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________________________________________________________________________________
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
COMMISSION FILE NO. 0-14116
NEORX CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Washington 91-1261311
(STATE OR OTHER JURISDICATION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
410 WEST HARRISON STREET, SEATTLE, WASHINGTON 98119
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (206)281-7001
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.02 PAR VALUE
9 3/4% CONVERTIBLE SUBORDINATED DEBENTURES, DUE 2014
$2.4375 CONVERTIBLE EXCHANGEABLE PREFERRED STOCK, SERIES 1
_______________
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 ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock held by nonaffiliates of the
Registrant as of March 1, 1996 was approximately $79 million (based on the
closing price for shares of the Registrant's Common Stock as reported by the
Nasdaq National Market for the last trading date prior to that date). Shares of
Common Stock held by each officer, director and holder of 5% or more of the
outstanding Common Stock have been excluded in that such persons may be deemed
to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
As of March 1, 1996, approximately 15.3 million shares of the Registrant's
Common Stock, $.02 par value per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Registrant's 1996 Notice of Annual Meeting and Proxy
Statement for the Registrant's Annual Meeting of Shareholders to be held on
May 14, 1996 are incorporated by reference in Part III of this Form 10-K.
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
The Annual Report on Form 10-K of NeoRx Corporation (File No.1-14116) for the
fiscal year ended December 31, 1995 is hereby amended to file exhibits 10.18,
10.32a and 10.33.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements -- See Index to Financial Statements.
(a) (2) Financial Statement Schedules -- Not applicable.
(a) (3) Exhibits -- See Exhibit Index filed herewith.
(b) Reports on Form 8-K -- Not applicable.
(c) Exhibits -- See Exhibit Index filed herewith.
2
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EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
OR INCORPORATION
EXHIBIT DESCRIPTION BY REFERENCE TO
- --------- --------------------------------------------------------------------- ----------------
<S> <C> <C>
3.1(a) Restated Articles of Incorporation................................... *
3.1(b) Amendment to Restated Articles of Incorporation filed with the
Washington Secretary of State on March 15, 1990...................... ***
3.1(c) Articles of Amendment, dated November 6, 1991, to Articles of
Incorporation........................................................ ****
3.1(d) Articles of Amendment of NeoRx Corporation dated January 25, 1996.... +++++
3.2 Bylaws, as amended, of the registrant................................ ***
4.1 Form of Indenture, dated as of June 1, 1989, between NeoRx
Corporation and First Interstate Bank of Washington, N.A., as
trustee.............................................................. **
4.2 Statement of Rights and Preferences relating to Convertible
Exchangeable Preferred Stock Series 1, par value $0.02 per share..... ***
4.3 Specimen Warrant Certificate......................................... +++
4.4 Form of Purchase Agreements dated as of April 18, 1995 between NeoRx
Corporation and the Purchasers....................................... +++
4.5 Form of Purchase Agreements dated as of January 30, 1996 between
NeoRx Corporation and the Purchasers................................. ++++
10.1 1994 Stock Option Plan............................................... ++
10.2 Option and Development Agreement, dated September 5, 1985, between
NeoRx Corporation and Merck Frosst Canada, Inc....................... *
10.3 Amendment, dated May 4, 1989, to Option and Development Agreement
between NeoRx Corporation and Merck Frosst Canada, Inc............... **
10.4 Lease Agreement for 410 West Harrison facility, dated February 15,
1996, between NeoRx Corporation and Diamond Parking, Inc............. +++++
10.5 1991 Stock Option Plan for Non-Employee Directors, as amended........ ++
10.6 1991 Restricted Stock Option Plan.................................... *****
10.7 Stock and Warrant Purchase Agreement, dated as of September 11, 1992,
between NeoRx Corporation and Boehringer Ingelheim International
GmbH................................................................. *****
10.8 Amendment to Stock and Warrant Purchase Agreement, dated as of
September 17, 1992, between NeoRx Corporation and Boehringer
Ingelheim International GmbH......................................... +
10.9 Second Amendment to Stock and Warrant Purchase Agreement, dated as of
September 29, 1993, between NeoRx Corporation and Boehringer
Ingelheim International GmbH......................................... +
10.10 Development and License Agreement, dated as of September 11, 1992,
between NeoRx Corporation and Boehringer Ingelheim International
GmbH................................................................. *****
10.11 First Amendment to Development and License Agreement, dated September
22, 1994, between NeoRx Corporation and Boehringer Ingelheim
International GmbH................................................... ++
10.12 Second Amendment to Development and License Agreement, dated October
31, 1994, between NeoRx Corporation and Boehringer Ingelheim
International GmbH................................................... ++
10.13 Technology License Agreement, dated as of September 11, 1992, between
NeoRx Corporation and Boehringer Ingelheim International GmbH........ *****
10.14 License Agreement, dated as of September 18, 1992, between NeoRx
Corporation and Sterling Winthrop Inc................................ *****
10.15 Collaboration and License Option Agreement, dated August 10, 1992,
between NeoRx Corporation and Organon International B.V.............. *****
10.16 Contract for Support of Research Project, effective as of July 1,
1992, between NeoRx Corporation and the Curators of the University of
Missouri............................................................. *****
</TABLE>
3
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<TABLE>
<CAPTION>
PAGE NUMBER
OR INCORPORATION
EXHIBIT DESCRIPTION BY REFERENCE TO
- -------- ------------------------------------------------------------------- ----------------
<S> <C> <C>
10.17 Amendment No. 1 to Contract for Support of Research Project,
effective as of July 1, 1993, between NeoRx Corporation and the
Curators of the University of Missouri............................... +
10.18 Agreement, dated as of December 15, 1995............................. filed herewith
10.19 License Option Agreement, dated June 1, 1991, between NeoRx
Corporation and the UAB Research Foundation.......................... +
10.20 Research Agreement (With Option to License), dated February 8, 1993,
between NeoRx Corporation and Southern Research Institute............ +
10.21 Consulting Agreement, effective March 15, 1993, between NeoRx
Corporation and Oxford Molecular Inc................................. +
10.22 Agreement, dated as of August 1, 1993, between NeoRx Corporation and
Avalon Medical Partners.............................................. +
10.23 Registration Rights Agreement, dated September 1993, between NeoRx
Corporation and Avalon Medical Partners............................... +
10.24 Consulting Agreement, dated as of July 7, 1993, between NeoRx
Corporation and Dr. Fred Craves....................................... +
10.25 Amendment to consulting agreement, dated May 9,1995 between NeoRx
Corporation and Dr. Fred Craves....................................... +++++
10.26 Engagement letter, dated as of June 22, 1993, between NeoRx
Corporation and the Placement Agents.................................. ******
10.27 Purchase Agreements, dated May 19, 1993, between NeoRx Corporation
and the Purchasers or representatives thereof......................... ******
10.28 Stock Purchase Agreement, dated as of October 5, 1994, between NeoRx
Corporation and The DuPont Merck Pharmaceutical Company............... ++
10.29 License Agreement, dated as of October 5, 1994, between NeoRx
Corporation and The DuPont Merck Pharmaceutical Company............... ++
10.30 Supply Agreement, dated November 10, 1994, between Cordis Corporation
and NeoRx Corporation................................................. ++
10.31 License Agreement, effective as of October 12, 1994, between Indiana
University Foundation and NeoRx Corporation, as amended............... ++
10.32 Agreement, dated as of June 1, 1987, between NeoRx Corporation and
the Board of Trustees of the Leland Stanford Junior University, as
amended............................................................... ++
10.32(a) Amendment No. 3, dated November 15, 1995, to Contract between NeoRx
Corporation and the Board of Trustees of the Leland Stanford Junior
University............................................................ filed herewith
10.33 Research Collaboration Agreement, dated September 1, 1995, between
NeoRx Corporation and biosys, Inc..................................... filed herewith
10.34 Form of Registration Rights Agreement, dated January 30, 1996, by and
among NeoRx Corporation and Grace Brothers, Ltd., Genesee Fund, Ltd.
and SBSF Biotechnology Partners....................................... ++++
23.1 Consent of Arthur Andersen LLP........................................ +++++
</TABLE>
_____________________
<TABLE>
<S> <C>
* Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration
No. 33-20694) effective August 11, 1988 and incorporated herein by reference.
** Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration
No. 33-28545) effective May 31, 1989 and incorporated herein by reference.
*** Filed as an exhibit to the Company's Registration Statement on Form S-4 (Registration
No. 33-33153) effective March 27, 1990 and incorporated herein by reference.
**** Filed as an exhibit to the Company's Form 10-K for the fiscal year ended September 30,
1990 and incorporated herein by reference.
4
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***** Filed as an exhibit to the Company's Form 10-K for the fiscal year ended September 30,
1991 and incorporated herein by reference.
****** Filed as an exhibit to the Company's Registration Statement on Form S-3 (Registration
No. 33-64992) effective August 25, 1993 and incorporated herein by reference.
+ Filed as an exhibit to the Company's Registration Statement on Form S-2 (Registration
No. 33-71164) effective December 13, 1993 and incorporated herein by reference.
++ Filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31,
1994 and incorporated herein by reference.
+++ Filed as an exhibit to the Company's Registration Statement on Form S-3 (Registration
No. 33-60029) effective August 8, 1994 and incorporated herein by reference.
++++ Filed as an exhibit to the Company's Registration Statement on Form S-3 (Registration
No. 333-00785) effective February 7, 1996 and incorporated herein by reference.
+++++ Filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31,
1995, of which this Amendment No.1 forms a part.
</TABLE>
5
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
NEORX CORPORATION
(Registrant)
By /s/ ROBERT M. LITTAUER
------------------------------
Robert M. Littauer
Senior Vice President, Chief
Financial Officer and Treasurer
Date: June 21, 1996
6
<PAGE>
A request for confidential treatment with respect to this exhibit has been filed
with the Securities and Exchange Commission. Pages where confidential treatment
has been requested are marked "Confidential Treatment Requested" and the
appropriate section has been replaced with an asterisk [*].
LICENSE AGREEMENT
This Agreement is made effective as of December 15, 1995 between [*]
(Licensor), and NeoRx Corporation, a Washington corporation having its principal
place of business at 410 West Harrison Street, Seattle, Washington 98119
(NeoRx).
WHEREAS Licensor, in conjunction with [*] and [*] developed murine
monoclonal antibodies designated TFS-2 and TFS-4 (the "Antibodies");
WHEREAS Licensor, in conjunction with [*], developed murine monoclonal
antibodies designated TFS-5 and TFS-6 (the "Additional Antibodies");
WHEREAS NeoRx and [*], a predecessor in interest to Licensor, executed an
Agreement dated March 14, 1987 (the "Original Agreement"), wherein [*] granted
to NeoRx a license to the Antibodies and Additional Antibodies;
WHEREAS [*] assigned its rights and obligations under the Original
Agreement to [*] in a Letter Agreement Dated March 28, 1988;
WHEREAS [*] assigned its rights and obligations under the Original
Agreement to Licensor in an Assignment Agreement dated September 1, 1993;
WHEREAS all of [*]'s interest in the Antibodies has reverted to Licensor,
including [*]'s right to make, have made, use or sell Antibodies and its right
to co-exclusively license a third party to make, have made, use, sell or have
sold Antibodies;
WHEREAS Licensor now has all right, title and interest in the Antibodies;
and
WHEREAS NeoRx and Licensor wish to memorialize their relationship, which
reflects Licensor's ownership interest in the Antibodies and current NeoRx
product development efforts and therefore agree that the Original Agreement
shall be superseded in its entirety by this Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein set forth,
the parties agree as follows:
[*] Confidential Treatment Requested 1
<PAGE>
1. Definitions.
1.1 "Diagnostic Products" shall mean all products, incorporating an
Antibody, an Additional Antibody or a Genetically Engineered Antibody, employed
in in vivo diagnosis of cancer, but not those employing a Pretargeting Protocol.
1.2 "Genetically Engineered Antibodies" shall mean targeting constructs
generated using genetic engineering techniques, which constructs incorporate
the sequences responsible for the binding characteristics of the Antibodies or
Additional Antibodies.
1.3 "Net Sales" shall mean receipts, when and as received, net of
commissions, discounts, freight, returns, warranty claims and taxes.
1.4 "Pretargeted Diagnostic Products" shall mean all products, incor-
porating an Antibody, an Additional Antibody or a Genetically Engineered
Antibody, employed in a Pretargeting Protocol for the in vivo diagnosis of
cancer.
1.5 "Pretargeted Products" shall mean Diagnostic and Therapeutic
Pretargeting Products.
1.6 "Pretargeting Protocol" shall mean a diagnostic or therapeutic
clinical protocol wherein the Antibodies, Additional Antibodies or Genetically
Engineered Antibodies are administered to a patient separately from the
administration of an active agent, such as a radionuclide.
1.7 "Pretargeted Therapeutic Products" shall mean products, incorporating
an Antibody, an Additional Antibody or a Genetically Engineered Antibody,
employed in a Pretargeting Protocol for the therapy of cancer.
1.8 "Therapeutic Products" shall mean products, incorporating an Anti-
body, an Additional Antibody or a Genetically Engineered Antibody, employed in
the therapy of cancer, but not those employing a Pretargeting Protocol.
2. License Grant.
2.1 Diagnostic and Therapeutic Products. Licensor grants to NeoRx a
worldwide, perpetual co-exclusive license, with the right to sublicense, to
develop, make, have made, use, sell, and have sold Antibodies and Genetically
Engineered Antibodies in Diagnostic and Therapeutic Products. Licensor grants
to NeoRx an worldwide, perpetual exclusive license, with the right to
2
<PAGE>
sublicense, to develop, make, have made, use, sell, and have sold Additional
Antibodies in Diagnostic and Therapeutic Products.
2.2 Pretargeted Products. Licensor grants to NeoRx a worldwide,
perpetual exclusive license, with the right to sublicense, to develop, make,
have made, use, sell, and have sold Antibodies, Additional Antibodies and
Genetically Engineered Antibodies in Pretargeted Products.
2.3 Permissible Sublicenses. NeoRx's right to sublicense under Paragraphs
2.1 and 2.2 above is conditioned upon the imposition upon any sublicensee
restrictions similar to those imposed upon NeoRx in this Agreement.
3. Royalty Reduction Fee.
Within ten (10) days of execution of this Agreement and a Stock Purchase
Agreement by both parties, NeoRx will deliver to Licensor an amount of NeoRx
common stock having a market value of at $[*] on the date first above written
(the "Royalty Reduction Fee").
4. Royalties.
4.1 Therapeutics. In consideration of the Royalty Reduction Fee, Licensor
shall receive royalties on Therapeutic and Pretargeted Therapeutic Products as
follows:
[*]% of Net Sales for any Therapeutic Product or Pretargeted Therapeutic
Product incorporating an Antibody, an Additional Antibody or a Genetically
Engineered Antibody sold by NeoRx or NeoRx sublicensees.
