SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for the Quarterly
Period ended MARCH 31, 1997 or
[ } Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _____________ to
_______________.
Commission File Number 0-16614
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 7, 1997 there were outstanding 16,517,963 million shares of the
Company's Common Stock, $.02 par value.
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TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
PART I FINANCIAL INFORMATION Page
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Item 1. Financial Statements:
Balance Sheets as of March 31, 1997
and December 31, 1996 3
Statements of Operations for the
three months ended March 31, 1997
and 1996 4
Statements of Cash Flows for the
three months ended March 31, 1997
and 1996 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
of Results of Operations and
Financial Condition 9
Item 3. Quantitative and Qualitative
Disclosure About Market Risks *
PART II OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities *
Item 3. Defaults Upon Senior Securities *
Item 4. Submission of Matters to a
Vote of Security Holders *
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
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* No information is provided due to inapplicability of the item.
2
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NEORX CORPORATION
BALANCE SHEETS
(in thousands, except share data)
March 31, December 31,
1997 1996
----------- ------------
(unaudited)
ASSETS
CURRENT ASSETS:
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Cash and cash equivalents $ 11,887 $ 2,945
Short-term investments 12,941 15,322
Inventories 500 600
Prepaids and other 842 845
------- -------
Total current assets 26,170 19,712
------- -------
FACILITIES AND EQUIPMENT, at cost:
Equipment and furniture 3,882 3,744
Leasehold improvements 3,241 3,237
------- -------
7,123 6,981
Less: accumulated depreciation and amortization (6,391) (6,295)
------- -------
Facilities and equipment, net 732 686
------- -------
OTHER ASSETS 112 112
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$ 27,014 $ 20,510
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,382 $ 1,235
Accrued liabilities 1,055 910
Current portion of capital leases 42 44
------- -------
Total current liabilities 2,479 2,189
------- -------
NON-CURRENT LIABILITIES:
Convertible subordinated debentures, 9 3/4% 1,195 1,195
Capital leases, less current portion 36 47
------- -------
Total non-current liabilities 1,231 1,242
------- -------
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,
Convertible preferred stock, Series 2, 5,000 and 7,000
shares issued and outstanding, respectively, and
Convertible preferred stock, Series 3, 100,000 and -0-
shares issued and outstanding, respectively 6 4
Common stock, $.02 par value,
60,000,000 shares authorized,
16,515,000 and 16,451,000 shares
issued and outstanding, respectively 331 329
Additional paid-in capital 152,147 140,789
Accumulated deficit (129,180) (124,043)
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Total shareholders' equity 23,304 17,079
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$ 27,014 $ 20,510
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See notes to financial statements.
3
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NEORX CORPORATION
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended
MARCH 31,
--------------------------
1997 1996
------- --------
REVENUES:
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Contract revenues and fees $ 12 $ 21
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OPERATING EXPENSES:
Research and development 2,652 2,678
General and administrative 894 1,104
------ ------
Total operating expenses 3,546 3,782
------ ------
Loss from operations (3,534) (3,761)
OTHER INCOME (EXPENSE):
Investment and interest income, net 338 297
Interest expense (35) (37)
------ ------
Net loss $(3,231) $(3,501)
====== ======
Preferred stock dividends (1,906) (191)
------ ------
Net loss applicable to common shares $(5,137) $(3,692)
====== ======
Net loss per common share $ (.31) $ (.25)
====== ======
Weighted average common
shares outstanding 16,481 14,996
====== ======
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See notes to financial statements.
4
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NEORX CORPORATION
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three months ended
MARCH 31,
--------------------------
1997 1996
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss $(3,231) $ (3,501)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 96 98
(Increase) decrease in inventories 100 (22)
(Increase) in prepaids and
other assets (35) (156)
(Decrease) increase in accounts
payable and accrued liabilities 163 (315)
Compensation expense on stock awards
and options - 139
Common Stock issued for services - 241
------ -------
Net cash used in operating
activities (2,907) (3,516)
------ -------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchases of) proceeds from short-
term investments, net 2,381 (10,796)
Facilities and equipment purchases (142) (38)
Other 6 54
------ -------
Net cash provided by (used in)
investing activities 2,245 (10,780)
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock
and warrants - 5,771
Proceeds from sale of preferred stock 9,490 4,425
Proceeds from capital lease obligations - -
Repayments of capital lease obligations (13) (11)
Proceeds from stock options exercised 127 169
------ -------
9,604 10,354
------ -------
Net increase (decrease) in cash
and cash equivalents 8,942 (3,942)
Cash and cash equivalents:
Beginning of period 2,945 7,182
------ ------
End of period $11,887 $ 3,240
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See notes to financial statements.
5
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NEORX CORPORATION
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 on Form 10-K for the year ended
December 31, 1996.
Certain reclassifications were made to the 1996 financial statements to make
them comparable with the 1997 presentation.
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, 1997 and the results of
operations and cash flows for the three month periods ended March 31, 1997 and
1996.
The results of operations for the three month period ended March 31, 1997 are
not necessarily indicative of the expected operating results for the full year.
2. New Accounting Standard
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share",
effective for financial statements for periods ending after December 15, 1997.
SFAS 128 specifies the computation, presentation, and disclosure requirements
for earnings per share, and will simplify the computation of earnings per share
for many companies eliminating calculation provisions which were required by the
prior earnings per share accounting standard. For entities with complex capital
structures, the statement requires dual presentation of both Basic Earnings
Per Share and Diluted Earnings Per Share on the face of the statement of opera-
tions. In the
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NEORX CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
opinion of management, the adoption of SFAS 128 will not have a material effect
on the Company's calculation of earnings per share.
3. Shareholders' Equity
Changes in shareholders' equity from December 31, 1996 to March 31, 1997 were as
follows (in thousands):
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Balance December 31, 1996 $17,079
Preferred stock issued 11,255
Common stock issued 107
Preferred stock dividends (1,906)
Net loss (3,231)
-------
Balance March 31, 1997 $23,304
=======
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In March 1997, the Company sold 100,000 shares of Series 3 Convertible Preferred
Stock, $.02 par value (the "Series 3 Stock") at a stated value of $100 per share
in a private transaction, and received net proceeds of $9,490,000. The Series 3
Stock is redeemable at the option of the Company in the first two years
following issuance of the Series 3 Stock at $117.65 per share plus accrued
dividends and interest; two years following issuance of the Series 3 Stock, any
remaining outstanding Series 3 Stock will be converted to Common Stock in
accordance the formula described below. A non-cash dividend charge of $1,765,000
was recognized by the Company in March 1997 for the amount of the excess of the
conversion value over the stated value.
Holders of the Series 3 Stock are entitled to receive cumulative dividends at
the rate of 7% per annum compounded quarterly on the $100 per share stated value
of the Series 3 Stock. The dividend is payable, in cash or Common Stock at the
Company's option, quarterly or at the time the Series 3 Stock is redeemed or
converted into Common Stock. Each share of the Series 3 Stock is convertible in
the first two years following issuance of the Series 3 Stock at the option of
the holder into the number of shares of Common Stock determined by dividing the
$100 stated value of the Series 3 Stock by 85% of 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 $3.93 nor more than $6.42 per
share,
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NEORX CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
plus accrued dividends and interest. The holders of the Series 3 Stock have no
voting rights except in limited circumstances. The Series 3 Stock ranks junior
to the Company's Convertible Exchangeable Preferred Stock, Series 1, and on a
parity with the Company's Series 2 Convertible Preferred Stock as to dividends,
distributions and payments in liquidation.
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, in a private
transaction, and received net proceeds of $6,640,000.
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NEORX CORPORATION
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition
QUARTER ENDED MARCH 31, 1997 COMPARED TO QUARTER ENDED MARCH 31, 1996.
