------- -----------
</TABLE>
(continued)
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<PAGE> 4
OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
December 31, September 30,
Liabilities and Stockholders' Equity (cont'd) 1997 1997
------------- -------------
(unaudited)
<S> <C> <C>
Stockholders' equity:
Common stock, $.01 par value;
50,000,000 shares authorized,
22,267,121 and 22,262,220
issued and outstanding at
December 31, 1997 and
September 30, 1997, respectively 222,671 222,622
Additional paid-in capital 104,885,283 104,864,056
Treasury stock, at cost 897,838 shares at
December 31, 1997 and
September 30, 1997 (6,284,866) (6,284,866)
Accumulated deficit (48,126,443) (45,657,713)
Cumulative translation adjustments (67,478) (101,531)
Unrealized holding loss on
short-term investments (83,900) (97,700)
------------- -------------
Total stockholders' equity 50,545,267 52,944,868
------------- -------------
Commitments and contingencies
$ 56,779,195 $ 59,585,565
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
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OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Revenues:
Collaborative program revenues,
principally from related parties $ 3,507,426 $ 1,833,182
Sales 198,766 276,710
Other research revenue 480,431 204,897
------------ ------------
4,186,623 2,314,789
------------ ------------
Expenses:
Research and development 4,881,891 3,474,333
Selling, general and administrative 1,784,263 1,768,856
Amortization of intangibles 365,186 365,185
------------ ------------
7,031,340 5,608,374
------------ ------------
Loss from operations (2,844,717) (3,293,585)
Other income (expense):
Net investment income 401,237 603,458
Other (25,250) (6,327)
------------ ------------
Net loss $ (2,468,730) $ (2,696,454)
============ ============
Weighted average number of shares
of common stock outstanding 21,366,603 22,176,112
============ ============
Basic net loss per share $ (.12) $ (.12)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 6
OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,468,730) $(2,696,454)
Adjustments to reconcile net loss
to net cash used by operating activities:
Gain (loss) on sale of investments (4,764) (6,411)
Depreciation and amortization 450,243 404,804
Amortization of library assets 450,739 275,376
Amortization of intangibles 365,186 365,185
Amortization of warrants 10,030 --
Foreign exchange (gain) loss 34,053 14,309
Changes in assets and liabilities:
Receivables (641,592) (601,991)
Interest receivable 123,948 (5,870)
Grants receivable (81,254) (204,897)
Prepaid expenses and other 21,257 (37,307)
Other assets (146,570) (225,060)
Accounts payable
and accrued expenses (923,880) (664,679)
Unearned revenue 474,507 (49,227)
Accrued postretirement
benefits cost 50,296 10,896
----------- -----------
Net cash used by
operating activities $(2,286,531) $(3,421,326)
----------- -----------
Cash flows from investing activities:
Additions to short-term
investments $(2,907,127) $(2,269,650)
Maturities and sales of short-term
investments 5,149,036 5,851,675
Additions to library assets (147,235) --
Additions to property,
equipment and leasehold
improvements (460,296) (476,411)
----------- -----------
Net cash provided by investing
activities $ 1,634,378 $ 3,105,614
----------- -----------
</TABLE>
(continued)
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<PAGE> 7
OSI PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
-------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from financing activities:
Proceeds from exercise
of stock options and
employee stock purchase plan $ 21,276 $ 50,210
Net change in loans payable (17,722) 148,899
------------ ------------
Net cash provided by financing
activities $ 3,554 $ 199,109
------------ ------------
Net decrease in cash and cash
equivalents (648,599) (116,603)
Cash and cash equivalents at
beginning of period $ 8,636,634 $ 13,409,866
------------ ------------
Cash and cash equivalents
at end of period $ 7,988,035 $ 13,293,263
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 8
OSI PHARMACEUTICALS, 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 OSI
Pharmaceuticals, Inc. and its subsidiaries (the "Company") as of December 31,
1997 and September 30, 1997, and its results of operations and cash flows for
the three months ended December 31, 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 1997 Annual Report on Form 10-K.