4.2 Diagnostics. Licensor shall receive royalties on Diagnostic and
Pretargeted Diagnostic Products as follows:
A) [*]% of Net Sales for any Diagnostic Product or Pretargeted Diagnostic
Product incorporating an Antibody or Additional Antibody sold by NeoRx or
NeoRx sublicensees until world-wide Net Sales in any calendar year of any
such product reach [*] United States dollars ($[*]);
B) [*]% of net sales on any Diagnostic Product or Pretargeted Diagnostic
Product incorporating an Antibody or an Additional Antibody sold by NeoRx
or NeoRx sublicensees when world-wide Net Sales in any calendar year of
any such product exceed [*] United States dollars ($[*]);
[*] Confidential Treatment Requested 3
<PAGE>
C) [*]% of Net Sales for any Diagnostic Product or Pretargeted Diagnostic
Product incorporating a Genetically Engineered Antibody sold by NeoRx or
NeoRx sublicensees until world-wide Net Sales in any calendar year of any
such product reach [*] United States dollars ($[*]); and
D) [*]% of net sales on any Diagnostic Product or Pretargeted Diagnostic
Product incorporating a Genetically Engineered Antibody sold by NeoRx or
NeoRx sublicensees when world-wide Net Sales in any calendar year of any
such product exceed [*] United States dollars ($[*]).
4.3 Royalty Adjustments.
A) The royalty amounts set forth in Section 4.2 shall be adjusted prorata,
if the Antibodies, Additional Antibodies or Genetically Engineered
Antibodies are used in a product in combination with other antibodies
directed against the tumor.
B) The royalty amount in Paragraph 4.2(B) will be adjusted if competitive
products developed by third parties having the same or better targeting
specificity emerge in markets where Diagnostic or Therapeutic Products or
Pretargeted Products are sold by NeoRx or NeoRx sublicensees. If
competitive products span all of the markets of NeoRx or any NeoRx
sublicensee, the royalty applicable to sales by the impacted organization
shall be reduced to [*]%. If some but not all markets of NeoRx or any
NeoRx sublicensee are subject to the emergence of competitive products,
Licensor and the impacted organization will negotiate in good faith a
reduction in royalty, with the royalty payable to Licensor never going
below [*]%.
C) The royalty amount in Paragraph 4.2(D) will be adjusted if competitive
products developed by third parties having the same or better targeting
specificity emerge in markets where Diagnostic Products or Pretargeted
Diagnostic Products are sold by NeoRx or NeoRx sublicensees. If
competitive products span all of the markets of NeoRx or any NeoRx
sublicensee, the royalty applicable to sales by the impacted organization
shall be reduced to [*]%. If some but not all markets of NeoRx or any
NeoRx sublicensee are subject to the emergence of competitive products,
Licensor and the impacted organization will negotiate in good faith a
reduction in royalty, with the royalty payable to Licensor never going
below [*]%.
4.4 Record Keeping; Audit. NeoRx and NeoRx sublicensees shall keep and
maintain its sales records relating to licensed Diagnostic and Therapeutic
Products and licensed Pretargeted Products for a period of three (3) years.
[*] Confidential Treatment Requested 4
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Upon reasonable notice to NeoRx, Licensor has the right to retain at Licensor's
expense an independent certified public accountant of Licensor's choice to
examine the relevant records. The results of such examination shall be kept
confidential, and Licensor shall be informed only with respect to whether the
royalty paid to Licensor is correctly calculated.
5. Milestone Payment.
5.1 First Product Approval. NeoRx shall pay to Licensor a one-time
milestone payment of [*] United States dollars ($[*]) upon the first approval
received from the health authority of any country of a product license
application for sale of any licensed Diagnostic or Therapeutic Product or
licensed Pretargeted Product.
5.2 Past Payments; Royalty Offset. The parties acknowledge that NeoRx
has paid the sums of ten thousand seven hundred and fifty United States dollars
($10,750) and five thousand United States dollars ($5,000) as acknowledged in or
pursuant to the Original Agreement. These sums as well as the milestone payment
referred to in Paragraph 5.1 shall be credited against the royalties due to
Licensor pursuant to Section 4 hereof.
6. Taxes.
All payments and royalties stipulated in this Agreement shall constitute net
value received by Licensor without any deduction incurred by any withholding
required by the Treaty for the Avoidance of Double Taxation between the United
States and Japan. NeoRx shall be responsible for such withholding imposed by
the United States taxing authorities, if such withholding is less than or equal
to fifteen percent (15%). If the withholding exceeds fifteen percent (15%),
the parties will negotiate in good faith with regard to sharing responsibility
for such withholding. NeoRx shall promptly, and in no event greater than sixty
(60) days after each remittance to Licensor, furnish to Licensor the
certificates, receipts, and other documents to establish the payment of such
withholding to the United States taxing authorities.
7 Licensor's Warranty.
Licensor warrants and represents that Licensor has the right to grant the
licenses set forth in Section 2 hereof to NeoRx. Licensor warrants and
represents that Licensor owns all right, title and interest to the Antibodies,
and that the Licensor has only the right to grant one additional license of
the antibodies pursuant to Section 8 hereof. Licensor warrants and represents
that Licensor owns all right, title and interest to the Additional Antibodies.
[*] Confidential Treatment Requested 5
<PAGE>
Licensor further warrants and represents that use of the Antibodies or
Additional Antibodies by NeoRx will not infringe any patents, trade secrets,
or other proprietary or property rights of [*] or any other person to the
best present knowledge of the Licensor.
8. Additional Licenses.
8.1 Licensor-Designated Licensee. Licensor shall have the right, but not
the obligation, to grant one additional co-exclusive license to a third party
for Antibodies in the cancer field. This additional license shall not grant
the third party the right to use Antibodies in Pretargeting Protocols to
develop, make, have made, use, sell or have sold Pretargeted Products. If
the additional license includes terms which inure to the benefit of the licensee
that are more favorable than this Agreement provides to NeoRx, this Agreement
will be amended to provide NeoRx with the more favorable terms.
8.2 NeoRx-Designated Licensee(s). Upon Licensor's consent which consent
shall not be unreasonably withheld, Licensor shall grant one or more additional
licenses, having the same royalty provisions and restrictions as this Agreement
to one or more third parties as may be designated by NeoRx from time to time for
Antibodies, Additional Antibodies or Genetically Engineered Antibodies to
develop, make, have made, use, sell or have sold licensed Diagnostic or
Therapeutic Products or Pretargeted Products. NeoRx shall assist [*] in
perfecting such grant of additional license(s) to NeoRx designee(s).
9. Termination.
NeoRx may terminate this Agreement at any time with cause or upon material
breach by Licensor. Licensor may terminate this Agreement only if NeoRx goes
bankrupt or if NeoRx materially breaches this Agreement; Licensor provides
written notice to NeoRx of the material breach; and NeoRx fails to cure the
breach within the longer of 30 days from receipt by NeoRx of the notice or such
time as is reasonably necessary to cure the breach. Licensor is under no
obligation to refund any payments made by NeoRx prior to any such termination.
10. Hybridoma Security.
NeoRx has been given hybridoma clones which secrete TFS-2 and TFS-4. NeoRx
may give such hybridoma clones to contract manufacturers, so long as the
agreement between NeoRx and the contract manufacturer adequately protects the
security of the clone.
[*] Confidential Treatment Requested 6
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11. Publicity.
Neither party shall publicize or disclose to any third party the existence or
the terms of this Agreement, except as required by any presently existing
agreements of either party, by any governmental or regulatory requirements or
agencies, by law or court order, or as necessary to obtain financing, whether
in connection with the sale of securities or otherwise.
12. Dispute Resolution.
NeoRx and Licensor agree that they shall endeavor to settle amicably any dispute
that may arise with regard to this Agreement. Any such dispute not so settled
shall be resolved by arbitration in Seattle, Washington USA, in accordance with
the rules of the International Chamber of Commerce.
13. Miscellaneous.
13.1 Entire Agreement. This Agreement expresses the entire understanding
between the parties on the subject matter hereof and supersedes and replaces all
prior agreements between them, whether written or oral.
13.2 Waiver; Amendment. The provisions of this Agreement may not be
waived or modified except by a writing signed by the party against whom
enforcement is sought. No waiver of breach shall constitute a subsequent waiver
of any subsequent breach, and if any provision of this Agreement is held to be
invalid or unenforceable, the remaining provisions shall remain valid and
enforceable.