Revenues for the three months ended March 31, 1997 were $12,000 compared to
$21,000 for the three months ended March 31, 1996.
Total operating expenses for the quarter ended March 31, 1997 decreased 6% to
$3,546,000 from $3,782,000 in the quarter ended March 31, 1996. Research and
development expenses for the quarter ended March 31, 1997 decreased 1% to
$2,652,000 from $2,678,000. General and administrative expenses for the quarter
ended March 31, 1997 decreased 19% to $894,000 from $1,104,000 for the quarter
ended March 31,1996, principally due to reduced compensation expense in 1997 and
a noncash charge resulting from accelerated vesting of a stock option in 1996.
Investment and interest income increased to $338,000 from $297,000 and interest
expense was $35,000 and $37,000 for the three months ended March 31, 1997 and
1996, respectively.
LIQUIDITY AND CAPITAL RESOURCES.
In March 1997, the Company raised $9,490,000 from the sale of 100,000 shares of
Series 3 Convertible Preferred Stock. During 1996, the Company received
$10,437,000 from the sale of 834,000 shares of Common Stock and 47,000 shares of
Series 2 Convertible
Preferred 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 the first quarter of 1999. 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 trials necessary to
bring its potential products to market, and to establish marketing and limited
manufacturing capabilities. The Company intends to
9
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NEORX CORPORATION
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition (Continued)
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.
When used in this report, the words "expects", "anticipates" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties such as those factors stated
above that could cause actual results to differ materially from those projected.
See "Important Factors Regarding Forward-Looking Statements" in the Company's
Form 10-K for the year ended December 31, 1996. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date of this report. Readers are also urged to carefully review and consider
the various disclosures made by the Company which advise interested parties of
certain factors which affect the Company's business detailed in the Company's
Securities and Exchange Commission filings and those described from time to time
in the Company's press releases and other communications. The Company undertakes
no obligation to publicly release the results of any revisions to these forward-
looking statements that may be made to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
IN RE BLECH SECURITIES LITIGATION
On June 6, 1996, the United State District Court for the Southern District of
New York dismissed claims against NeoRx in a purported class action suit against
David Blech, D. Blech & Co. and a number of other defendants, including 11
publicly traded biotechnology companies, of which one was NeoRx, that had been
named in an amended complaint on March 27, 1995. The plaintiffs have not
appealed the order. On July 26, 1996, the plaintiffs filed a second amended
pleading which did not include any claims against the Company. NeoRx is not a
defendant in the subject suit.
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NEORX CORPORATION
Item 5. Other Information
DEVELOPMENT, DISTRIBUTION AND SUPPLY AGREEMENT BETWEEN NEORX
CORPORATION AND SCHWARZ PHARMA AG
On March 31, 1997, the Company entered into an agreement with Schwarz Pharma AG
("Schwarz Pharma") in which Schwarz Pharma received exclusive rights to market
NeoRx's Biostent(TM) product in North America and Europe. NeoRx retains
manufacturing rights on a worldwide basis and retains marketing rights for
territories outside North America and Europe. In exchange, Schwarz Pharma will
fund the future development of the product and NeoRx will receive up to $30
million in license fees and milestone payments depending on product development.
NeoRx will also receive royalties based on future sales as well as profits from
manufacturing the product.
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 * Development, Distribution and
Supply Agreement between NeoRx
Corporation and Schwarz Pharma
AG dated March 31, 1997 13
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(b) Reports on Form 8-K:
No report on Form 8-K has been filed during the quarter for which this
Form 10-Q is filed.
* Portions of this exhibit have been omitted pursuant to a request for
confidential treatment.
11
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EXHIIBIT 10
REDACTED VERSION
EXHIBIT 10
To
NeoRx Corporation's
Form 10-Q
Dated
May ___, 1997
" [ * ] " = omitted, confidential material, which material has been separately
filed with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
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DEVELOPMENT, DISTRIBUTION AND SUPPLY AGREEMENT
NEORX CORPORATION
AND
SCHWARZ PHARMA AG
March 31, 1997
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CONTENTS
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RECITALS ................................................................. 1
1. DEFINITIONS ..................................................... 1
2. LICENSES ........................................................ 10
2.1 License Grant ........................................ 10
2.2 Disclosure of NeoRx Product Information .............. 11
2.3 Covenants Against Unauthorized Use ................... 11
2.4 Expansion of Territory ............................... 11
3. PRODUCT DEVELOPMENT ............................................. 12
3.1 Management of Collaborative Efforts .................. 12
3.2 Development .......................................... 13
3.3 Development Plan ..................................... 14
3.4 Reports .............................................. 14
3.5 Approval Applications; Schwarz Pharma Information .... 14
3.6 Adverse Events ....................................... 15
3.7 Exclusive License .................................... 16
3.8 NeoRx Development .................................... 16
3.9 Analytical Certification ............................. 16
3.10 Reimbursement Formula ................................ 16
3.11 Diligence ............................................ 16
4. MARKETING ....................................................... 17
4.1 Marketing Efforts .................................... 17
4.2 Packaging and Labeling ............................... 17
5. RIGHTS TO OTHER FIELDS .......................................... 17
5.1 Peripheral Products .................................. 17
5.2 Other Exclusive Products ............................. 18
5.3 S&G Products ......................................... 18
6. MANUFACTURING AND SUPPLY ........................................ 18
6.1 Manufacturing Rights and Responsibilities ............ 18
6.2 Clinical Supply ...................................... 20
6.3 Purchase Price of Clinical Supplies .................. 21
6.4 Commercial Product Supply ............................ 21
6.5 Commercial Purchase Price of Coronary Product ........ 24
6.6 Coronary Product for Promotional Purposes ............ 25
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6.7 Audits ............................................... 26
6.8 Quality Control ...................................... 26
6.9 Regulatory Approval .................................. 27
6.10 Coronary Product Recall Procedures ................... 27
6.11 Back-Up Manufacturing Rights ......................... 28
MILESTONE PAYMENTS .............................................. 29
7.1 Triggering Events .................................... 29
7.2 Installment Payments ................................. 30
7.3 Payments Related to Manufacturing .................... 30
8. PATENT AND OTHER INTELLECTUAL PROPERTY IN TERRITORY ............. 31
8.1 Ownership of Technology .............................. 31
8.2 Prosecution and Maintenance of Patents ............... 31
8.3 Abandonment of Patents ............................... 32
8.4 Assistance With Patents .............................. 32
8.5 Patent Infringement .................................. 33
8.6 Claimed Infringement ................................. 36
8.7 Third Party Patents in Territory ..................... 36
8.8 Schwarz Pharma Payments During Infringement Claim .... 37
8.9 Loss of Patent Rights ................................ 37
9. INDEMNIFICATION ................................................. 37
9.1 Drug Product ......................................... 37
9.2 Indemnity Procedure .................................. 38
10. TRADENAME ....................................................... 38
11. CONFIDENTIALITY ................................................. 39
11.1 Confidentiality ...................................... 39
11.2 Authorized Disclosure ................................ 39
11.3 Press Release ........................................ 39
11.4 Publications ......................................... 39
11.5 Agreement Confidential ............................... 40
12. REPRESENTATIONS AND WARRANTIES .................................. 40
12.1 Representations, Warranties, and Covenants of NeoRx .. 40
12.2 Representations, Warranties and Covenants of
Schwarz Pharma ....................................... 42
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13. TERM OF AGREEMENT AND TERMINATION ............................... 42
13.1 Term ................................................. 42
13.2 Termination .......................................... 44
13.3 Return of Materials and Information .................. 45
13.4 Accrued Rights; Surviving Obligations ................ 45
14. MISCELLANEOUS ................................................... 45
14.1 Disclaimers; Limitation of Liability ................. 45
14.2 Liability Insurance .................................. 46
14.3 Entire Agreement; Amendment .......................... 46
14.4 Assignment ........................................... 46
14.5 Notices .............................................. 46
14.6 Severability ......................................... 47
14.7 Force Majeure ........................................ 47
14.8 Expenses ............................................. 47
14.9 Non-Waiver ........................................... 48
14.10 Disclaimer of Agency ................................. 48
14.11 Further Actions ...................................... 48
14.12 Counterparts ......................................... 48
14.13 Governing Law ........................................ 48
14.14 Dispute Resolution; Arbitration ...................... 48
14.15 Official Language .................................... 49
14.16 Payment; Interest .................................... 49
14.17 Value of Collaboration and Know-How .................. 49
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EXHIBITS
Exhibit A NeoRx Patents.