Results for interim periods are not necessarily indicative of results for the
entire year.
(2) Net Loss Per Share
Effective December 31, 1997, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 128, "Earnings Per Share," which replaced
the calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share. Basic loss per share is computed by dividing the
net loss by the weighted-average number of common shares outstanding during the
period. Diluted loss per share is not presented as the inclusion of potential
common shares (stock options and warrants) would be antidilutive.
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<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
REVENUES
Revenues for the three months ended December 31, 1997 were approximately $4.2
million, an increase of $1.9 million or 81%, compared to revenues of $2.3
million for the three months ended December 31, 1996. Collaborative program
revenues increased approximately $1.7 million or 91%. 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")
to discover and develop novel pharmaceutical products to treat influenza; (3)
Bayer Corporation ("Bayer") for the continuing development of serum-based cancer
diagnostics; and (4) Anaderm Research Corp. ("Anaderm") for the commencement on
October 1, 1997, of the funded phase of the research agreement among the
Company, Anaderm and Pfizer Inc. ("Pfizer"). 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. Sales revenue,
representing primarily service revenue from the pharmaceutical division of the
Company's Aston Molecules Ltd. ("Aston") subsidiary, which the Company acquired
in September 1996, decreased approximately $78,000 or 28%. The decrease was
primarily due to the Company's decision to devote certain of Aston's resources
to internal programs as opposed to sales outside the Company. Other research
revenues, representing primarily government and other research grants, increased
approximately $276,000 or 134%. The increase was primarily related to new
government grants and to the inclusion of a Muscular Dystrophy grant from the
Association Francaise Contre Les Myopathies.
EXPENSES
The Company's operating expenses increased by approximately $1.4 million or 25%
for the three months ended December 31, 1997, compared to the three months ended
December 31, 1996. Research and development expenses increased approximately
$1.4 million or 41%. The increase was due to the expansion of the Company's
joint venture with Anaderm for the discovery and development of novel compounds
to treat baldness, wrinkles and pigmentation disorders; the new joint venture
with Sepracor, Inc. ("Sepracor") for the discovery of certain anti-infective and
anti-inflammatory agents, and the new collaborative agreement with Sankyo for
the discovery and development of novel pharmaceutical products to treat
influenza. Although the Company incurred expenses in connection with its chronic
anemia program with HMRI, 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 proprietary program in this area. Also
contributing to the increase in expenses were costs associated with the
expansion of the Company's natural products discovery and medicinal
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<PAGE> 10
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.
OTHER INCOME AND EXPENSE
Investment income decreased approximately $202,000 or 34% for the three months
ended December 31, 1997 compared to the three months ended December 31, 1996.
The decrease relates to the decrease in the principal balance invested.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, working capital (representing primarily cash, cash
equivalents and short-term investments) aggregated approximately $27.8 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.
In connection with the formation of Helicon Therapeutics, Inc. ("Helicon") in
July 1997, the Company agreed to perform $1 million of molecular screening
services for Helicon through approximately July 1998 (and grant to Helicon a
non-exclusive license with respect to certain screening technology) in exchange
for its shares of Helicon's capital stock. Helicon is to provide research
funding to the Company for the second and third years of the initial three-year
term of this program. In addition, pursuant to its agreement with Pfizer and
Anaderm, the Company will contribute approximately $800,000 in drug discovery
resources (including assay biology, high throughput screening, lead optimization
and chemistry) to Anaderm in fiscal 1998 and, assuming Anaderm achieves certain
milestones, approximately an additional $1 million in such resources through
fiscal 1999.
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
three to four years based on its current business 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 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
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<PAGE> 11
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
Hoffman-La Roche Inc., the formation of Anaderm in April 1996 with Pfizer and
New York University, and the Company's co-ventures with BioChem Pharma
(International) Inc., which commenced in May 1996, and with Sepracor, 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.
