SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for the Quarterly
Period ended March 31, 1996 or
Transition Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for the transition
period from _____________ to _______________.
Commission File Number 0-16614
NeoRx Corporation
(Exact Name of Registrant as Specified in its Charter)
WASHINGTON 91-1261311
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
410 West Harrison Street, Seattle, Washington 98119
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (206) 281-7001
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:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of May 1, 1996 there were outstanding 15.3 million shares of the Company's
Common Stock, $.02 par value.
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TABLE OF CONTENTS
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Page
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
of Results of Operations and
Financial Condition 8
PART II OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 6. Exhibits and Reports on Form 8-K 10
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2
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NEORX CORPORATION
(a development stage company)
BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
(unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,240 $ 7,182
Short-term investments 19,733 8,937
Inventories 560 538
Prepaids and other 1,033 931
------- -------
Total current assets 24,566 17,588
------- -------
FACILITIES AND EQUIPMENT, at cost:
Equipment and furniture 3,553 3,498
Leasehold improvements 3,216 3,233
------- -------
6,769 6,731
Less: accumulated depreciation and amortization (6,012) (5,914)
------- -------
Facilities and equipment, net 757 817
------- -------
OTHER ASSETS 113 113
------- -------
$ 25,436 $ 18,518
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 780 $ 1,511
Accrued liabilities 763 531
Deferred revenue 250 250
Current portion of capital leases 51 51
------- -------
Total current liabilities 1,844 2,343
------- -------
NON-CURRENT LIABILITIES:
Convertible subordinated debentures, 9 3/4 % 1,195 1,195
Capital leases, less current portion 77 88
------- -------
Total non-current liabilities 1,272 1,283
------- -------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Series preferred stock, $.02 par value,
3,000,000 shares authorized:
Convertible exchangeable preferred stock, Series 1,
208,000 shares issued and outstanding 4 4
Convertible preferred stock, Series 2,
47,000 shares issued and outstanding 1 -
Common stock, $.02 par value,
60,000,000 shares authorized,
15,350,000 and 14,359,000 shares
issued and outstanding, respectively 307 287
Additional paid-in capital 139,058 128,098
Deferred compensation - (139)
Accumulated deficit since inception (117,050) (113,358)
------- -------
Total shareholders' equity 22,320 14,892
------- -------
$ 25,436 $ 18,518
======= =======
</TABLE>
See notes to financial statements.
3
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NEORX CORPORATION
(a development stage company)
STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
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<CAPTION>
Three months ended February 13, 1984
March 31, (inception) to
-------------------- March 31,
1996 1995 1996
------ ------ ------
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REVENUES:
Contract revenues and fees $ 21 $ 57 $ 37,661
------ ------ --------
OPERATING EXPENSES:
Research and development 2,416 2,199 94,447
General and administrative 1,366 1,122 56,017
------ ------ --------
Total operating expenses 3,782 3,321 150,464
------ ------ --------
Loss from operations (3,761) (3,264) (112,803)
OTHER INCOME (EXPENSE):
Investment and interest income, net 297 212 11,153
Interest expense (37) (34) (5,532)
Litigation expense, net - - (985)
Other - - (1,228)
------ ------ --------
Net loss $(3,501) $(3,086) $(109,395)
====== ====== ========
Preferred stock dividends (191) (182) (6,094)
====== ====== ========
Net loss applicable to common shares $(3,692) $(3,268) $(115,489)
====== ====== ========
Net loss per common share $ (.25) $ (.28) $ (20.90)
====== ====== ========
Weighted average common
shares outstanding 14,996 11,873 5,525
====== ====== ========
</TABLE>
See notes to financial statements.