Exhibit B Development Plan.
Exhibit C Stock Purchase Agreement.
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DEVELOPMENT, DISTRIBUTION AND SUPPLY AGREEMENT
THIS DEVELOPMENT, DISTRIBUTION AND SUPPLY AGREEMENT is made as of the 31st
day of March, 1997 (the "Effective Date") by and between SCHWARZ PHARMA AG, a
corporation organized and existing under the laws of the Federal Republic of
Germany, and having its principal place of business at Alfred-Nobel-Strasse 10,
40789 Monheim, Germany ("Schwarz Pharma"), and NEORX CORPORATION, a Washington
corporation, having its principal place of business at 410 West Harrison,
Seattle, Washington 98119-4007, USA ("NeoRx") (Schwarz Pharma and NeoRx may be
referred to jointly as the "Parties" or individually as a "Party").
RECITALS
A. NeoRx is developing a pharmaceutical formulation for delivery
by catheter, which is currently in Phase I/IIa clinical trials in the United
States for use in treatment of restenosis in humans.
B. NeoRx has rights (either exclusively or with Cordis Corporation,
a Florida corporation ("Cordis")) to certain know-how and patents relating to
the development of Coronary Products in the Field.
C. NeoRx and Cordis are parties to a certain restated supply agreement,
dated as of March 21, 1997, pursuant to which NeoRx has certain rights to
purchase and market a MIC catheter for use in conjunction with the Drug
Substance in the Field (the "Cordis Agreement").
D. NeoRx by means of its own proprietary position and under an
agreement with Cordis has the right to grant licenses and sublicenses to third
parties.
E. Schwarz Pharma develops, manufactures and markets cardiovas-
cular drugs among other pharmaceutical products.
F. Schwarz Pharma and NeoRx wish to enter into a comprehensive
development, supply, marketing, distribution and license arrangement in the
Territory in the Field, subject to the terms and conditions set forth in this
Agreement.
In consideration of the forgoing recitals and the mutual agreements
which follow, the parties agree as follows:
1. DEFINITIONS
As used herein, the following capitalized terms shall have the
following meanings when used in this Agreement. All terms defined in the
singular shall have the same meanings when used in the plural and vice versa (as
appropriate) unless otherwise specified:
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1.1 "Affiliate" means a corporation, partnership, entity, person, firm,
company, or joint venture that controls, is controlled by or is under common
control with the referenced Party; provided, however, that with respect to any
Information or Patents, a corporation, partnership, entity, person, firm,
company, or joint venture that controls or is under common control with the
referenced Party shall only be considered to be an "Affiliate" if (a) it assists
or participates in the performance of this Agreement (or employs persons who
assisted or participated in the performance of this Agreement) and such
Information or Patents are or were utilized or developed by or in the course of
such assistance or participation or (b) it manufactures Drug Substance for
commercial sale in the Territory and the Information or Patents are used by it
in manufacturing the Drug Substance. For the purposes of this definition the
word "control" (including, with correlative meaning, the terms "controlled by"
or "is under common control with") means the power to direct or cause the
direction of the management and policies of such entity, or the ownership of at
least fifty percent (50%) of the voting stock of such entity; provided, however,
that if the applicable law of the jurisdiction of organization of such entity
prohibits ownership by a Party of fifty percent (50%) or more, then "control"
shall mean the ownership of the maximum percentage of the voting stock of such
entity allowed by such applicable law.
1.2 "Approval Application" means the appropriate application(s),
together with all documents, data and information concerning the Coronary
Product required to be included with such applications, that is necessary to
obtain Regulatory Approval to use, import, distribute, market and/or sell the
Coronary Product in a country in the Territory.
1.3 "Back-Up Manufacturing License" means the nonexclusive right and
license, granted by NeoRx to Schwarz Pharma under NeoRx Patents, NeoRx Know-How
and Manufacturing Information in the event Schwarz Pharma assumes manufacturing
pursuant to Section 6.11, solely to make or have made Drug Product for use and
sale in Coronary Products in the Field in the Territory.
1.4 "Breach of Manufacturing Process Demonstration" means the failure
by NeoRx to achieve Manufacturing Process Demonstration within [ * ].
1.5 "Breach of Validation Deadline" means, if there has not been a
Breach of Manufacturing Process Demonstration, the failure of NeoRx to achieve a
Validation Date within [ * ].
1.6 "Clinical Trial Product" means a product, appropriate for use in
clinical trials, consisting of a Coronary Product or a Coronary Product wherein
the Drug Substance has been replaced with a placebo, for use in clinical trials
in the Field in the Territory. Unless changed by agreement of the Parties or by
the FDA (or its equivalent in a country in the Territory), the Clinical Trial
Product will be as described in Protocol 9501 dated March 5, 1996.
[ * ] Confidential Treatment Requested.
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1.7 "Confidential Information" means, with respect to a Party,
Information that is (i) owned or Controlled by such Party, its Affiliates or its
Sublicensees, (ii) is disclosed by such Party to the other Party pursuant to
this Agreement, and (iii) is identified or acknowledged in writing to be
confidential at the time of disclosure if disclosed in tangible form or within
thirty (30) days after disclosure if disclosed orally; provided, however, that
Confidential Information shall not include any Information that:
(a) was already known to the receiving Party, other than
under an obligation of confidentiality, at the time of disclosure by the other
Party;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party by the
other Party;
(c) became generally available to the public or otherwise part of the
public domain after its disclosure to the receiving Party by the other Party,
other than through any act or omission of the receiving Party in breach of this
Agreement;
(d) was disclosed to the receiving Party, other than under an
obligation of confidentiality, by a Third Party who had no obligation to the
other Party not to disclose such information to others; or
(e) was subsequently and independently developed by employees or others
on behalf of the receiving Party without use of any Confidential Information
disclosed to the receiving Party or such others by the other Party.
1.8 "Control" means, with respect to a compound, material, information
or intellectual property right, possession of the ability to grant access to or
a license or sublicense as provided for herein under such compound, material,
information or right without violating the terms of any agreement or other
arrangements with any Third Party existing at the time a Party would be first
required hereunder to grant the other Party such access or license or
sublicense.
1.9 "Coronary Product" means a product composed of the Drug Product and
a drug delivery catheter that is developed pursuant to Article 3 for sale in the
Territory that is to be used to prevent or treat restenosis in humans through
the catheter delivery of the Drug Product to a coronary blood vessel.
1.10 "Cytochalasin B" shall have the meaning assigned to it in THE
MERCK INDEX: AN ENCYCLOPEDIA OF CHEMICALS, DRUGS AND BIOLOGICALS, 11th edition.
1.11 "Development" means conducting in vitro and/or in vivo
pre-clinical and clinical investigations and trials on Coronary Products and
preparing, submitting and prosecuting all Approval Applications, as necessary,
to obtain Regulatory Approval of Coronary Products for sale in the Field in the
Territory.