YEAR 2000 COMPLIANCE
The Company is currently working to resolve the potential impact of the Year
2000 on the processing of date-sensitive information by the Company's
computerized information systems. The Year 2000 problem is the result of
computer programs being written using two digits (rather than four) to define an
applicable year. Substantially all of the Company's biology and chemistry
databases are stored on Oracle tables and ISIS chemical structure databases,
which are Year 2000 compliant, as are its Novell network servers. The Company
currently plans to convert its financial records to an Oracle based system and
is in the process of implementing a new planning and budgeting package both of
which are Year 2000 compliant. Based on current information, costs of addressing
remaining potential problems are not expected to have a material adverse impact
on the Company's financial position, results of operations, or cash flows in
future periods.
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NEW ACCOUNTING PRONOUNCEMENTS
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income," SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," and SFAS No. 132, "Employers' Disclosures about Pensions and
Other Postretirement Benefits." SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components. SFAS No. 131
establishes standards for reporting information about operating segments and
related disclosures about products and services, geographic areas and major
customers. SFAS No. 132 revises current disclosure requirements for employers'
pensions and other retiree benefits. These standards are effective for years
beginning after December 15, 1997. These standards expand or modify current
disclosures and, accordingly, will have no impact on the Company's reported
financial position, results of operations and cash flows.
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. Various factors
that may cause the Company's actual future experience to differ materially from
the descriptions contained in future looking statements herein are discussed in
Exhibit 99 to the Company's annual report on Form 10-K for the fiscal year ended
September 30, 1997.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
3.1 Certificate of Incorporation, as amended
3.2 By-Laws, as amended (1)
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.
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<PAGE> 14
(b) REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K on October 6,
1997. The earliest event covered by such report occurred on
October 1, 1997. The item included on this report consisted
of:
Item 5. Other Events
Effective October 1, 1997, the Company changed its
name and Nasdaq National Market Symbol to OSI
Pharmaceuticals, Inc. and "OSIP," respectively.
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<PAGE> 15
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.
OSI PHARMACEUTICALS, INC.
Date: February 13, 1998 /s/ Gary E. Frashier
--------------------------------
Gary E. Frashier
Chairman and Chief Executive Officer
Date: February 13, 1998 /s/ Robert L. Van Nostrand
--------------------------------
Robert L. Van Nostrand
Vice President and Chief Financial Officer
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<PAGE> 16
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
3.1 Certificate of Incorporation, as amended
3.2 By-Laws, as amended (1)
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.
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<PAGE> 1
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
OSI Pharmaceuticals, Inc.
INTO
Oncogene Science, Inc.
(Pursuant to Section 253 of the General
Corporation Law of Delaware)
Oncogene Science, Inc., a Delaware corporation (the "Corporation"), does
hereby certify:
FIRST: That the Corporation is incorporated pursuant to the General
Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding shares of
each class of the capital stock of OSI Pharmaceuticals, Inc., a Delaware
corporation.
THIRD: That the Corporation, by the following resolutions of its
Board of Directors, duly adopted at a meeting thereof held on June 11, 1997,
determined to merge OSI Pharmaceuticals, Inc. into itself on the conditions set
forth in such resolutions:
RESOLVED, that the Corporation authorizes the
formation of a subsidiary under the Delaware General
Corporation Law to be named OSI Pharmaceuticals, Inc. and to
be wholly-owned by the Corporation; and further
RESOLVED, that effective October 1, 1997, the
subsidiary shall be merged with and into the Corporation, with
the Corporation to be the surviving corporation, and, upon the
effective date of the merger, the name of the surviving
corporation shall be changed to OSI Pharmaceuticals, Inc.; and
further
RESOLVED, that the officers of the Corporation be,
and they hereby are, authorized, empowered and directed to
take such actions as
<PAGE> 2
shall be necessary or appropriate to effectuate the foregoing
resolutions.