4
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NEORX CORPORATION
(a development stage company)
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three months ended February 13, 1984
March 31, (inception) to
-------------------- March 31,
1996 1995 1996
------ ------ ------
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,501) $(3,086) $(109,395)
------- ------ --------
Adjustments to reconcile net
loss to net cash (used in)
operating activities:
Depreciation and amortization 98 105 9,551
(Increase) decrease in inventories (22) 27 (560)
(Increase) in prepaids and
other assets (156) (220) (755)
(Decrease) increase in accounts
payable and accrued liabilities (315) 116 1,310
Increase in deferred revenue - - 250
Compensation expense on stock
awards and options 139 23 1,263
Return of common stock for license - - (3,850)
Debt conversion expense - - 1,228
Common stock issued for services 241 80 2,658
------- ------ --------
Total adjustments (15) 131 11,095
------- ------ --------
Net cash (used in) operating
activities (3,516) (2,955) (98,300)
------- ------ --------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchases of) proceeds from short-
term investments, net (10,796) 1,101 (19,733)
Facilities and equipment purchases (38) (41) (8,958)
Other 54 - (102)
------- ------ --------
Net cash provided by (used in)
investing activities (10,780) 1,060 (28,793)
------- ------ --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock
and warrants 5,771 - 105,957
Proceeds from sale of convertible
debentures - - 26,606
Proceeds from sale of preferred stock 4,425 - 4,425
Proceeds from capital lease obligations - - 2,322
Repayments of capital lease obligations (11) (5) (3,575)
Proceeds from stock options exercised 169 35 1,542
Preferred stock issuance costs - - (792)
Preferred stock dividends - - (5,515)
Repurchase of preferred stock - - (305)
Repurchase of common stock - - (332)
------- ------ --------
Net cash provided by financing
activities 10,354 30 130,333
------- ------ --------
Net increase (decrease) in cash
and cash equivalents (3,942) (1,865) 3,240
Cash and cash equivalents:
Beginning of period 7,182 2,428 -
------- ------ --------
End of period $ 3,240 $ 563 $ 3,240
======= ====== ========
</TABLE>
See notes to financial statements.
5
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NEORX CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation
The interim financial statements contained herein have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission.
Certain information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations,
although the Company believes that the disclosures made are adequate to make
the information presented not misleading. These financial statements should
be read in conjunction with the Company's Annual Report to Shareholders for
the year ended December 31, 1995.
In the opinion of management, the interim financial statements reflect all
adjustments, consisting only of normal recurring accruals necessary to
present fairly the Company's financial position as of March 31, 1996 and
the results of operations and cash flows for the three month periods ended
March 31, 1996 and 1995 and for the period from inception to March 31,
1996.
The results of operations for the three month period ended March 31, 1996
are not necessarily indicative of the expected operating results for the
full year.
6
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NEORX CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS (continued)
2. Shareholders' Equity
Changes in shareholders' equity from December 31, 1995 to March 31, 1996
were as follows (in thousands):
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Balance December 31, 1995 $ 14,892
Preferred stock issued 4,425
Common stock issued 6,556
Preferred stock dividends (191)
Net loss (3,501)
Amortization of deferred compensation 139
------
Balance March 31, 1996 $ 22,320
======
</TABLE>
3. In January 1996, the Company issued 370,000 shares of Common Stock and
47,000 shares of Series 2 Convertible Preferred Stock, $.02 par value
(the "Series 2 Stock"), in a private transaction and received net proceeds
of $6,640,000.
Holders of the Series 2 Stock are entitled to receive cumulative dividends
at the rate of 8% per annum of the $100 per share stated value of the
Series 2 Stock. The dividend is payable, in cash or Common Stock at the
Company's option, at the time that the Series 2 Stock is redeemed or
converted into Common Stock. The Series 2 Stock is redeemable at the
option of the Company at $120.50 per share. Each share of the Series 2
Stock is convertible at the option of the holder or the Company into the
number of shares of Common Stock determined by dividing $120.50 by the average
stock market closing bid price of the Common Stock for the five trading days
ending one day prior to the day of conversion, but not less than $4.41 nor
more than $8.36 per share. The holders of the Series 2 Stock have no
voting rights, except in limited circumstances. The Series 2 Stock ranks
junior to the Company's Convertible Exchangeable Preferred Stock, Series 1,
as to dividends, distributions and payments in liquidation.
In October 1995, the Company registered 650,000 shares of Common Stock to
be sold from time to time. During the quarter ended March 31, 1996,
464,000 shares were issued for net proceeds of $3,797,000.
7
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NEORX CORPORATION
(a development stage company)
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition
Quarter ended March 31, 1996 compared to quarter ended March 31, 1995.
- ----------------------------------------------------------------------
Revenues for the three months ended March 31, 1996 decreased to $21,000
from $57,000 recorded for the three months ended March 31, 1995.
Total operating expenses for the quarter ended March 31, 1996 increased 14%
to $3,782,000 from $3,321,000 recorded in the quarter ended March 31, 1995.