13.3 Assignment. Neither party to this Agreement may assign any of its
rights or obligations hereunder without the express written consent of the other
party which shall not be unreasonably withheld.
13.4 Severability. If any portion of this Agreement is held to be invalid
for any reason, the remainder of this Agreement shall remain in full force and
effect.
13.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the state of Washington, USA.
7
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IN WITNESS WHEREOF, the parties have signed their names effective as of the day
and year first above written.
Accepted for:
NEORX CORPORATION
/s/Robert M. Littauer
- --------------------------- ------------------------------
Robert M. Littauer [*]
Senior Vice President
Chief Financial Officer
[*] Confidential Treatment Requested 8
<PAGE>
A request for confidential treatment with respect to this exhibit has been filed
with the Securities and Exchange Commission. Pages where confidential treatment
has been requested are marked "Confidential Treatment Requested" and the
appropriate section has been replaced with an asterisk [*].
AMENDMENT NO. 3
to the
License Agreement
Effective June 1, 1987
Between
STANFORD UNIVERSITY
and
NEORX CORPORATION
Effective as of November 15, 1995, THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY, a body having corporate powers under the laws of the
State of California ("STANFORD") and NEORX CORPORATION, a Washington corpora-
tion, having a principal place of business at 410 W. Harrison, Seattle,
Washington 98119 ("NEORX"), agree as follows:
1. Background
1.1 -- NEORX is holding an exclusive license to the technology
entitled "Reversibly Bound Chelate Antibody Conjugates," as described in
Stanford Docket S86-050 and in US Patent Application Serial No. 877,327,
which has STANFORD as its assignee, pursuant to a License Agreement effective
June 1, 1987 as amended in Amendment No. 1 dated December 11, 1987 and
Amendment No. 2 dated December 16, 1991 (collectively, the "License")
1.2 -- NEORX has developed a strategy to seek a corporate partner to
aid in the development of Licensed Products, in particular NEORX's first
Licensed Product under development comprising humanized NR-LU-10-streptavidin,
a clearing agent and Y-90-DOTA-biotin (the "Avicidin Product"). One barrier
that has arisen in negotiations with potential corporate partners is the cost
of goods of the Avicidin Product.
1.3 -- The royalty owed to STANFORD pursuant to the License is a
significant component of the cost of goods of the Avicidin Product.
1.4 -- Therefore, both NEORX and STANFORD agree to hereby amend
the License between the parties, as follows:
1
<PAGE>
2. AMENDMENTS
2.1 -- Paragraph 5.3 of the License is hereby amended to read in its
entirety, as follows:
"5.3 -- In addition, NEORX shall pay STANFORD earned royalties on
Net Sales of Licensed Product(s) of [*] ([*]%). Such royalties
may be reduced to [*] ([*]%), as follows:
(a) Upon signing a sublicense agreement pursuant to the License for
NEORX's Avicidin Product for the small cell lung cancer indication,
provided NEORX, at its election, pays STANFORD a one-time cash
payment of $[*] within 30 days after execution of the sublicense
agreement; or
(b) Upon commencement of a Phase III clinical trial for a Licensed
Product other than the Avicidin Product for small cell lung cancer,
provided NEORX, at its election, pays STANFORD a one-time payment
of $[*] within 30 days of the commencement of the Phase III study."
2.2 -- Paragraph 12.4(b) of the License is hereby amended to read in
its entirety, as follows:
"12.4(b) -- In addition, NEORX shall pay STANFORD earned royalties
of [*] ([*]%) of Net Sales on all sales of Licensed Product(s) by its
sublicensees. Such royalties may be reduced to [*] ([*]%) on
NEORX's Avicidin Product for the small cell lung cancer indication
and/or on Licensed Products for other indications provided that NEORX
complies with the appropriate royalty reduction provision of Section
5.3 hereof."
3. Continuity
Except as amended as provided above, the License shall continue in
full force and effect.
[*] Confidential Treatment Requested 2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment No. 3 in duplicate originals by their duly authorized officers or
representatives.
THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY
By /s/ Katharine Ku
----------------------------------
Title: Director, Technology Licensing
Date: November 10, 1995
NEORX CORPORATION
By /s/ Jeffrey J. Miller
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Jeffrey J. Miller, Ph.D., J.D.
Title: Senior Vice President
Business Development & Legal Affairs
Date: November 6, 1995
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A request for confidential treatment with respect to this exhibit has been filed
with the Securities and Exchange Commission. Pages where confidential treatment
has been requested are marked "Confidential Treatment Requested" and the
appropriate section has been replaced with an asterisk [*].
RESEARCH COLLABORATION AGREEMENT
This Agreement is made effective as of September 1, 1995 between biosys,
a Delaware corporation having a place of business at 10150 Old Columbia Road,
Columbia, Maryland 21046 (biosys), and NeoRx Corporation, a Washington
corporation having its principal place of business at 410 West Harrison Street,
Seattle, Washington 98119 (NeoRx).
WHEREAS NeoRx and a predecessor in interest to biosys (Crop Genetics
International Corporation) entered into a Feasibility Study and Materials
Transfer Agreement dated August 26, 1994 and amended March 7, 1995
(collectively, the "Initial Agreement") for the purpose of evaluating the
production of a humanized monoclonal antibody in insect larvae;
WHEREAS NeoRx and biosys, a Delaware corporation duly licensed to do
business in Maryland, wish to expand the collaborative effort begun pursuant
to the Initial Agreement with regard to production of proteins and protein-
containing constructs in vivo in insect larvae; and
WHEREAS NeoRx and biosys agree that the Initial Agreement shall be
superseded in its entirety by this Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein set forth,
the parties agree as follows:
1. Definitions.
1.1 "FDA Protein Product Plan" shall mean a plan for addressing the
regulatory issues raised by use of Protein Products in human clinical trials.
1.2 "Fusion Construct" shall mean a construct containing one component
selected from the group of Humanized Antibody, Modified Antibody or monoclonal
antibody fragment and a second component selected from streptavidin, one or more
streptavidin subunits and Modified Streptavidin.
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1.3 "Humanized Antibody" shall mean a humanized version of the murine
monoclonal antibody NR-LU-10.
1.4 "Know-How" shall mean all confidential, technical, trade secret and
scientific information owned or controlled by NeoRx or biosys (with right to
license or sublicense) or possessed by NeoRx or biosys (with right to disclose),
which is necessary or useful for the production, testing, marketing or sale of
Protein Products.
1.5 "Modified Antibody" shall mean an antibody or antibody fragment
having amino acid additions and/or deletions and/or substitutions made through
changes in the encoding DNA sequence for the antibody or antibody fragment.
1.6 "Modified Streptavidin" shall mean streptavidin having amino acid
additions and/or deletions and/or substitutions made through changes in the
encoding DNA sequence for streptavidin.
1.7 "NeoRx Designees" shall mean one or more third parties designated by
NeoRx as entities for which biosys can manufacture Protein Products.
1.8 "Net Sales" shall mean the portion of the invoice amount received from
commercial sales of Products attributable to the value of the Protein Product
component thereof after deduction of the following items, provided and to the
extent such items are included in the invoice amount received:
(A) transportation and transportation insurance charges separately stated
in the invoice and allocated in a fair and consistent manner to Products if
other products are included in the invoice;
(B) trade and quantity discounts or rebates and cash discounts or rebates
actually allowed and taken to the extent customary in the trade;
(C) credits or allowances given or made for rejection or return of
previously sold Products; and
(D) any sales tax or other governmental charge levied directly on the
sale, transportation, or delivery of Products and borne by the seller.
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Any Products sold or otherwise transferred in other than an arm's length
transaction or in kind or other non-financial transactions involving the sale
or other transfer of Products to any third party (e.g., barter) shall be deemed
invoiced at the fair market price of Products in the country of sale or
transfer. Net Sales shall not include any transfers of Products between NeoRx
and NeoRx Designees, unless the receiving party is the consumer, marketer or
user of the Products.