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1.12 "Development Committee" means the body established pursuant to
Section 3.1 for overseeing the preclinical and clinical investigations under
this Agreement.
1.13 "Development Plan" means the written work plan prepared by the
Parties for Development of Coronary Products with the goal of achieving
Regulatory Approval within the Territory as promptly as practicable. The initial
Development Plan prepared by Schwarz Pharma is attached hereto as Exhibit B, and
is subject to amendment from time to time as provided in Section 3.3.
1.14 "Directly Competitive Product" means for a particular calendar
year in a particular country in the Territory, products sold by Third Parties
using the Drug Substance and a catheter which are sold for use in the Field and
which have obtained a market share of not less than [ * ] of all retail dollar
sales of such products and the Coronary Products.
1.15 "Drug Master File" means the submission (or the applicable part
thereof), together with all Information contained therein, submitted to the FDA
in the United States, or to the appropriate governing health authority in
another country in the Territory, providing information on the manufacturing
facilities and manufacturing processes for making a Coronary Product, including
without limitation activities relating to manufacturing, processing,
formulating, packaging and storage to be conducted by or under the direction of
NeoRx or its Affiliates, which Information may be used to support Regulatory
Approval of the Coronary Product in the United States or such other country.
1.16 "Drug Product" means the formulation of the Drug Substance
developed pursuant to Article 3 for use in a Coronary Product.
1.17 "Drug Storage" means a storage facility under the control and
maintenance of Schwarz Pharma, at its expense, that is adequate for storing, in
accordance with Section 6.1(d), Drug Substance supplied by NeoRx.
1.18 "Drug Storage Breach" means any failure by NeoRx to place and
maintain Drug Substance in Drug Storage pursuant to, and in the amount required
by, Section 6.1(d), which failure is not cured within (a) [ * ] after written
notice thereof from Schwarz Pharma to NeoRx in the event the failure by NeoRx is
greater than [ * ] of such required amount and (b) [ * ] after written notice
thereof from Schwarz Pharma to NeoRx in the event the failure by NeoRx is equal
to or less than [ * ] of such required amount; provided that a failure which is
caused by NeoRx drawing down on the amount of Drug Substance in Drug Storage
after the occurrence of a Failure of Supply or a Material Supply Breach shall
not be treated as a Drug Storage Breach.
[ * ] Confidential Treatment Requested.
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1.19 "Drug Substance" means Cytochalasin B and all improvements,
modifications and structural analogs thereof.
1.20 "Exclusive Schwarz Pharma License" means Schwarz Pharma's right to
develop, market, import and sell Coronary Products by itself, or through its
Affiliates or its Sublicensees, in the Field in the Territory pursuant to this
Agreement.
1.21 "Failure of Supply" means a failure of NeoRx to supply at least
[ * ] of Schwarz Pharma's binding orders for Drug Product pursuant to Section
6.4 for delivery in the immediately preceding [ * ], which failure is caused by
Force Majeure.
1.22 "FDA" means the United States Food and Drug Administration, or
the successor thereto.
1.23 "Field" means [ * ].
1.24 "Final Report" means the report prepared by NeoRx and signed by
NeoRx and [ * ] describing the results, including the six-month follow-up, of
the study conducted under Protocol 9501, dated March 5, 1996, in such form and
covering such subject matter as is commonly accepted in the pharmaceutical
industry as acceptable for filing with the FDA for a Phase I study.
1.25 "Force Majeure" means acts of God, weather, fire, flood,
explosion, war, invasions, riot or civil unrest, governmental laws, order,
restrictions, actions, embargoes or blockades, national or regional emergencies,
strikes, lockouts, labor trouble or other industrial disturbances,
acts/omissions or delays in acting by any governmental authority, accidents,
plant conditions, shortages or delays in transportation, energy, equipment or
supplies or any other cause beyond the reasonable control of a Party that
affects the Party's performance of this Agreement.
1.26 "Fully Burdened Costs" means, with respect to the manufacture of
Drug Product, NeoRx's fully burdened costs of manufacturing the Drug Product,
including without limitation all raw materials, labor, manufacturing and
packaging costs and expenses, and overhead amounts directly allocable to such
manufacturing, calculated in accordance with generally accepted accounting
principles consistently applied.
1.27 "IND" means the appropriate application, together with all
documents, data and other information concerning a Coronary Product that are
required to be included in such application, filed or submitted with the FDA in
the United States (known as an investigational new drug application) or the
appropriate governing health authority of any other country in the Territory,
for the purpose of obtaining approval or authority to commence human clinical
trials in such country for the purpose of seeking general marketing approval.
[ * ] Confidential Treatment Requested.
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1.28 "Information" means information and data of any type whatsoever,
in any tangible or intangible form whatsoever, including without limitation
inventions, practices, methods, techniques, specifications, formulations,
formulae, knowledge, know-how, skill, experience, test data including
pharmacological, biological, chemical, biochemical, toxicological and clinical
test data, analytical and quality control data, stability data, studies and
procedures, and patent and other legal information or descriptions.
1.29 "Joint Patents" means all rights under Patents for inventions and
discoveries related to Coronary Products which are invented jointly by the
respective employees or agents of the Parties in the course of the activities
conducted under the Development Plan or otherwise arising from the collaboration
in this Agreement. Inventorship shall be determined under U.S. patent law.
1.30 "Major Country" means Italy, France, the United Kingdom,
Germany or the United States.
1.31 "Manufacturing Information" means the Information contained in the
Drug Master File and CMC file and all other Information owned or Controlled by
NeoRx, its Affiliates or Sublicensees (other than Schwarz Pharma) or a
subcontractor of NeoRx that is manufacturing the Drug Substance for NeoRx, in
each case that is maintained as confidential by NeoRx, such Affiliate or
Sublicensee or such subcontractor and that is used in the manufacture by NeoRx
or such subcontractor of the Drug Substance for Schwarz Pharma.
1.32 "Manufacturing Process Demonstration" means that (a) NeoRx has
provided to Schwarz Pharma a detailed written description of its proposed
manufacturing process, together with detailed written parameters for the
manufacture of Drug Substance which are sufficient to permit an experienced
pharmaceutical manufacturer to understand the process and implement a commercial
GMP manufacturing facility for the Drug Substance through use of the written
materials and (b) after supplying such written materials, NeoRx has
demonstrated, with Schwarz Pharma personnel having the right to be present at
any time during the demonstration, the feasibility of the manufacturing process
and parameters described in such written materials by producing, in a non-GMP
pilot manufacturing facility at NeoRx or at a manufacturing subcontractor chosen
by NeoRx, Drug Substance in a lot size sufficient to yield a minimum [ * ] of
Drug Product per lot, which production was completed within sufficient time to
demonstrate that the process can yield [ * ] of Drug Product within a one-year
period.
[ * ] Confidential Treatment Requested.
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1.33 "Material Supply Breach" means a failure of NeoRx to supply at
least [ * ] of Schwarz Pharma's binding orders for Drug Product pursuant to
Section 6.4 for delivery during the immediately preceding [ * ], unless such
failure is caused by Force Majeure.
1.34 "MIC" means a specific drug delivery catheter and all improvements
or modifications thereof, now or hereafter manufactured by Cordis for NeoRx
pursuant to the Cordis Agreement for use in the Territory in Coronary Products.
1.35 "Milestone 1" means, unless modified by the last sentence of
[ * ], the completion by Schwarz Pharma of [ * ], or a result that is deemed to
be sufficiently positive by Schwarz Pharma to warrant continued clinical
development.
1.36 "Milestone 2" means, unless modified by the last sentence of
[ * ], that the results from [ * ].
1.37 "Milestone 3" means the [ * ].