Research and development expenses for the quarter ended March 31, 1996
increased 10% to $2,416,000 from $2,199,000, primarily due to antibody
humanization and increased clinical trial activities. General and
administrative expenses for the quarter ended March 31, 1996 increased 22%
to $1,366,000 from $1,122,000 for the quarter ended March 31,1995,
principally due to patent filing costs and a noncash charge resulting from
accelerated vesting of a stock option.
Interest income increased to $297,000 from $212,000 and interest expense
was $37,000 and $34,000 for the three months ended March 31, 1996 and 1995,
respectively. The increase in interest income was primarily due to higher
cash balances.
Liquidity and capital resources.
- --------------------------------
During the quarter ended March 31, 1996, the Company raised $10,437,000
from the sale of 834,000 shares of Common Stock and 47,000 shares of Series
2 Stock.
The Company expects that its capital resources and interest income will be
sufficient to finance its currently anticipated working capital and capital
requirements through late 1997. The Company's working capital and capital
requirements will depend upon numerous factors, including results of
research and development activities, clinical trials, the levels of
resources that the Company devotes to establishing and expanding marketing
and manufacturing capabilities, competitive and technological developments
and the timing and cost of relationships with parties to collaborative
agreements. The Company will need to raise substantial additional funds to
conduct research and development activities, preclinical studies and clinical
8
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NEORX CORPORATION
(a development stage company)
Item 2. (continued)
clinical trials necessary to bring its products to market, and to establish
marketing and limited manufacturing capabilities. The Company intends to
seek additional funding through public or private equity financings,
arrangements with corporate collaborators or other sources. Adequate funds
may not be available when needed or on terms acceptable to the Company.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
IN RE BLECH SECURITIES LITIGATION
- ---------------------------------
The Company has been named as an additional codefendant in an amended
complaint filed in the United States District Court Southern District of
New York on March 27, 1995 in a pending purported class action suit against
David Blech, D. Blech & Co. and a number of other defendants, including
eleven publicly traded biotechnology companies. The complaint seeks
damages for alleged unlawful manipulation of the stock market prices of the
named biotechnology companies. The Company believes that the claims
against it have no factual or legal basis and are without merit. Although
the complaint alleges that D. Blech & Co. was the principal market maker
for NeoRx Corporation stock, to the Company's knowledge D. Blech & Co. was
never a significant market maker for the Company's stock. The Company
intends to defend this suit vigorously.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
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Sequentially
Exhibit Numbered
Number Exhibit Page
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10 Indemnification
Agreement 11
</TABLE>
(b) Reports on Form 8-K:
No report on Form 8-K has been filed during the quarter ended March
31, 1996.
9
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NEORX CORPORATION
(a development stage company)
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.
NeoRx Corporation
(Registrant)
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Date: May 10, 1996 By: \s\ Robert M. Littauer
----------------------
Robert M. Littauer
Authorized Officer and
Senior Vice President,
Chief Financial Officer and
Treasurer
</TABLE>
10
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NEORX CORPORATION
Indemnification Agreement
This INDEMNIFICATION AGREEMENT (this "Agreement") dated as of March 11, 1996
is made between NEORX CORPORATION, a Washington corporation (the "Company"),
and ____________________ ("Indemnitee").
Recitals
--------
A. Indemnitee is an Officer and/or Director of the Company and in such capacity
is performing valuable services for the Company.
B. The Company and Indemnitee recognize the difficulty in obtaining directors'
and officers' liability insurance, the significant cost of such insurance and
the general reduction in the coverage of such insurance.
C. The Company and Indemnitee further recognize the substantial increase in
litigation subjecting officers and directors to expensive litigation risks at
the same time that such liability insurance has been severely limited.
D. The shareholders of the Company have adopted bylaws (the "Bylaws") providing
for indemnification of the officers, directors, agents and employees of the
Company to the full extent permitted by the Business Corporation Act of
Washington (the "Statute").
E. The Bylaws and the Statute specifically provide that they are not exclusive,
and thereby contemplate that contracts may be entered into between the Company
and the members of its Board of Directors and its officers with respect to
indemnification of such directors and officers.
F. In order to induce Indemnitee to continue to serve as an officer and/or
director, as the case may be, of the Company, the Company has agreed to enter
into this Agreement with Indemnitee.