1.9 "Patent Technology" shall mean any patentable or potentially
patentable intellectual property relating generally or specifically to the
production of Protein Products that is included in any United States or
international patent application filed by biosys and/or NeoRx.
1.10 "Patent Applications" shall mean patent applications filed in the
United States or any international Patent Office and having one or more claims
encompassing Patent Technology or Protein Products.
1.11 "Pretargeting Information" shall mean information relating to NeoRx's
proprietary pretargeting technology, including information regarding the
humanized antibody designated NR-LU-10.
1.12 "Product" shall mean a diagnostic, therapeutic, reagent or other
product which is or includes a Protein Product.
1.13 "Protein Product" shall mean any one or more or a combination of
certain crude proteins or protein-containing constructs designated by NeoRx and
produced using a baculovirus expression system by biosys pursuant to this
Agreement which meet NeoRx's specifications for such proteins or protein-
containing constructs in purified form suitable for use in humans.
1.14 "Research Capital Expenditures" shall mean capital additions or
improvements in biosys' dedicated facility in Columbia, Maryland required to
achieve Research Goals.
1.15 "Research Goals" shall mean research or production benchmarks in the
Research Project which must be achieved in a timely fashion to advance the
Research Project.
1.16 "Research Information" shall mean information regarding the
production of Protein Product by biosys, including regulatory information,
manufacturing process parameters, characteristics of the insect colony once
such a colony is established, and other relevant Know-How.
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1.17 "Research Project" shall mean research conducted pursuant to this
Agreement with regard to the production of Protein Product and the use of such
Protein Product in in vitro or in vivo preclinical evaluation or in human
clinical trials alone or with other Product components.
1.18 "Research Project Leader" shall mean the person having the
responsibility to determine the scope and scientific direction of the Research
Project and to alter that scope and direction to advance research, product
development and clinical evaluation of Products.
1.19 "Supply Agreement" shall mean a definitive agreement for the
commercial supply of Protein Product to NeoRx or NeoRx Designees by biosys.
1.20 "Quarterly Payments" shall mean advanced quarterly payments paid
by NeoRx to biosys for participating in the Research Project pursuant to this
Agreement.
2. Quarterly Payments.
NeoRx shall pay to biosys Quarterly Payments in the amount of $[*] as set forth
below.
A) NeoRx will pay to biosys one-half of one Quarterly Payment on
November 15, 1995 or upon execution of this Agreement by both parties,
whichever is later; and
B) Thereafter, NeoRx will pay to biosys three Quarterly Payments
commencing on January 1, 1996, unless this Agreement is terminated prior
to the due date of any such Quarterly Payment (January 1, 1996, April 1,
1996 and July 1, 1996).
At NeoRx's option, Quarterly Payments may be in cash or may be made in the form
of registered NeoRx common stock. If the Quarterly Payments are made in
registered NeoRx common stock, NeoRx will provide a number of shares sufficient
to yield $[*] to biosys, net any costs associated with the sale of the
registered stock. If the number of shares provided to biosys for a Quarterly
Payment does not yield $[*] to biosys, NeoRx will issue additional shares to
biosys to make up the deficiency. NeoRx and biosys will cooperate to facilitate
the sale of the registered shares by biosys in a manner that minimizes the
impact of such sale on the trading price of the NeoRx common stock, but the
ultimate decision with regard to the sale of the registered stock rests with
biosys.
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3. Research
3.1 Research Project Leader. Dr. John Reno or his designee of NeoRx will
be the Research Project Leader.
3.2 Research Project. The Research Project will be conducted by NeoRx
and biosys under the direction of the Research Project Leader. Initially,
NeoRx and biosys contemplate that the Research Project will progress through
the series of Research Goals set forth in Section 3.3 hereof. The Research
Project Leader may, from time to time during the term of this Agreement, alter
the scope or scientific direction of the Research Project. If such alteration
necessitates the modification, substitution, elimination or addition or
establishes or alters the timing of a Research Goal, NeoRx will provide biosys
with timely written notice thereof. The parties agree that the total number
of Research Goals that are applicable at any time during the term of this
Agreement, including those Research Goals that have been attained and those
Research Goals to be attained, shall not exceed five.
3.3 Research Goals. The Research Goals are as follows:
A) Delivery by biosys to NeoRx of not less than a 5 g research batch of
crude clinical grade Humanized Antibody (i.e., Humanized Antibody that upon
purification is suitable for use in humans) on or before December 31, 1995;
and delivery by biosys to NeoRx of 50g research batches crude clinical
grade Humanized Antibody per quarter thereafter during the term of this
Agreement;
B) Expression of streptavidin as a Protein Product by ________________
[Date?];
C) Expression of Modified Streptavidin as a Protein Product;
D) Expression of Modified Antibody as a Protein Product; and
E) Expression of Fusion Construct as a Protein Product.
If NeoRx in its sole discretion determines that any Research Goal has not been
met by biosys, NeoRx may terminate this Agreement upon delivery of written
notice of such termination to biosys.
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3.4 Periodic Research Progress Reports. A written report, detailing the
work done in furtherance of the Research Project, including progress made toward
meeting the Research Goals, incorporating any modification of Research Infor-
mation arising pursuant to the Research and highlighting any potentially
patentable subject matter discovered during the Research shall be prepared by
biosys and submitted to the Research Project Leader no later than two weeks
after the date upon which this Agreement is executed by both parties, January
1, 1996, April 1, 1996 and July 1, 1996.
4. biosys Commitment.
4.1 Personnel. During the term of this Agreement which ends September
30, 1996, biosys will contribute 100% of the time of three predesignated biosys
researchers (Dr. Jeff Kelly, Scott Foulke and Donald Weaver) and at biosys' sole
discretion a percentage of other staff time necessary to carry out biosys'
research pursuant to this Agreement. For any research extending beyond
September 30, 1996, biosys agrees to apply not less than 50% of Dr. Kelly's time
in performance of such research. biosys' obligations under this paragraph are
conditioned upon continued employment at biosys of the three predesignated
researchers. If Dr. Kelly leaves the employ of biosys, then NeoRx shall have
the option to terminate this Agreement if a substitute researcher suitable to
NeoRx is not employed by biosys. Breach of this Paragraph 4.1 is non-curable
by its nature, and therefore NeoRx may terminate this Agreement upon delivery
of notice to biosys of such breach.
4.2 Facilities. biosys will provide production and research facilities
in Columbia, Maryland necessary for biosys to meet its obligations under this
Agreement. biosys is responsible to ensure that such facilities have a level of
automation appropriate for the research production scale required as the
Research Project progresses, subject to the limitations of Paragraph 4.3 hereof.
4.3 Capital Improvements. During the term of this Agreement, biosys shall
contribute up to $[*] in Research Capital Expenditures. biosys shall maintain
records with regard to Research Capital Expenditures and provide a quarterly
report of such Research Capital Expenditures to NeoRx. If Research Capital
Expenditures in excess of $[*] are required to achieve Research Goals, biosys
may terminate this Agreement, if NeoRx does not elect to pay for the additional
Research Capital Expenses.
4.4 Preparation of Crude Humanized Antibody for Research. During the
term of this Agreement, biosys shall provide to NeoRx crude clinical grade
Humanized Antibody for research to be conducted hereunder. NeoRx shall be
responsible for purification of the crude clinical grade Humanized Antibody.
If NeoRx determines in its sole discretion that NeoRx and biosys are unable to
develop a purification process to render the crude clinical grade Humanized
Antibody sufficiently pure for use in human clinical trials, NeoRx may terminate
this Agreement upon delivery of written notice of such termination to biosys.
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5. Future Research.
On or before July 1, 1996, NeoRx will present to biosys NeoRx's future research
goals, if any, requiring research efforts from biosys personnel in time periods
extending beyond September 30, 1996. If NeoRx has any such future research
goals, future advanced quarterly payments will be negotiated in good faith by
the parties based upon staffing required to meet those future research goals.