1.38 "NDA" means a new drug application filed with the FDA in the
United States or foreign equivalents filed in other countries of the Territory
regarding the use of the Drug Product in the Coronary Product.
1.39 "NeoRx Know-How" means Product Information that is owned or
Controlled by NeoRx or an Affiliate of NeoRx, but excluding NeoRx Patents.
1.40 "NeoRx Patents" means all Patents in the Territory owned or
Controlled by NeoRx or an Affiliate of NeoRx that claim or cover the
manufacture, use or sale of Coronary Products. Exhibit A attached hereto sets
forth a list of NeoRx Patents as of the Effective Date.
1.41 "Net Sales" means the gross invoice price of Coronary Products
sold or otherwise disposed of for value by Schwarz Pharma, its Affiliates and/or
its Sublicensees to any non-Affiliate after deducting, if not previously
deducted in the amount invoiced: (a) trade, cash and quantity discounts; (b)
returns and allowances; (c) rebates, chargebacks and other similar amounts
granted, paid or credited to the customer on sale or dispensing of a Coronary
Product; (d) retroactive price reductions; and (e) sales or excise taxes, value
added taxes, insurance charges, transportation charges, customs duties, and
other governmental charges separately shown on the invoice. Any Coronary Product
sold or otherwise disposed of for value in other than an arm's length
transaction or for other property (E.G., barter) shall be deemed invoiced at its
fair market value in the country of sale or disposition. If Schwarz Pharma, its
Affiliates or its Sublicensees use a Coronary Product to provide for value a
clinical service to a non-Affiliate intended to have a therapeutic benefit, Net
Sales shall include the fair market value of the Coronary Product in the country
of such use.
[ * ] Confidential Treatment Requested.
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For purposes of calculating Net Sales, Net Sales in other than United
States Dollars during a particular calendar quarter shall be converted into
United States Dollars at the average of the exchange rates for the first and
last business days of the quarter, as reported in the WALL STREET JOURNAL.
1.42 "Other Exclusive Products" means cardiovascular products developed
by NeoRx that include [ * ], for human therapeutic use wherein approval of the
solution is to be sought for [ * ] and non-cardiovascular products developed by
NeoRx for human therapeutic use that include [ * ] as employed in the current
Coronary Product; provided, however, that "Other Exclusive Products" shall not
include, in any event, the Coronary Products, Peripheral Products, S&G Products
and Platelet Products.
1.43 "Patent" means (a) all patent applications heretofore or hereafter
filed or having legal force in any country; (b) all patents that have issued or
in the future issue therefrom, including without limitation utility, model and
design patents and certificates of invention; and (c) all divisionals,
continuations, continuations-in-part, reissues, renewals, extensions (including
supplemental protection certificates), additions, registrations or confirmations
to or of any such patent applications and patents.
1.44 "Peripheral Product" means a product composed of a solution of the
Drug Substance and drug delivery catheter that is developed pursuant to Section
5.1 for sale in the Territory that is to be used to prevent or treat restenosis
in humans through the delivery of the Drug Substance to a peripheral blood
vessel.
1.45 "Phase II" means that portion of the clinical development program
that provides for the initial trials of a product on a limited number of
patients for the purposes of determining dose and evaluating safety and efficacy
in the proposed therapeutic indication.
1.46 "Phase III" means that portion of the clinical development program
that provides for continued trials of a product on a sufficient number of
patients to establish the safety and efficacy of a product necessary to support
Regulatory Approval in the proposed therapeutic indication. This may include
what is known as a "pivotal" phase II study.
1.47 "Platelet Product" means a product containing the Drug
Substance for use in preserving, protecting or treating platelets.
1.48 "Product Analytical Information" means the Information that is
owned or Controlled by NeoRx or its Affiliate that is necessary to enable
Schwarz Pharma to perform analysis of the Drug Products in order to make the
requisite certification to the appropriate regulatory authorities, to permit the
import, packaging, use or sale of such Drug Products in countries in the
Territory.
[ * ] Confidential Treatment Requested.
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1.49 "Product Information" means, with respect to a Party, Information
owned or Controlled by such Party or its Affiliate regarding Coronary Products
that are necessary or useful to the development, Regulatory Approval and
commercialization of Coronary Products for use in the Field including, without
limitation, the results of all pre-clinical and clinical trials before or after
the effective date of this Agreement.
1.50 "Regulatory Approval" means, with respect to a country, all
approvals (including price and reimbursement approvals), licenses,
registrations, or authorizations of any federal, state or local regulatory
agency, department, bureau or other government entity, necessary for the use,
storage, import, transport and sale of a Coronary Product in such country.
1.51 "S&G Product" means a cardiovascular product such as stent, graft
or other device or material that is coated with or incorporates the Drug
Substance.
1.52 "Schwarz Pharma Know-How" means Product Information that is owned
or Controlled by Schwarz Pharma or an Affiliate of Schwarz Pharma, but excluding
Schwarz Pharma Patents.
1.53 "Schwarz Pharma Legal Dept." means the Legal Department,
Trademarks and Patents of Schwarz Pharma located at its corporate offices in
Monheim, Germany.
1.54 "Schwarz Pharma Patents" means all Patents owned or Controlled by
Schwarz Pharma or an Affiliate of Schwarz Pharma for inventions that claim or
cover the manufacture, use or sale of Coronary Products that were incorporated
in the Coronary Product or were conceived in the course of conducting the
Development or related work on the Coronary Product under this Agreement.
1.55 "Specifications" means the specifications (and any modifications
thereto) for the Coronary Product that the Parties establish pursuant to Section
3.1, it being recognized that the specification for the catheter component of
the Coronary Product will be established by, and subject to the approval of, the
manufacturer of the catheter.
1.56 "Steering Committee" means the executive body established pursuant
to Section 3.1 for making certain Development decisions.
1.57 "Sublicensee" means a party other than Schwarz Pharma, NeoRx or
their Affiliates that is licensed or subcontracted by Schwarz Pharma or NeoRx to
develop, manufacture, use or sell the Coronary Products in the Field in a
certain country or countries during the term of this Agreement.
1.58 "Territory" means the United States, Canada, Puerto Rico, Mexico
and all of Europe, including without limitation, all current European Patent
Convention Members and European Union members, Albania, Bulgaria, Czech
Republic, Hungary, Iceland, Norway, Poland, Romania, Russia, Slovak Republic,
Slovenia, Yugoslavia, Turkey and all states of the CIS and all Soviet Union
successor states.
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1.59 "Third Party" means any entity or individual other than NeoRx,
Schwarz Pharma, or Affiliates or Sublicensees of either.
1.60 "Validation Date" means the date by which NeoRx has validated
(i.e., by production of three validation lots that meet specifications set forth
in the CMC file using validated assays according to FDA requirements) a
manufacturing facility for Drug Substance and one contract fill and finish
facility.
1.61 "Validation Deadline" means the later of [ * ] unless the FDA,
after joint discussion with Schwarz Pharma and NeoRx, requires that Drug Product
from a validated facility must be available at an earlier time for use in a
clinical trial in the United States, in which event "Validation Deadline" means
the later of (i) [ * ] and (ii) such earlier time that the FDA requires that
Drug Product from a validated facility be used in a clinical trial in the United
States.
2. LICENSES
2.1 License Grant
(a) Subject to the terms of this Agreement, NeoRx hereby grants Schwarz
Pharma the Exclusive Schwarz Pharma License, with the right to sublicense, under
the NeoRx Patents and the NeoRx Know-How solely to conduct Development with
respect to the Drug Product and Coronary Product in the Territory in the Field
and to import, use, and sell Coronary Products solely for use within the Field
within the Territory; provided that such Drug Products and Coronary Products
either were purchased from NeoRx (and/or Cordis, if applicable) pursuant to this
Agreement or were manufactured by or on behalf of Schwarz Pharma pursuant to the
permitted and proper exercise of the license in Section 6.11. The Exclusive
Schwarz Pharma License shall be exclusive within the Field within the Territory,
except that NeoRx shall have the non-exclusive rights to conduct research on the
Drug Substance and products which incorporate the Drug Substance.