Agreement
---------
In consideration of the recitals above, the mutual covenants and agreements
herein contained, and Indemnitee's continued service as an officer and/or
director, as the case may be, of the Company after the date hereof, the
parties to this Agreement agree as follows:
11
1. INDEMNITY OF INDEMNITEE
1.1. Scope:
The Company agrees to hold harmless and indemnify Indemnitee to the full
extent permitted by law, notwithstanding that such indemnification is not
specifically authorized by this Agreement, the Company's Articles of
Incorporation, the Bylaws, the Statute or otherwise. In the event of any
change, after the date of this Agreement, in any applicable law, statute or
rule regarding the right of a Washington corporation to indemnify a member
of its board of directors or an officer, such changes, to the extent that
they would expand Indemnitee's rights hereunder, shall be within the purview
of Indemnitee's rights and the Company's obligations hereunder, and, to the
extent that they would narrow Indemnitee's rights hereunder, shall be excluded
from this Agreement; provided, however, that any change that is required by
applicable laws, statutes or rules to be applied to this Agreement shall be
so applied regardless of whether the effect of such change is to narrow
Indemnitee's rights hereunder.
1.2. Nonexclusivity:
The indemnification provided by this Agreement shall not be deemed exclusive
of any rights to which Indemnitee may be entitled under the Company's Articles
of Incorporation, the Bylaws, any agreement, any vote of shareholders or
disinterested directors, the Statute, or otherwise, whether as to action in
Indemnitee's official capacity or otherwise.
1.3. Additional Indemnity:
If Indemnitee was or is made a party, or is threatened to be made a party,
to or is otherwise involved (including, without limitation, as a witness)
in any Proceeding (as defined below), the Company shall hold harmless and
indemnify Indemnitee from and against any and all losses, claims, damages,
liabilities or expenses (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties, amounts paid in settlement and other expenses
incurred in connection with such Proceeding) (collectively, "Damages").
1.4. Definition of Proceeding:
For purposes of this Agreement, "Proceeding" shall mean any actual, pending
or threatened action, suit, claim or proceeding, whether civil, criminal,
administrative or investigative and whether formal or informal, in which
Indemnitee is, was or becomes involved by reason of the fact that Indemnitee
is or was a director, officer, employee or agent of the Company or that,
being or having been such a director, officer, employee or agent, Indemnitee
is or was serving at the request of the Company as a director, officer,
employee, trustee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise (collectively a "Related Company"),
12
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including service with respect to an employee benefit plan, whether the basis
of such proceeding is alleged action (or inaction) by Indemnitee in an
official capacity as a director, officer, employee, trustee or agent or in
any other capacity while serving as a director, officer, employee, trustee
or agent; provided, however, that, except with respect to an action to enforce
the provisions of this Agreement, "Proceeding" shall not include any action,
suit, claim or proceeding instituted by or at the direction of Indemnitee
unless such action, suit, claim or proceeding is or was authorized by the
Company's Board of Directors.
1.5. Determination of Entitlement:
In the event that a determination of Indemnitee's entitlement to indemni-
fication is required pursuant to Section 23B.08.550 of the Statute or any
successor thereto or pursuant to other applicable law, the appropriate
decision-maker shall make such determination; provided, however, that
Indemnitee shall initially be presumed in all cases to be entitled to
indemnification, that Indemnitee may establish a conclusive presumption
of any fact necessary to such a determination by delivering to the Company
a declaration made under penalty of perjury that such fact is true and that,
unless the Company shall deliver to Indemnitee written notice of a determi-
nation that Indemnitee is not entitled to indemnification within twenty (20)
days of the Company's receipt of Indemnitee's initial written request for
indemnification, such determination shall conclusively be deemed to have
been made in favor of the Company's provision of indemnification and Company
hereby agrees not to assert otherwise.
1.6. Survival:
The indemnification provided under this Agreement shall apply to any and all
Proceedings, notwithstanding that Indemnitee has ceased to be a director,
officer, employee, trustee or agent of the Company or a Related Company.
2. EXPENSE ADVANCES
2.1. Generally:
The right to indemnification of Damages conferred by Section 1 shall include
the right to have the Company pay Indemnitee's expenses in any Proceeding
promptly as such expenses are incurred and in advance of such Proceeding's
final disposition (such right is referred to hereinafter as an "Expense
Advance").