6. Confidentiality, Publication and Access by Third Parties.
6. Confidentiality. Each party agrees that it will keep confidential and
will not publish or otherwise divulge or use for any purpose other than as
contemplated by this Agreement any Research Information or Pretargeting Infor-
mation or other proprietary information relating to the production of Protein
Products received from the other party under this Agreement ("Confidential
Information"), without the express written consent of the disclosing party.
All Research Information or Pretargeting Information or other proprietary
information relating to the production of Protein Products exchanged pursuant
to this Agreement shall be regarded as confidential, except that which, as
established by competent proof:
(A) can be shown to have been known to the receiving party prior to
disclosure by the providing party;
(B) is now, or comes into, the public domain by publication or otherwise
without the fault of the receiving party;
(C) is made known to the receiving party from another source under no
obligation to the providing party;
(D) is required by law, regulation or judicial order to be disclosed; or
(E) can be shown by the receiving party to have been developed
independently of any disclosure hereunder.
6.2 Publication. Neither party will publish any results generated in
accordance with this Agreement in a scientific forum such as a peer-reviewed
scientific journal or at a scientific meeting, unless the following procedure is
followed:
A) The drafting party shall submit the proposed publication, whether
written or oral, to the reviewing party at least 30 days prior to sub-
mission of written material which is not an abstract for publication or
prior to an oral presentation and at least 15 days prior to submission of
a written abstract;
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B) The reviewing party shall promptly review the proposed publication,
provide suggestions, and notify the drafting party of the inclusion of
potentially patentable material in the proposed publication and provide or
withhold consent to publication of any Confidential Information required by
Section 6.1 hereto; and
C) The drafting party will address the suggestions made by the receiving
party, revise the publication to be commensurate in scope to the consent to
disclose Confidential Information received pursuant to Section 6.2(B) and
delay publication of the portions of the publication identified as
potentially patentable for a period of not more than 90 days to allow for
the further evaluation and, if deemed appropriate, the preparation and
filing of a patent application directed thereto.
If the publication is to be submitted by both parties, the preceding procedure
must be followed, with the employee authors of each party constituting the
drafting party and the employee reviewers of that party constituting the
reviewing party.
6.3 Access by Third Parties. Notwithstanding the limitations recited
in Sections 6.1 and 6.2, NeoRx may disclose Research Information and provide
Protein Product to NeoRx's existing or potential corporate partners. Such
disclosures by NeoRx shall be made under terms of non-disclosure and non-use
by the receiving party for a period of five years. Such material transfers
by NeoRx shall be made under terms of non-disclosure, non-transferability and
non-commercial use by the receiving party for a period of five years. NeoRx
shall use reasonable efforts to facilitate the execution of a non-disclosure
agreement between biosys and the third party, if such third party is a
manufacturer of proteins and if disclosure of a high level of technical
detail with regard to the biosys process is to be undertaken. If such a
biosys-third party non-disclosure agreement is not executed and biosys provides
written notice to NeoRx that biosys intends to sue a third party for breach of
the NeoRx-third party non-disclosure agreement, then at its sole discretion
NeoRx may (1) assign its rights related to biosys Confidential Information
under such non-disclosure agreement to biosys or (2) institute an action
against the third party for such breach.
Also notwithstanding the foregoing, either party may disclose confidential
information to governmental agencies to the extent desirable to obtain approval
for marketing Products, to outside consultants and to non-clinical and clinical
investigators to the extent desirable for their information under a secrecy
agreement with essentially the same provisions as contained herein. Nothing
in this Agreement shall be construed to limit the right of clinical investi-
gators to publish the results of their studies, however NeoRx and biosys shall
use reasonable efforts to see that the Confidential Information of NeoRx and
biosys is respected in such instances and that clinical investigators do not
otherwise disclose Confidential Information.
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Also notwithstanding the foregoing, either party may disclose such information
to third parties under a secrecy agreement having essentially the same provi-
sions as that contained in this Section 6 in connection with the exercise of
sublicense rights granted hereunder.
6.4 Term and Superseding of Prior Confidentiality Agreements. The
foregoing obligations of confidentiality shall survive for five (5) years after
termination or expiration of this Agreement. Any confidentiality agreement
concerning the subject matter of this Agreement previously entered into by the
parties shall be superseded by this Section 6.
7. Patent Technology.
7.1 Ownership. NeoRx will own any Patent Technology and any Protein
Product developed in the Research Project.
7.2 Patent Application Filing and Prosecution. NeoRx will prepare and
file or have prepared and filed and prosecute or have prosecuted Patent
Applications. NeoRx and biosys agree to cooperate in the preparation, filing
and prosecution of Patent Applications. Cooperation by biosys and NeoRx
includes, but is not limited to, the following:
A) Reasonable delay in publication or other disclosure of the potentially
patentable subject matter to permit preparation and filing of Patent
Applications;
B) Technical support in preparation and prosecution of Patent
Applications; and
C) Prompt execution of any and all documents necessary to allow NeoRx
to prosecute Patent Applications before patent offices of various
jurisdictions.
7.3 License Grant. NeoRx hereby grants to biosys a co-exclusive
(biosys and NeoRx only), world-wide [*]% royalty-bearing license based upon Net
Sales of the protein produced, without the right to sublicense, to use all
Patent Technology that is the subject of an issued patent for production of
moieties other than Protein Product for biosys or for third parties. NeoRx
hereby grants to biosys a co-exclusive (biosys and NeoRx only), world-wide [*]%
royalty-bearing license based upon Net Sales of the protein produced, without
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the right to sublicense, to use all Patent Technology that is the subject of
a patent application pending before a patent office in the United States or
abroad for production of moieties other than Protein Product for biosys or
for third parties. These licenses terminate upon material breach of this
Agreement by biosys, which is not cured in accordance with Section 16 hereof.
Quarterly royalty payments shall be due from biosys to NeoRx for such use of
patented Patent Technology, until the last to expire patent claiming the
Patent Technology being employed by biosys has expired. Quarterly royalty
payments shall be due from biosys to NeoRx for such use of Patent Technology
encompassed by a pending patent application, until such application has matured
into a patent, and quarterly payments of a [*]% royalty become due, or until
such application abandoned and no continuing applications are filed. NeoRx
retains a co-exclusive right to use Patent Technology in accordance with the
terms of this Agreement.
8. Know-How.
NeoRx and biosys will jointly own any Know-How developed during the Research
Project. NeoRx will not use such Know-How to produce products for themselves or
others except in accordance with Section 13 or 14 hereof.
9. Third Party Intellectual Property Licenses.
NeoRx and biosys will cooperate in evaluating potential intellectual property
barriers to production of Protein Product and in determining a strategy for
achieving freedom to operate in the field of preparation of Protein Product.
biosys will enter into any intellectual property licenses necessary to practice
the production process for Protein Product. These intellectual property
licenses must allow biosys to sublicense the technology to permit NeoRx to
qualify as a second source under Section 14 hereof. Such intellectual
property licenses shall also be assignable or otherwise transferable in the
event that NeoRx acquires the insect larvae protein production portion of
biosys' business in accordance with Section 13 hereof or in the case of merger
where NeoRx is not the surviving entity or upon acquisition of all or
substantially all of NeoRx's assets by a third party. Payment of all third
party royalties associated with the process for producing Protein Product is
biosys' responsibility, provided that biosys is a producer of Protein Product.
10. Food and Drug Administration.
NeoRx and biosys acknowledge that approval of the United States Food and Drug
Administration (FDA) with respect to administration of Protein Product to humans
is essential for the development of any Product pursuant to this Agreement.