FOURTH: That this certificate of ownership and merger shall not
become effective until 12:01 a.m. Eastern Time on October 1, 1997.
IN WITNESS WHEREOF, Oncogene Science, Inc. has caused its corporate seal
to be affixed hereto and this certificate to be signed by Robert L. Van
Nostrand, its authorized officer, this 26th day of September, 1997.
[SEAL] ONCOGENE SCIENCE, INC.
By: /s/ Robert L. Van Nostrand
-------------------------------
Robert L. Van Nostrand
Vice President and
Chief Financial Officer
2
<PAGE> 3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ONCOGENE SCIENCE, INC.
I, the President of Oncogene Science, Inc., a corporation organized
and existing under the laws of the State of Delaware (the "Corporation"), do
hereby certify that (i) Article Fourth of the Corporation's Certificate of
Incorporation has been amended in its entirety to read as set forth below, and
(ii) such amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
FOURTH. The total number of shares of stock that the Corporation
shall have authority to issue is 50,000,000 shares of common stock,
having a par value of $.01 per share, all of the same class.
IN WITNESS WHEREOF, I have hereunto set my hand and seal as of the
31st day of March, 1993.
(Corporate Seal)
Attest:
/s/ Theresa R. Dragone /s/ Gary E. Frashier (SEAL)
- ---------------------------- ----------------------------
Theresa R. Dragone Gary E. Frashier, President
Secretary
<PAGE> 4
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ONCOGENE SCIENCE, INC.
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
We, the President and Secretary of ONCOGENE SCIENCE, INC., a
corporation existing under the laws of the State of Delaware, do hereby certify
as follows:
FIRST: That Article IX of the Certificate of Incorporation of said
corporation has been amended in its entirety to read as follows:
ARTICLE IX
INDEMNIFICATION AND INSURANCE
SECTION 1. Right to Indemnification. Each person who was or is
made a party or is threatened to be made a party to or is involved
in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative
("Proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was the director, officer,
employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent
of another corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit
plans, whether the basis of such Proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in
any other capacity
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<PAGE> 5
while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (out, in the case of any
such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment),
against all expenses, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid
or to be paid in settlement) reasonably incurred or suffered by such
person in connection therewith; provided, however, that the
Corporation shall indemnify any such person seeking indemnity in
connection with a Proceeding (or part thereof) initiated by such
person only if the proceeding (or part thereof) was authorized by
the Board of Directors of the Corporation. The right to
indemnification conferred in this Section 1 shall be a contract
right and shall include the right to be paid by the Corporation
expenses incurred in defending any such Proceeding in advance of its
final disposition; provided, however, that if the Delaware General
Corporation Law requires, the payment of such expenses incurred by a
director or officer in his capacity as a director or officer (and
not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the
final disposition of such Proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of
such director or officer, to repay all amounts so advanced if it
should be determined ultimately that such director of officer is not
entitled to be indemnified under this Section or otherwise.
SECTION 2. Non-Exclusivity of Rights. The rights conferred on
any person by Section 1 shall not be exclusive of any other right
which such person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-laws, agreement,
vote of stockholders or disinterested directors, or otherwise.
SECTION 3. Limitation of Liability of Directors. A director of
the Corporation shall not be personally liable to the Corporation or
its stockholders for monetary damages for breach
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<PAGE> 6
of fiduciary duty as a director except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper
personal benefit.
SECTION 4. Insurance. The Corporation may maintain insurance,
at its expense, to protect itself and any such director, officer,
employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any
such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
SECOND: That such amendment has been duly adopted in accordance with
the provisions of the General Corporation Law of the State of Delaware by the
affirmative vote of the holders of not less than a majority of the outstanding
stock entitled to vote thereon.
IN WITNESS WHEREOF, we have signed this certificate this 9th day of
April, 1987.
/s/ Robert E.Ivy
--------------------------
Robert E. Ivy, President
ATTEST: /s/ Gary Takata
--------------------------
Gary Takata, Secretary
-3-
<PAGE> 7
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ONCOGENE SCIENCE, INC.