2.2. Conditions to Expense Advance:
The Company's obligation to provide an Expense Advance is subject to the
following conditions:
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2.2.1. Undertaking:
If the Proceeding arose in connection with Indemnitee's service as a director
or an officer of the Company (and not in any other capacity in which Indemnitee
rendered service, including service to any Related Company), then Indemnitee
or his or her representative shall have executed and delivered to the Company
an undertaking, which need not be secured and shall be accepted without
reference to Indemnitee's financial ability to make repayment, by or on behalf
of Indemnitee to repay all Expense Advances if and to the extent that it shall
ultimately be determined by a final, unappealable decision rendered by a
court having jurisdiction over the parties and the question that Indemnitee
is not entitled to be indemnified for such Expense Advance under this Agreement
or otherwise.
2.2.2. Cooperation:
Indemnitee shall give the Company such information and cooperation as it may
reasonably request and as shall be within Indemnitee's power.
2.2.3. Affirmation:
Indemnitee shall furnish, upon request by the Company and if required under
applicable law, a written affirmation of Indemnitee's good faith belief that
any applicable standards of conduct have been met by Indemnitee.
3. PROCEDURES FOR ENFORCEMENT
3.1. Enforcement:
In the event that a claim for indemnity, an Expense Advance or otherwise is
made hereunder and is not paid in full within sixty days (twenty days for an
Expense Advance) after written notice of such claim is delivered to the
Company, Indemnitee may, but need not, at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim (an "Enforcement
Action").
3.2. Presumptions in Enforcement Action:
In any Enforcement Action the following presumptions (and limitation on
presumptions) shall apply:
(a) The Company shall conclusively be presumed to have entered into this
Agreement and assumed the obligations imposed on it hereunder in order to
induce Indemnitee to continue as an officer and/or director, as the case may
be, of the Company;
(b) Neither (i) the failure of the Company (including the Company's Board of
Directors, independent or special legal counsel or the Company's shareholders)
to have made a determination prior to the commencement of the Enforcement
Action that indemnification of Indemnitee is proper in the circumstances nor
(ii) an actual determination by the Company, its Board of Directors, indepen-
dent or special legal counsel or shareholders that Indemnitee is not entitled
to indemnification shall be a defense to the Enforcement Action or create a
presumption that Indemnitee is not entitled to indemnification hereunder; and
14
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(c) If Indemnitee is or was serving as a director, officer, employee, trustee
or agent of a corporation of which a majority of the shares entitled to vote
in the election of its directors is held by the Company or in an executive or
management capacity in a partnership, joint venture, trust or other enterprise
of which the Company or a wholly owned subsidiary of the Company is a general
partner or has a majority ownership, then such corporation, partnership, joint
venture, trust or enterprise shall conclusively be deemed a Related Company
and Indemnitee shall conclusively be deemed to be serving such Related
Company at the request of the Company.
3.3. Attorneys' Fees and Expenses for Enforcement Action:
In the event Indemnitee is required to bring an Enforcement Action, the Company
shall indemnify and hold harmless Indemnitee against all of Indemnitee's fees
and expenses in bringing and pursuing the Enforcement Action (including
attorneys' fees at any stage, including on appeal); provided, however, that
the Company shall not be required to provide such indemnity for such attorneys'
fees or expenses if a court of competent jurisdiction determines that each of
the material assertions made by Indemnitee in such Enforcement Action was not
made in good faith or was frivolous.
4. LIMITATIONS ON INDEMNITY; MUTUAL ACKNOWLEDGEMENT
4.1. Limitation on Indemnity:
No indemnity pursuant to this Agreement shall be provided by the Company:
(a) On account of any suit in which a final, unappealable judgment is rendered
against Indemnitee for an accounting of profits made from the purchase or sale
by Indemnitee of securities of the Company in violation of the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto;
(b) For Damages that have been paid directly to Indemnitee by an insurance
carrier under a policy of officers' and directors' liability insurance
maintained by the Company;
(c) On account of Indemnitee's conduct which is finally adjudged to have
been intentional misconduct, a knowing violation of law or a violation of
the unlawful distribution provisions of RCW 23B.08.310, or for a transaction
from which Indemnittee personally received a benefit in money, property or
services to which Indemnittee was not legally entitled; or
(d) If a final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful.
15
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4.2. Mutual Acknowledgement:
The Company and Indemnitee acknowledge that, in certain instances, federal
law or public policy may override applicable state law and prohibit the
Company from indemnifying Indemnitee under this Agreement or otherwise.