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10.1 FDA Protein Product Plan. NeoRx and biosys will work together to
formulate a FDA Protein Product Plan and communicate the FDA Protein Product
Plan to the FDA. The regulatory issues to be addressed by the FDA Protein
Product Plan include, but are not limited to, the issues covered in the
following FDA documents:
Points to Consider in the Production and Testing of New Drugs and Biologics
Produced by Recombinant DNA Technology (1985);
Supplement to the Points to Consider in the Production and Testing of New
Drugs and Biologics Produced by Recombinant DNA Technology: Nucleic
Acid Characterization and Genetic Stability (1992);
Points to Consider in the Manufacture and Testing of Therapeutic Products
for Human Use Derived from Transgenic Animals (1995); and
Points to Consider in the Manufacture and Testing of Monoclonal Antibody
Products for Human Use (1994).
10.2 Feedback. The FDA will provide feedback to NeoRx and biosys at
many stages during the term of this Agreement. Such stages for FDA feedback
include, but are not limited to, upon request for a meeting to discuss the FDA
Protein Product Plan; upon evaluation of the FDA Protein Product Plan by the
FDA; upon submission of an Investigational New Drug Application (IND) relating
to human clinical use of Protein Product to the FDA; upon the request for any
change in a clinical protocol; and upon occurrence of any adverse event in
humans. If at any time during the term of this Agreement, NeoRx determines
in its sole discretion that FDA feedback renders the use of Protein Product
in humans either impossible or impracticable, NeoRx may terminate this Agreement
upon delivery of written notice of such termination to biosys. Impossibility
connotes FDA refusal to allow Protein Product to be administered to humans or
FDA imposition of requirements or limitations so onerous or stringent as to
effectively preclude compliance, such as a requirement for identification of
all adventitious agents comprising the bioburden or proof of six log removal
or inactivation of all such adventitious agents. Impracticability connotes
FDA imposition of requirements or limitations that render compliance therewith
impractical, such as any requirement or limitation that removes the cost
advantage of the use of Protein Product over mammalian cell culture protein
or protein-containing construct production.
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10.3 Regulatory Compliance-Facility.
10.3.1 Facility Inspection. From time to time and upon adequate
notice to biosys, NeoRx will be permitted to inspect biosys' facility for the
purpose of assuring good manufacturing practice (GMP) compliance.
10.3.2 Production Changes. biosys will notify NeoRx prior to making
any significant production changes which may structurally or functionally alter
the Protein Product.
10.4 Regulatory Compliance-Documents.
10.4.1 Copying. From time to time and upon adequate notice to
biosys, NeoRx will be permitted to copy relevant production records for the
purpose of assuring GMP compliance.
10.4.2 Investigational New Drug Application (IND). biosys will
provide to NeoRx detailed written descriptions of all processes used to manu-
facture Protein Product to permit NeoRx to file an IND with the FDA for a
Product or a Protein Product.
10.4.3 Drug Master File (DMF). NeoRx will provide regulatory
support to biosys in the preparation and filing of a DMF pertaining to Protein
Product, if such a filing is required. biosys will permit NeoRx to cross
reference the DMF in NeoRx's IND or market application filed with the FDA and
counterpart documents required to be filed with foreign regulatory authorities.
11. Production of Protein Product by biosys.
biosys shall have the right to produce Protein Product only for NeoRx and NeoRx
Designees.
12. Purchase of Protein Product by NeoRx.
12.1 Pricing Matrix. If NeoRx or a NeoRx Designee requires Protein
Product and subject to Sections 13 and 14 hereof, NeoRx and NeoRx Designees
will purchase Protein Product exclusively from biosys in accordance with the
matrix attached hereto as Exhibit A.
12.2 Supply Agreement. Following execution of this Agreement, NeoRx
and biosys will negotiate in good faith a Supply Agreement, wherein the terms
of such Supply Agreement shall be consistent with this Section 12 and the matrix
attached as Exhibit A. If NeoRx and biosys cannot negotiate a Supply Agreement
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within 120 days of the execution of this Agreement, NeoRx may terminate this
Agreement upon delivery of written notice of such termination to biosys or this
Agreement may be amended to provide for an extended time period for negotiation
of a Supply Agreement. Failure of the parties to negotiate a Suppy Agreement
pursuant to this Section shall not trigger the provisions of Sections 13 or 14
hereof.
13. Uninterrupted Supply.
If biosys for any reason cannot or will not make Protein Product for NeoRx or
for NeoRx Designees due to a biosys business decision, including but not limited
to, a change in business strategy or focus of biosys, the inability or unwil-
lingness of biosys to produce Protein Product in accordance with the pricing
matrix described in Paragraph 12.1 and Exhibit A hereof or as a result of
acquisition of biosys by a party which cannot or will not make Protein Product
for NeoRx, then upon election by NeoRx and biosys and payment by NeoRx to
biosys of the market value of the equipment, insect stocks, seed lots, virus
stocks and other material associated with the production of Protein Product
and assumption by NeoRx of biosys' future liabilities relating to Protein
Product production, which may include personnel salaries of persons that
NeoRx elects in its sole discretion to retain, intellectual property licenses
and rent, NeoRx will have the exclusive right to make, have made, use, sell or
have sold such Protein Product. NeoRx will owe no royalties to biosys following
such an acquisition. If any such equipment has been leased by biosys, NeoRx
will either assume the lease, buy the leased equipment from the lessor or
pursue any other alternative transfer mechanism provided for in the lease.
If either NeoRx or biosys does not elect this option, biosys shall provide
Protein Product to NeoRx until NeoRx is qualified as a second source pursuant
to Section 14 hereof.
14. Second Source.
14.1 Qualification Right. NeoRx will have the right to qualify itself as
a second source for the production of Protein Product. biosys shall provide
training to NeoRx personnel sufficient for such qualification during the term
of this Agreement, upon non-election by biosys pursuant to Section 13 hereof or
upon breach of this Agreement by biosys at biosys' expense and otherwise at
NeoRx's expense.
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14.2 Protein Product Production Right. NeoRx will have the right to
produce Protein Product, if biosys is unwilling or unable to meet NeoRx's or
any NeoRx Designee's demand therefor due to a biosys business decision,
including but not limited to, a change in business strategy or focus of biosys
or as a result of acquistion of biosys by a party which cannot or will not make
Protein Product for NeoRx, due to the inability or unwillingness of biosys to
produce Protein Product in accordance with the pricing matrix described in
Paragraph 12.1 and Exhibit Ahereof or upon breach by biosys of the Supply
Agreement between NeoRx and biosys. In this event, biosys shall use best
efforts to provide Protein Product to NeoRx until NeoRx is qualified as a
second source pursuant hereto.
14.3 Royalty. If NeoRx commences production of Protein Product to meet
NeoRx or NeoRx Designee demand as set forth in Sections 13 and 14 of this
Agreement, NeoRx shall owe no royalties to biosys for such production.
15. Royalty Accounting and Payments
15.1 Payments and Reports. Royalties due pursuant to this Agreement shall
be paid quarterly on a calendar year basis. Such royalties shall be based upon
actual Net Sales during the applicable calendar quarter and the royalty rates
established pursuant to Section 7. All sales in foreign currencies shall be
converted into United States dollars using the financial rate of exchange quoted
under Foreign Exchange in The Wall Street Journal on the last business day of
the calendar quarter in which the royalty is due. Costs associated with the
currency conversion shall be borne by the remitting party. Royalty payments
shall be made within forty-five (45) days after the end of each calendar quarter
and shall be accompanied by reports of local currency sales and units sold by
product and country and conversion rates into United States currency.