(b) Schwarz Pharma shall purchase all of its requirements for the Field
from NeoRx (except Drug Products in the event it assumes manufacturing pursuant
to Section 6.11) and shall not sell Coronary Products outside of the Territory
or promote their use outside of the Field.
(c) NeoRx agrees that it will not use or sell Coronary Products for
resale outside the Territory unless NeoRx has (i) supplied Schwarz Pharma with
[ * ] of its orders of Coronary Products in accordance with Section 6.4, or,
if unable to do so, (ii) prorated its supply of Coronary Products to all
purchasers (including itself) based on actual sales of Coronary Products in
the preceding quarter.
[ * ] Confidential Treatment Requested.
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2.2 Disclosure of NeoRx Product Information
Within [ * ] following execution of this Agreement, NeoRx shall
disclose to Schwarz Pharma all Product Information that is then owned or
Controlled by NeoRx or its Affiliates. Promptly upon developing or receiving any
additional Product Information (but on no less than a semi-annual basis during
this Agreement), and subject to the following limitations, NeoRx shall continue
to disclose to Schwarz Pharma all additional Product Information that thereafter
is owned or Controlled by NeoRx or its Affiliates not previously disclosed to
Schwarz Pharma. Schwarz Pharma shall have the right to ask for additional
information regarding such Product Information, and NeoRx shall provide
reasonable additional information within its Control. Notwithstanding the
foregoing, Schwarz Pharma understands and agrees that NeoRx has no obligation to
identify, seek to discover or develop any additional variations of Coronary
Product. Schwarz Pharma may use and refer to such Product Information in the
Territory within the Field in accordance with the terms of this Agreement.
2.3 Covenants Against Unauthorized Use
Schwarz Pharma hereby covenants that Schwarz Pharma, its Affiliates and
its Sublicensees (a) will not utilize or practice the NeoRx Patents or NeoRx
Know-How except as expressly permitted under the Exclusive Schwarz Pharma
License and this Agreement, (b) will not sell any Coronary Product outside the
Territory, and (c) will not market, promote, or advertise any use of Coronary
Product outside the Field, except to the extent that Schwarz Pharma obtains
rights outside the Field pursuant to Article 5.
2.4 Expansion of Territory
NeoRx hereby grants Schwarz Pharma a first right to negotiate an
expansion of the definition of "Territory" to include Japan and/or China as
follows:
(a) Before negotiating a license or other relationship with an
Affiliate or Third Party for Japan or China with respect to the Field, NeoRx
shall give written notice to Schwarz Pharma and
(b) If Schwarz Pharma gives notice that it does not desire to negotiate
a relationship or the Parties fail to reach an agreement, or an agreement in
principle binding each to an attempt to negotiate in good faith the definitive
terms of an agreement, within the next [ * ] after NeoRx's notice, Schwarz
Pharma shall have no further right of first negotiation and NeoRx shall be free
to enter any license or other relationship within the Field with respect to
Japan and China with any Affiliates or Third Parties.
[ * ] Confidential Treatment Requested.
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At its discretion during the term of this Agreement, NeoRx may make a
written proposal to add to the definition of "Territory" any one or more other
countries, which proposal shall include any fees or milestone payments required
to add such country to the Territory. Schwarz Pharma may accept or decline the
proposal.
3. PRODUCT DEVELOPMENT
3.1 Management of Collaborative Efforts
(a) Promptly after the Effective Date, the Parties shall form a
Steering Committee constituted of two representatives from each Party. The
Steering Committee shall meet regularly at least once each six (6) months during
the term of this Agreement. The meeting site for Steering Committee meetings
shall alternate between Monheim, Germany and Seattle, Washington, U.S.A. The
Steering Committee shall (i) oversee all activities of the Parties under this
Agreement, including the coordination of the overall strategy for development of
the Coronary Product pursuant to the Development Plan, subject to the specific
decision-making rules provided in this Agreement, and (ii) be responsible for
establishing appropriate goals and development milestones and criteria. The
Parties intend that development activities shall be conducted under the
supervision of the Development Committee appointed pursuant to this Article and
that the Development Committee shall report to and be under the supervision of
the Steering Committee. In addition, the Steering Committee shall resolve any
disputes or disagreements that are unresolved by the Development Committee. Each
Party shall pay its own expenses in connection with Steering Committee meetings.
It is the intent of the Parties, in working together, to develop and
commercialize the Coronary Products as set forth herein, and to assign
responsibilities for the various operational aspects of the collaboration to
those portions of their respective organizations which have the appropriate
resources, expertise and responsibility for such functions. The Parties intend
that their respective organizations will work together to assure success of the
collaboration.
The members of the Steering Committee shall use reasonable best efforts
to reach unanimous decisions. Each Party shall have one vote and in cases of
dead-lock, the matter shall be referred to the CEOs of the respective Parties
who will attempt to reach agreement. If the CEOs fail to agree within a
reasonable time period (not to exceed 30 days), then the CEO of Schwarz Pharma
shall cast a tie-breaker vote.
(b) Each Party recognizes that the work contemplated under the
Development Plan requires the cooperation of both Parties. To this end, Schwarz
Pharma and NeoRx shall establish the Development Committee to ensure the smooth
and orderly progress of work under the Development Plan and to facilitate
communication between the Parties. The Development Committee shall (i) oversee
all preclinical and clinical investigations and efforts undertaken under this
Agreement in conducting Development of the Coronary Product in the Territory for
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use in the Field, (ii) establish working project teams at Schwarz Pharma and
NeoRx, respectively, to conduct work under the Development Plan, and (iii) be
the primary contact point between the Parties regarding the transfer of
Information, the discussion of the Development Plan and Schwarz Pharma's efforts
to conduct Development, and other issues relating to each Party's development
and marketing of Coronary Products in their respective territories. Each Party
may appoint its representatives to the Development Committee and other members
of its project team at its discretion.
The Development Committee (together with such members of the project
team as the Development Committee members deem appropriate) shall meet every six
(6) months or less frequently as the Parties shall mutually agree. The meeting
site for Development Committee meetings shall alternate between Monheim, Germany
and Seattle, Washington, U.S.A. The members of the project teams shall meet and
communicate as frequently as appropriate to carry out the objectives of the
Development Plan. Each Party shall pay its own expenses in connection with
Development Committee meetings and project team meetings.
On a roughly semiannual basis in connection with a meeting of the
Steering Committee, each Party shall prepare a report for the Steering Committee
detailing the progress of the work, successes, problems, delays and under or
overspending in that period and shall review the commitment under the
Development Plan for the remainder of the year. Such report shall be delivered
to the Steering Committee no fewer than ten days prior to the applicable
Steering Committee meeting. The general format of this report shall be agreed
upon by the Parties. The discussions and deliberations of the Development
Committee will be reported to the Steering Committee. Schwarz Pharma and NeoRx
shall give due consideration to any requests or recommendations of the
Development Committee, to benefit the Development of Coronary Products.
3.2 Development
Responsibility and costs of Development of the Coronary Product shall
be allocated between the Parties as follows:
(a) NeoRx shall, at its cost and expense, complete the appropriate
analysis and follow-up regarding the study conducted under the Protocol 9501
dated March 5, 1996 and shall complete an extended Phase I study to evaluate up
to [ * ] new catheters, such extended Phase I study for the new catheters to be
in [ * ] patients per catheter. NeoRx shall assign the IND for the Coronary
Product to Schwarz Pharma after completion of the extended Phase I study.