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
We, the President and Secretary of ONCOGENE SCIENCE, INC., a
corporation existing under the laws of the State of Delaware, do hereby certify
as follows:
FIRST: That Article FOURTH of the Certificate of Incorporation of
said corporation has been amended in its entirety to read as follows:
"FOURTH. The total number of shares of stock
which the Corporation shall have authority to issue
is 20,000,000 shares of common stock, of the par
value of $.01 per share, all of the same class."
SECOND: That such amendment has been duly adopted in accordance with
the provisions of the General Corporation Law of the State of Delaware by the
written consent of the holders of not less than a majority of the outstanding
stock entitled to vote thereon and that written notice of the corporation action
has been given to those stockholders who have not consented in writing, all in
accordance with the provisions of Section 228 of the General Corporation Law.
<PAGE> 8
IN WITNESS WHEREOF, we have signed this certificate this 18th day of
January, 1986.
/s/ Robert E. Ivy
--------------------------
Robert E. Ivy, President
ATTEST: /s/ Gary Takata
--------------------------
Gary Takata, Secretary
-2-
<PAGE> 9
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ONCOGENE SCIENCE, INC.
(a Delaware corporation)
Adopted in accordance with the
provisions of Section 241 of the
General Corporation Law of the
State of Delaware
THE UNDERSIGNED, Steven Gelles, sole incorporator of ONCOGENE
SCIENCE, INC., does hereby certify:
FIRST: That the Certificate of Incorporation of ONCOGENE SCIENCE,
INC. (the "Corporation") was filed in the office of the Secretary of State of
Delaware on March 6, 1983 and a certified copy thereof was recorded in the
office of the Recorder of Kent County, Delaware on March 16, 1983.
SECOND: That the Corporation has not received payment for its stock.
THIRD: That the Certificate of Incorporation of the Corporation is
amended as follows:
(i) By striking out paragraph FIRST thereof as it now exists
and inserting in lieu thereof ARTICLE I, reading as
follows:
ARTICLE I
NAME
The name of the corporation is ONCOGENE SCIENCE, INC.
<PAGE> 10
(ii) By striking out paragraph SECOND thereof as it now
exists and inserting in lieu thereof ARTICLE II,
reading as follows:
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The registered office of the Corporation in the State of Delaware is
located at 229 South State Street, City of Dover, County of Kent. The name and
the address of the registered agent of the Corporation in the State of Delaware
is The Prentice-Hall Corporation System, Inc., 229 South State Street, Dover,
Delaware.
(iii) By striking out paragraph THIRD thereof as it now exists
and inserting in lieu thereof ARTICLE III, reading as
follows:
ARTICLE III
CORPORATE PURPOSES AND POWERS
The nature of the business of the Corporation, or the objects or
purposes to be transacted, promoted or carried on by the Corporation are any and
all lawful acts or activities for which corporations may be organized under the
General Corporation Law of Delaware, including but not limited to research and
development, manufacture, production, purchase or acquisition, and sale,
licensing, leasing, or disposition of materials, supplies, substances, chemicals
or equipment used or useful in the field of biotechnology or in any other field
in which such materials, supplies, substances, chemicals or equipment may
profitably be used.
(iv) By striking out paragraph FOURTH thereof as it now
exists and inserting in lieu thereof ARTICLE IV, reading
as follows:
ARTICLE IV
CAPITAL STOCK
The amount of the total authorized capital stock of this Corporation
is One Hundred Thousand Dollars ($100,000) consisting of Ten Million
(10,000,000) common shares, with a par value of one cent ($.01) each.