15.2 Records Retention. Each party shall maintain sales records in
sufficient detail to permit the receiving party to confirm the accuracy of the
determination of the accuracy of the royalty paid. At the request and expense
of the requesting party, the remitting party shall permit an auditor, appointed
by the requesting party and reasonably acceptable to the remitting party, to
examine such records to the extent necessary to verify the accuracy of the
determination of royalties payable by product and country. The appointed
auditor may examine such records upon request of the requesting party during
normal business hours upon reasonable notice to the remitting party. Such
examinations shall be made not more than once per calendar year. Also, such
examinations shall be made not later than three (3) years after the date of
the report being examined, and the parties shall not be required to maintain
sales records for a longer period of time. Results of any such examination
shall be made available to both parties. If such results establish that the
remitting party has underpaid the requesting party by ten percent (10%) or
more, then the remitting party shall reimburse the requesting party for its
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costs reasonably associated with such examination and remit to the requesting
party three times the difference in royalties between that paid by the remitting
party and that found to be owing by the remitting party during the examination.
15.3 Currency Blockage. If the laws or regulations of another country
prevent the conversion of its currency into United States dollars for the
payment of royalties, the remitting party will either (a) pay such royalties by
depositing the currency of the other country into a bank account designated by
the receiving party in that country or (b) if permitted by law, pay such
royalties in the currency of the country in question to the receiving party's
designee in that country.
16. Termination.
16.1 NeoRx may terminate this Agreement at any time upon ninety (90)
days written notice to biosys, provided that NeoRx remains obligated to make
payments pursuant to this Agreement to biosys during the notice period.
NeoRx may also terminate this Agreement if biosys materially breaches this
Agreement; NeoRx provides written notice to biosys of the material breach; and
biosys fails to cure the breach within the longer of 30 days from receipt by
biosys of the notice or such time as is reasonably necessary to cure the breach.
Upon such termination, NeoRx may use Know-How and Patent Technology developed
subject to or employed pursuant to this agreement to produce protein by a method
other than in vivo insect larvae production unless the provisions of Section 13
or Section 14 hereof apply. Notwithstanding the foregoing, NeoRx may also
terminate this Agreement in any other manner specifically set forth herein upon
delivery of written notice of termination to biosys.
16.2 biosys may terminate this Agreement if NeoRx materially breaches this
Agreement; biosys provides written notice to NeoRx of the material breach; and
NeoRx fails to cure the breach within the longer of 30 days from receipt by
NeoRx of the notice or such time as is reasonably necessary to cure the breach.
16.3 Either party to this Agreement may terminate this Agreement upon
written notice in the event that the other party becomes insolvent, or seeks
protection under any bankruptcy, receivership, trust deed, creditor's arrange-
ment or composition or if any comparable proceeding is instituted against the
other party and not dismissed within 90 days after institution.
16.4 biosys is under no obligation to refund any payments made by NeoRx
prior to any such termination.
16.5 The obligations of the parties under Sections 6 and 7 of this
Agreement shall survive the termination hereof.
15
<PAGE>
17. Notices.
Any notice, request, approval or other documents required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have been
sufficiently given, and effective upon the date of dispatch, if delivered in
person or by internationally recognized courier service, transmitted by
telegraph or facsimile, provided, that in the case of facsimile delivery, such
notice shall be confirmed by mail sent in the manner provided herein, or
deposited in the mail, postage prepaid, for mailing by first class air mail,
certified or registered mail, return receipt requested, addressed as follows:
If to biosys, addressed to:
biosys
10150 Old Columbia Road
Columbia, Maryland 21046
Attention: R. Patrick Simms
Fax: (410) 381-3840
If to NeoRx, addressed to:
NeoRx Corporation
410 West Harrison
Seattle, Washington 98119
Attention: Jeffrey J. Miller, Ph.D., J.D.
Fax: (206) 284-7112
or to such other address or addresses as may be specified by the parties from
time to time by written notice.
18. Publicity.
The name of either party to this Agreement shall not be used by the other party
in any advertising, publicity or news release, etc., related to the work
undertaken under the terms of the Agreement without prior written consent which
shall not be unreasonably withheld. The parties may make disclosures necessary
to meet the requirements of the Securities and Exchange Commission.
16
<PAGE>
19. Dispute Resolution.
In the event of any controversy or claims arising out of or in relation to any
provision of this Agreement or the breach thereof, the parties shall make
reasonable efforts to settle the problem between themselves in an amicable way
before commencing litigation.
20. Miscellaneous.
20.1 Entire Agreement. This Agreement expresses the entire understanding
between the parties on the subject matter hereof and supersedes and replaces
all prior agreements between them, whether written or oral.
20.2 Waiver; Amendment. The provisions of this Agreement may not be
waived or modified except by a writing signed by the party against whom
enforcement is sought. No waiver of breach shall constitute a subsequent waiver
of any subsequent breach, and if any provision of this Agreement is held to be
invalid or unenforceable, the remaining provisions shall remain valid and
enforceable.
20.3 Assignment. Neither party to this Agreement may assign any of its
rights or obligations hereunder without the express written consent of the other
party which shall not be unreasonably withheld.
20.4 Severability. If any portion of this Agreement is held to be invalid
for any reason, the remainder of this Agreement shall remain in full force and
effect.
20.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the state of Washington, USA.
17
<PAGE>
IN WITNESS WHEREOF, the parties have signed their names effective as of the day
and year first above written.
Accepted for:
NEORX CORPORATION biosys
/s/ Jeffrey J. Miller /s/ R. Patrick Simms
- ------------------------------- ----------------------------------
Jeffrey J. Miller, Ph.D., J.D. By: R. Patrick Simms
Senior Vice President Its: Sr. Vice President
Business Development & Legal Affairs
18
<PAGE>
Letter Agreement Regarding Quarterly Payments
For NeoRx - biosys Research Collaboration Agreement
1. NeoRx shall pay to biosys one-half of one Quarterly Payment in cash upon
execution by both parties of the Research Collaboration Agreement and this
Letter Agreement (the "Effective Date").
2. Also on the Effective Date, NeoRx shall issue and transfer to biosys or
biosys' broker a number of shares of NeoRx registered common stock having a fair
market value equal to a Quarterly Payment plus $[*] (Adjusted Payment), said
number of shares to be based upon the closing price of the stock on the trading
day immediately preceding the issue date. biosys shall transfer the issued
stock to a broker for sale by the broker with net proceeds to be paid to biosys.
On the first business day of the quarter next succeeding the issuance and
transfer of shares to biosys, January 2, 1996, if the gross proceeds less sales
commissions from the sale of shares accrued to the brokerage account of biosys
is less than the Adjusted Payment, then NeoRx will pay to biosys any shortfall
in cash within 5 days notice of such shortfall provided to NeoRx by biosys.
If the net proceeds from the sale of the shares exceed the Adjusted Payment or
if the sale of less than the number of issued shares provides net proceeds
in excess of a Adjusted Payment, then the excess proceeds or shares shall be
applied to NeoRx's payment obligations arising in the next quarter or returned
to NeoRx if no further payment to biosys is due.
3. Provided that the Research Collaboration Agreement remains in effect, NeoRx
at its election will pay biosys a Quarterly Payment in cash when due under the
Research Collaboration Agreement or 2) deliver registered common stock to biosys
60 days prior to the due date pursuant to the terms set forth above.
/s/ Jeffrey J. Miller /s/ R. Patrick Simms
- ----------------------------------- ---------------------------------
Jeffrey J. Miller, Ph.D., J.D. By: R. Patrick Simms
Senior Vice President Its: Sr. Vice President
Business Development & Legal Affairs
[*] Confidential Treatment Requested
<PAGE>
Exhibit A
PROTEIN PRICING GRID
($/[*] Crude)
<TABLE>
<CAPTION>
Yield ([*]/[*] larvae)
------------------------------------------
Volume
([*]/Yr) <=[*] [*] [*] [*] [*]
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
[*] - [*] [*] [*] [*] [*] [*]
[*] - [*] [*] [*] [*] [*] [*]
[*] - [*] [*] [*] [*] [*] [*]
[*] - [*] [*] [*] [*] [*] [*]
[*] - [*] [*] [*] [*] [*] [*]
> [*] [*] [*] [*] [*] [*]
</TABLE>
[*] Confidential Treatment Requested