(b) NeoRx shall, at its cost and expense, conduct any work necessary to
properly document the CMC file, except that Schwarz Pharma will be responsible
[ * ] Confidential Treatment Requested.
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for the expense of CMC work that is required by regulatory authorities in the
Territory outside the U.S. but not required by the FDA.
(c) Schwarz Pharma shall conduct and pay the cost of all other clinical
work in the Territory. It shall prepare the pre-clinical data package at its
cost and expense. It shall be responsible, at its cost and expense, for
submitting for approval the CMC and Drug Master Files, and for preparing and
submitting Approval Applications in all of the Major Countries and in such other
countries that it elects in the Territory.
As provided below, the Parties agree to work closely together in
conducting such Development and to cooperate in attempting to proceed with
Development efforts as quickly as practicable. Schwarz Pharma and NeoRx will
consult regularly with the Development Committee concerning the Development
efforts undertaken in the Territory. NeoRx and Schwarz Pharma agree to provide
each other reasonable assistance in conducting such Development.
3.3 Development Plan
Prior to the end of each calendar year while Schwarz Pharma and NeoRx
are the Parties conducting Development on Coronary Product, the Parties shall
modify the Development Plan, to reflect such revised Development activities as
the Parties reasonably determine to be necessary or useful to attempt to achieve
Regulatory Approval of Coronary Products within the Territory as soon as
commercially practicable, after considering the results of the Development of
such Coronary Product during such year and the anticipated regulatory
requirements to achieve such Regulatory Approval. If the Parties do not agree
regarding the manner in which the Development Plan should be modified, the
disagreement shall be resolved by the Steering Committee in the manner set forth
in Section 3.1(a).
3.4 Reports
Schwarz Pharma shall maintain appropriate records of all Development
activities and all results of any trials, studies and other investigations
conducted by or on behalf of Schwarz Pharma hereunder. While Schwarz Pharma is
conducting Development, Schwarz Pharma shall prepare and submit to the
Development Committee at least every six months a report summarizing such
Development activities and identifying significant results or developments
during such period.
3.5 Approval Applications; Schwarz Pharma Information
Schwarz Pharma will be solely responsible at Schwarz Pharma's expense,
except as otherwise provided in Section 3.2, for assembling its Approval
Applications to obtain Regulatory Approval in the Territory. Such Approval
Applications shall be owned by and filed in the name of Schwarz Pharma (or its
Affiliate or Sublicensee). Schwarz Pharma (or its Affiliate or Sublicensee) will
be responsible for causing such Approval Applications to progress through the
approval process in the Territory. NeoRx shall retain ownership and control of
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all confidential or proprietary Information of NeoRx or its Affiliates or
licensors prepared by NeoRx for inclusion in such Approval Applications, but
Schwarz Pharma shall retain ownership and control of such Approval Applications
as a whole. The Parties will cooperate in such manner as may be reasonably
necessary to obtain Regulatory Approvals. NeoRx shall receive copies of all
Approval Applications, amendments and related correspondence to and from
regulatory authorities. During the term of this Agreement and thereafter (a)
NeoRx may disclose to a prospective partner or Sublicensee Schwarz Pharma's
preclinical (e.g., toxicological) and clinical data, but use by NeoRx or its
Sublicensee or partner of such preclinical and clinical data in an Approval
Application shall require the prior written consent of Schwarz Pharma and (b)
subject to this limitation on the use of preclinical and clinical data, Schwarz
Pharma's Information, other than Schwarz Pharma's Patents, can be used by NeoRx
and its Sublicensees and partners (i) outside of the Territory and (ii) within
the Territory if outside the Field (during the term). Only in the event of early
termination of this Agreement by Schwarz Pharma under Section 13.2(c) shall
NeoRx and its Sublicensees and partners have the right to use Schwarz Pharma's
preclinical and clinical data in Approval Applications without the prior written
consent of Schwarz Pharma and without charge.
3.6 Adverse Events
Each Party shall notify the other promptly of any Information of which
such Party becomes aware concerning (a) any adverse side effect, injury,
toxicity or sensitivity reaction, whether or not serious or unexpected, (b) any
unexpected incidence, and the severity thereof, associated with the clinical
uses, studies, investigations, tests and marketing of any Coronary Product,
whether or not determined to be attributable to such Coronary Product, or (c)
any negative information related to the efficacy of any Coronary Product (the
events and information set forth in (a), (b) and (c) of this Section 3.6 shall
be referred to collectively as the "Adverse Events"). Without limiting the
generality of the foregoing, each Party shall notify the other Party of any
event or incidence regarding any Coronary Product, which it is required to
notify or report to any governmental authority of the country in which it sells
such Coronary Product, on or before the date when it is required to give such
notice or to make such report. Each Party further shall immediately notify the
other of any Information received regarding any threatened or pending action by
a governmental agency or any other Third Party arising out of or relating to an
alleged adverse event or unexpected incidence regarding any Coronary Product.
Upon receipt of any such Information, the Parties shall consult with each other
in an effort to arrive at a mutually acceptable procedure for taking appropriate
action; provided, however, that nothing contained herein shall be construed as
restricting either Party's right to make a timely report of such matter to any
government agency or take other action that it deems to be appropriate or
required by applicable law or regulation, including the right of a Party to
recall or withdraw such Coronary Product from development, marketing and
selling. Each Party shall disclose to the other any Adverse Event that it learns
of from any Third Party. The obligations in this Section 3.6 pertaining to
Coronary Products shall survive the expiration or termination of this Agreement.
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3.7 Exclusive License
During the term of this Agreement, NeoRx shall not market or sell, and
shall not license any Third Party under the NeoRx Patents and NeoRx Know-How to
develop, market or sell within the Territory, any Coronary Product.
3.8 NeoRx Development
NeoRx shall retain the right to develop Coronary Products in the
Territory or to have Third Parties develop, market and sell Coronary Product for
use in the Field in all countries outside the Territory. NeoRx shall not,
without Schwarz Pharma's prior written approval (which may be withheld for any
reason), market or license others to market a Platelet Product within the
Territory, wherein the product configuration [ * ] .
3.9 Analytical Certification
NeoRx shall provide the Product Analytical Information to Schwarz
Pharma upon Schwarz Pharma's reasonable request. Upon Schwarz Pharma's
reasonable request, NeoRx shall also make its personnel available in Germany
(without charge to Schwarz Pharma) in conjunction with a regularly scheduled
Development Committee meeting in Germany for such time as is necessary to train
Schwarz Pharma personnel to perform the analytical procedures necessary to meet
European certification requirements.
3.10 Reimbursement Formula
If NeoRx performs activities for Schwarz Pharma that this Agreement
provides shall be at Schwarz Pharma's expense, Schwarz Pharma will reimburse
NeoRx for its actual outside costs, plus NeoRx's labor at the rate of [ * ] per
full-time employee per year. No additional reimbursement for supplies, overhead,
facilities expense or other expense shall be required.
3.11 Diligence
Schwarz Pharma shall use good faith, commercially reasonable and
diligent efforts to develop Coronary Products under this Agreement. Without
limiting the foregoing, Schwarz Pharma agrees that it, its Affiliates and/or
Sublicensees will pursue programs of Development of Coronary Products with
diligent efforts no less than Schwarz Pharma applies to the Development of its
own compounds or products with similar regulatory requirements and market
potential. If Schwarz Pharma commits a material breach of such diligence
obligations (provided that such breach shall not be as a result of Force
Majeure), and such breach remains uncured for 90 days after written notice
thereof, NeoRx may, at its election, and upon written notice to Schwarz Pharma,
terminate this Agreement or convert to nonexclusive Schwarz Pharma's rights
throughout the Territory. The actual means by which Schwarz Pharma conducts
Development of Coronary Products under this Agreement are within Schwarz
Pharma's discretion, subject to Schwarz Pharma's compliance with these diligence
obligations and this Agreement.