(v) By striking out paragraph FIFTH thereof as it now exists
and inserting in lieu thereof ARTICLE V, reading as
follows:
-2-
<PAGE> 11
ARTICLE V
INCORPORATOR
The name and mailing address of the sole incorporator of the
Corporation is:
Name Address
Steven Gelles 122 East 42nd Street
Suite 606
New York, New York 10168
(vi) By adding thereto additional ARTICLES VI - XI, reading
as follows:
ARTICLE VI
POWERS OF BOARD OF DIRECTORS
In addition to and not in limitation of the powers conferred by
statute, the board of directors of the Corporation expressly is authorized:
(a) To make, adopt, alter, amend or repeal the by-laws, except
as otherwise expressly provided in any by-law adopted by the holders of
Capital Stock of the Corporation entitled to vote thereon. Any by-law may
be altered, amended or repealed by the holders of Capital Stock of the
Corporation entitled to vote thereon at any annual meeting or at any
special meeting called for that purpose;
(b) To authorize and cause to be executed mortgages, liens,
and other security interests upon the real and personal property of the
Corporation;
(c) To determine the use and disposition of any surplus and
net profits of the Corporation including, without limitation by
specification, the determination of the amount of working capital required
by the Corporation, to set apart out of any of the funds of the
Corporation, whether or not available for dividends, a reserve or reserves
for any proper purpose and to abolish any such reserve in the manner in
which it was created;
(d) To designate, by resolution passed by a majority of the
members of the board of directors, one or more committees, each consisting
of two or more directors of the Corporation which, to the extent provided
in the resolution designating
-3-
<PAGE> 12
the committee or provided in the by-laws of the Corporation, have and may
exercise, subject to the provisions of the General Corporation Law of
Delaware, all the powers and authority of the board of directors in the
management of the business and affairs of the Corporation. Such committee
or committees may authorize the seal of the Corporation to be affixed to
all papers which may require it. Such committee or committees shall have
such name or names as may be provided in the by-laws of the Corporation or
as may be determined from time to time by resolution adopted by the board
of directors;
(e) To grant rights or options entitling the holders thereof
to purchase from the Corporation shares of its Capital Stock evidenced by
or in such instrument or instruments as shall be approved by the board of
directors. The terms upon which, the time or times at or within which, the
persons to whom, and the price or prices at which any such rights or
options may be issued and any shares of Capital Stock may be purchased
from the Corporation upon the exercise of any such right or option shall
be such as shall be fixed in a resolution or resolutions adopted by the
board of directors providing for the creation and issuance of such rights
or options. In the absence of actual fraud in the transaction, the
judgment of the board of directors as to the consideration for the
issuance of such rights or options and the sufficiency thereof shall be
conclusive. No such rights or options shall be invalidated or in any way
affected by the fact that any director shall be a grantee thereof or shall
vote for the issuance of such rights or options to himself or for any plan
pursuant to which he may receive any such rights or options;
(f) To adopt such plans as from time to time may be approved
by the board of directors for the purchase by officers or employees of the
Corporation and of any corporation either affiliated with or a subsidiary
of the Corporation of shares of Capital Stock of the Corporation. The
terms upon which, the time or times at or within which and the price or
prices at which shares of Capital Stock may be purchased from the
Corporation pursuant to such plan shall be fixed in the plan by the board
of directors. No such plan which is not at the time of adoption
unreasonable or unfair shall be invalid or in any way affected because any
director shall be entitled to purchase shares of Capital Stock of the
Corporation thereunder and shall vote for such plan;
(g) To adopt or assume and carry out such plans as from time
to time may be approved by the board of directors for the distribution
among the officers or employees of the Corporation and of any corporation
which is affiliated with or a subsidiary of the Corporation, or any of
them, in addition to their regular salaries, of part of the earnings of
the Corporation, in consideration for or in recognition of services
rendered by such officers or employees or as an inducement to future
efforts. No such
-4-
<PAGE> 13
plan which is not at the time of adoption or assumption unreasonable or
unfair shall be invalidated or in any way affected because any director
shall be a beneficiary thereunder or shall vote for any plan under which
he may benefit or for any distribution thereunder in which he may
participate;
(h) To adopt such pension, profit sharing, retirement,
deferred compensation or other employee benefit plans or provisions as
may, from time to time, be approved by the board of directors, providing
for pensions, profit sharing, retirement income, deferred compensation or
other benefits for officers or employees of the Corporation and of any
corporation which is affiliated with or a subsidiary of the Corporation,
or any of them, in consideration for or in recognition of the services
rendered by such officers or employees or as an inducement to future
efforts. No such plan or provision, which is not at the time of adoption
unreasonable or unfair shall be invalidated or in any way affected because
any director shall be a beneficiary thereunder or shall vote for any plan
or provision under which he may benefit; and
(i) To exercise, in addition to the powers and authorities
herein or by law conferred upon the board of directors, any such powers
and authorities and do all such acts and things as may be exercised or
done by the Corporation subject, nevertheless, to the provisions of the
General Corporation Law of Delaware, this certificate of incorporation and
any by-laws from time to time adopted by the holders of Capital Stock of
the Corporation entitled to vote thereon.