For example, the Company and Indemnitee acknowledge that the Securities and
Exchange Commission (the "SEC") has taken the position that indemnification
is not permissible for liabilities arising under certain federal securities
laws, and federal legislation prohibits indemnification for certain ERISA
violations. Furthermore, Indemnitee understands and acknowledges that the
Company has undertaken or may be required in the future to undertake with
the SEC to submit the question of indemnification to a court in certain
circumstances for a determination of the Company's right under public policy
to indemnify Indemnitee.
5. NOTIFICATION AND DEFENSE OF CLAIM:
5.1. Notification:
Promptly after receipt by Indemnitee of notice of the commencement of any
Proceeding, Indemnitee will, if a claim in respect thereof is to be made
against the Company under this Agreement, notify the Company of the
commencement thereof; but the omission so to notify the Company will not
relieve the Company from any liability which it may have to Indemnitee under
this Agreement unless and only to the extent that such omission can be shown
to have prejudiced the Company's ability to defend the Proceeding.
5.2. Defense of Claim:
With respect to any such Proceeding as to which Indemnitee notifies the
Company of the commencement thereof:
(a) The Company may participate therein at its own expense;
(b) The Company, jointly with any other indemnifying party similarly notified,
may assume the defense thereof, with counsel satisfactory to Indemnitee.
After notice from the Company to Indemnitee of its election so to assume the
defense thereof, the Company shall not be liable to Indemnitee under this
Agreement for any legal or other expenses (other than reasonable costs of
investigation) subsequently incurred by Indemnitee in connection with the
defense thereof unless (i) the employment of counsel by Indemnitee has been
authorized by the Company, (ii) Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and Indemnitee
in the conduct of the defense of such action, or (iii) the Company shall not
in fact have employed counsel to assume the defense of such action, in each
of which cases the fees and expenses of counsel shall be at the expense of
the Company. The Company shall not be entitled to assume the defense of
any action, suit or proceeding brought by or on behalf of the Company or
as to which Indemnitee shall have made the conclusion provided for in (ii)
above;
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(c) The Company shall not be liable to indemnify Indemnitee under this
Agreement for any amounts paid in settlement of any Proceeding effected
without its written consent; (d) The Company shall not settle any action
or claim in any manner which would impose any penalty or limitation on
Indemnitee without Indemnitee's written consent; and
(e) Neither the Company nor Indemnitee will unreasonably withhold its, his
or her consent to any proposed settlement.
6. SEVERABILITY
Nothing in this Agreement is intended to require or shall be construed as
requiring the Company to do or fail to do any act in violation of applicable
law. The Company's inability, pursuant to court order, to perform its
obligations under this Agreement shall not constitute a breach of this
Agreement. The provisions of this Agreement shall be severable, as provided
in this Section 6. If this Agreement or any portion hereof shall be invali-
dated on any ground by any court of competent jurisdiction, then the Company
shall nevertheless indemnify Indemnitee to the full extent permitted by any
applicable portion of this Agreement that shall not have been invalidated,
and the balance of this Agreement not so invalidated shall be enforceable in
accordance with its terms.
7. GOVERNING LAW; BINDING EFFECT; AMENDMENT AND TERMINATION
(a) This Agreement shall be interpreted and enforced in accordance with the
laws of the State of Washington.
(b) This Agreement shall be binding upon Indemnitee and upon the Company,
its successors and assigns, and shall inure to the benefit of Indemnitee,
Indemnitee's heirs, personal representatives and assigns and to the benefit
of the Company, its successors and assigns.
(c) No amendment, modification, termination or cancellation of this Agreement
shall be effective unless in writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS OF NEORX CORPORATION AS OF 3/31/96 AND 12/31/96, AND THE RELATED STATE-
MENTS OF OPERATIONS FOR EACH OF THE 3 MONTHS ENDED 3/31/96 AND AND 3/31/95 AND
FOR THE PERIOD FROM 12/31/84 (INCEPTION) TO 3/31/96 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH 10-Q REPORT FOR THE PERIOD ENDED 3/31/96.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,240
<SECURITIES> 19,733
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 560
<CURRENT-ASSETS> 24,566
<PP&E> 6,769
<DEPRECIATION> 6,012
<TOTAL-ASSETS> 25,436
<CURRENT-LIABILITIES> 1,844
<BONDS> 1,272
<COMMON> 307
0
5
<OTHER-SE> 22,008
<TOTAL-LIABILITY-AND-EQUITY> 25,436
<SALES> 0
<TOTAL-REVENUES> 21
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37
<INCOME-PRETAX> (3,501)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,501)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,501)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> (.25)
</TABLE>