ARTICLE VII
MEETINGS AND CONSENTS OF STOCKHOLDERS AND DIRECTORS;
CORPORATION BOOKS; ELECTIONS OF DIRECTORS;
AND NOTICES
Meetings of holders of Capital Stock of the Corporation and of the
board of directors and of any committee thereof may be held outside the State of
Delaware if the by-laws so provide. Except as otherwise provided by law or by
this certificate of incorporation, any action required to be taken at any
annual, or special meeting of stockholders of the Corporation or any action
which may be taken at any annual or special meeting of such stockholders may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding Capital Stock having not less than the minimum number of votes that
would be necessary to authorize or to take such action at a meeting at which all
shares of Capital Stock entitled to vote thereon were present and voted. Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing. Any action required or permitted to be taken
-5-
<PAGE> 14
at any meeting of the board of directors or of any committee thereof may be
taken without a meeting as provided by statute if the by-laws of the Corporation
so provide. Except as otherwise provided by law, the books of the Corporation
may be kept outside the State of Delaware at such place or places as may be
designated from time to time by the board of directors or in the by-laws of the
Corporation. The elections of directors need not be by ballot unless the by-laws
of the Corporation so provide. Any notice permitted or required by this
certificate of incorporation shall be written, signed by the sender and mailed,
postage prepaid, in the United States by certified or registered mail.
ARTICLE VIII
TRANSACTIONS WITH DIRECTORS AND OFFICERS
No contract or transaction between the Corporation and one or more
of its directors or officers or between the Corporation and any other
corporation, partnership, association or other organization, in which one or
more of its directors or officers are directors or officers or have a financial
interest, shall be void or voidable solely for such reason or solely because the
director or officer is present at or participates in the meeting of the board of
directors or committee thereof which authorizes the contract or transaction or
solely because his or their votes are counted for such purpose if: (a) The
material facts as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the board of directors or the
committee and the board of directors or the committee in good faith authorizes
the contract or transaction by the affirmative vote of a majority of the
disinterested directors even though the disinterested directors may be less than
a quorum; or (b) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (c) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified by the board of directors, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the stockholders or the board of directors
or of a committee which authorizes the contract or transaction.
ARTICLE IX
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification by Corporation.
(a) Any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(other than action by or in the right of the
-6-
<PAGE> 15
Corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall
be indemnified by the Corporation, unless similar indemnification is
provided by such other corporation or organization which may be involved
(any funds received by any person as a result of the provisions of this
Article shall be deemed an advance against his receipt of any such other
indemnification from any such other corporation or organization), against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Any such person who could be indemnified pursuant to the preceding
sentence except for the fact that the subject action or suit is or was by
or in the right of the Corporation shall be indemnified by the Corporation
against expenses (including attorneys' fees) actually and reasonably
incurred by him, in connection with the defense or settlement of such
action or suit except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of
his duties to the Corporation unless and only to the extent that the Court
of Chancery of the State of Delaware or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem
proper;
(b) To the extent that a director, officer, employee or agent
of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in paragraph (a) of
this Section 1 or in defense of any claim, issue or matter therein, he
shall be indemnified by the Corporation against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith without the necessity of any action being taken by the
Corporation other than the determination, in good faith, that such defense
has been successful. In all other cases wherein indemnification is
provided by this Article, unless ordered by a court, indemnification shall
be made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable
standard of conduct specified in this Article. Such determination shall be
made: (1) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding; or (2) if such a quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs, by independent
-7-
<PAGE> 16
legal counsel in a written opinion; or (3) by the holders of a majority of
the Capital Stock outstanding;
(c) The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere
or its equivalent shall not create, of itself, a presumption that the
person seeking indemnification did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interests
of the Corporation and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful. Entry of a
judgment by consent as part of a settlement shall not be deemed final
adjudication of liability for negligence or misconduct in the performance
of duty or of any other issue or matter;
(d) Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the board
of directors in the specific case upon receipt of an undertaking by the
director, officer, employee or agent involved to repay such amount unless
it ultimately shall be determined that he is entitled to be indemnified by
the Corporation; and
(e) The indemnification provided in this Article shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
an official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
SECTION 2. Insurance. By action of the board of directors,
notwithstanding any interest of the directors in the action, the Corporation may
purchase and maintain insurance, in such amounts as the board of directors deems
appropriate, on behalf of any person who is or was a director, officer, employee
or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the Corporation shall have the power to
indemnify him against such liability under the provisions of this Article.
-8-
<PAGE> 17
ARTICLE X
COMPROMISE OR ARRANGEMENT BETWEEN CORPORATION
AND ITS CREDITORS OR STOCKHOLDERS
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
ARTICLE XI
RESERVATION OF RIGHT TO AMEND CERTIFICATE
OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal
any provisions contained in this certificate of incorporation in the manner now
or hereafter prescribed by law and by this certificate of incorporation. All the
provisions of this certificate of incorporation and all rights and powers
conferred in this certificate of incorporation on stockholders, directors and
officers are subject to such reserved power.
FOURTH: That such amendment has been duly adopted in accordance with
the provision of Section 241 of the General Corporation Law of the State of
Delaware.
-9-
<PAGE> 18
IN WITNESS WHEREOF, I have signed this certificate this 15th day of
April, 1983.
/s/ Steven Gelles
--------------------
STEVEN GELLES
-10-
<PAGE> 19
CERTIFICATE
OF
INCORPORATION
OF
ONCOGENE SCIENCE, INC.
FIRST: The name of this Corporation is ONCOGENE SCIENCE, INC.
SECOND: Its Registered Office in the State of Delaware is to be located
at 600 Bay Road, in the City of Dover, Zip Code 19901. The
Registered Agent in charge thereof is Ms. Pam Goldsborough.
THIRD: The purpose of the Corporation is to perform research and to
develop, manufacture, produce, purchase or otherwise acquire, and
to sell, license, lease or otherwise dispose of materials,
supplies, substances, chemicals or equipment used or useful in
the field of Biotechnology or in any other field in which such
materials, supplies, substances, chemicals or equipment may be
profitably used and to engage in any lawful act or activity for
which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The amount of the total authorized capital stock of this Corporation
is One Hundred Thousand Dollars ($100,000) divided into Ten Million
(10,000,000) shares, of One Cent ($.01) each.
FIFTH: The name and mailing address of the incorporator are as follows:
Name: Steven Gelles
Mailing Address: 122 East 42nd Street, Suite 606
Zip Code: New York, New York 10168
I, THE UNDERSIGNED, for the purpose of forming a Corporation under the laws of
the State of Delaware, do make, file and record this Certificate, and do certify
that the facts herein stated are true, and I have accordingly hereto set my hand
this Tenth day of March, 1983.
/s/ Steven Gelles
- ---------------------------- ----------------------------
- ----------------------------
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