[ * ] Confidential Treatment Requested.
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4. MARKETING
4.1 Marketing Efforts
Schwarz Pharma, its Affiliates and its Sublicensees shall use their
commercially reasonable efforts to market and sell the Coronary Products that
have received the applicable Regulatory Approval in a country in the Territory
for use in the Field in each such country.
4.2 Packaging and Labeling
The Coronary Product for commercial sale under this Agreement shall be
packaged and labeled consistent with the requirements of the regulatory
authorities in the Territory, shall identify any applicable NeoRx Patents
consistent with marking requirements, and, if applicable, shall identify NeoRx
as the manufacturer and supplier of the Coronary Product. Subject to the
foregoing, Schwarz Pharma shall, in its reasonable discretion, determine the
packaging and labeling for the Coronary Products.
5. RIGHTS TO OTHER FIELDS
5.1 Peripheral Products
Schwarz Pharma shall have the same rights to Peripheral Products as it
has with respect to Coronary Products, upon the same terms and conditions as set
forth in this Agreement for Coronary Products (recognizing that the catheter
will be of different design and manufacture and will be priced at the
manufacturer's price), and all provisions of this Agreement shall apply to the
Peripheral Products as they apply to Coronary Products (including Development);
provided, however, that Schwarz Pharma's rights shall terminate, and it shall
have no right to the Peripheral Products, in the event it does not expend at
least [ * ] and is not thereafter developing the Peripheral Products in
accordance with Development Plans (covering financial investments and time
lines) mutually agreed upon by the parties within one year after such event and
mutually agreed each anniversary thereafter, such Development Plans being
established, if the Parties do not agree, by a majority vote of a panel of three
experts (each Party selecting an expert and the two experts so selected
selecting a third), and provided further that the [ * ].
[ * ] Confidential Treatment Requested.
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5.2 Other Exclusive Products
During the term of this Agreement, Schwarz Pharma shall have the
exclusive right to develop (subject to NeoRx's right to conduct research and
development), market and distribute in the Territory all Other Exclusive
Products, upon terms to be agreed upon. Whether or not such terms are agreed
upon for any reason, NeoRx shall not appoint any distributors in the Territory
for Other Exclusive Products and shall not sell or license others to import,
make, use or sell (other than to Schwarz Pharma) Other Exclusive Products in the
Territory.
5.3 S&G Products
(a) NeoRx hereby grants Schwarz Pharma a first right to negotiate, as
hereafter provided, on a product-by-product basis or, if more than one product
can be derived from essentially the same technology, then on a
technology-by-technology basis, to obtain exclusive rights in the Territory
under NeoRx Know-How and NeoRx Patents for S&G Products. Provided that Schwarz
Pharma is not in material breach of this Agreement, NeoRx will give Schwarz
Pharma written notice if at any time NeoRx desires to sell directly after
Regulatory Approval, or to grant a license to an Affiliate or Third Party to
import, develop, use and/or sell, within the Territory one or more such S&G
Products. Such notice shall include such Information owned or Controlled by
NeoRx or its Affiliates as NeoRx in its reasonable discretion believes would be
necessary to enable Schwarz Pharma to evaluate its interest in obtaining such
rights. If Schwarz Pharma is interested in obtaining such rights, Schwarz Pharma
shall give NeoRx written notice of its desire to negotiate such rights within
[ * ] of receipt of such written notice and Information from NeoRx. If
Schwarz Pharma provides such notice, the Parties will meet and negotiate
exclusively and in good faith, during the [ * ] period following Schwarz
Pharma's provision of such notice, the terms and provisions of an agreement
granting Schwarz Pharma such rights to commercialize S&G Products in the
Territory.
(b) Upon (i) Schwarz Pharma giving notice that it does not desire to
negotiate such a license or failure to give such notice within [ * ] or (ii) the
failure of the Parties to reach an agreement, or an agreement in principle
binding each to attempt to negotiate in good faith the definitive terms of an
agreement, within the following [ * ] period, Schwarz Pharma shall have no
further rights under this Section 5.3 and NeoRx shall be free to sell directly
or to enter into any license or other arrangement with Third Parties with
respect to S&G Products.
[ * ] Confidential Treatment Requested.
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6. MANUFACTURING AND SUPPLY
6.1 Manufacturing Rights and Responsibilities
(a) Subject to this Section 6.1, NeoRx shall manufacture or have
manufactured the Coronary Products for Schwarz Pharma as provided in this
Article 6. The components of the Coronary Products (e.g., catheter and Drug
Product) may be supplied in one combination package or supplied separately.
Schwarz Pharma shall have the right to review and comment upon any
subcontractors that NeoRx is considering using to manufacture Drug Substance for
NeoRx's commercial supply obligations to Schwarz Pharma under Section 6.4, which
comments NeoRx shall reasonably consider in selecting a subcontractor. For
purposes of analyzing subcontractors, it is recognized that the lowest cost is
not more important than assurance of conformity to Specifications and assurance
of timely supply.
(b) The Coronary Products shall be supplied in accordance with the
Specifications and cGMP regulations and in compliance with all applicable laws.
The Drug Product for commercial sales shall have a shelf life of at least [ * ].
(c) For Clinical Trial Products, NeoRx will manufacture bulk Drug
Substance at its pilot plant. Upon payment of the amount required by Section
7.1(a), NeoRx shall contract with a Third Party with appropriate skills and
experience in development of pharmaceutical [ * ] processes (e.g., [ * ]) and
attempt to develop a commercially feasible [ * ] process acceptable to
manufacture Drug Substance in lot sizes sufficient to yield [ * ] of Drug
Product. NeoRx shall provide Schwarz Pharma with a copy of the technical and
financial proposal from and the final contract with the Third Party for such
development. NeoRx shall accomplish [ * ] by [ * ], the failure of which shall
result in a reduction to the payment under [ * ] and a possible loss of
manufacturing rights in accordance with Section 6.11(a). NeoRx shall have a Drug
Substance manufacturing facility and one contract fill and finish facility
validated (i.e., by production of three validation lots that meet specifications
set forth in the CMC file using validated assays according to FDA requirements)
by [ * ], the failure of which shall result in a reduction to the payment under
[ * ] and a possible loss of manufacturing rights in accordance with Section
6.11(a). A second contract site at least 100 miles from the other NeoRx
fill/finish/packaging facility shall be validated by NeoRx for
fill/finish/packaging within [ * ] after Regulatory Approval of the Coronary
Product in a Major Country.
(d) Within [ * ] after [ * ], NeoRx shall manufacture or have
manufactured [ * ] of Schwarz Pharma's estimated one-year requirements of bulk
Drug Substance for the Territory, and shall place the bulk Drug Substance in
Drug Storage. Within [ * ], NeoRx shall place in Drug Storage and maintain in
Drug Storage thereafter sufficient bulk Drug Substance to equal [ * ] of Schwarz
Pharma's estimated one-year supply requirements for the next [ * ] as provided
[ * ] Confidential Treatment Requested.
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to NeoRx pursuant to Section 6.4(a), or [ * ] doses of the Drug Substance,
whichever is less. The cost for manufacturing the bulk Drug Substance shall be
borne by NeoRx. The Drug Substance maintained in Drug Storage shall always have
a shelf life of at least [ * ]. While maintaining the requisite amount of Drug
Substance in Drug Storage, NeoRx shall periodically remove Drug Substance from
Drug Storage for use in manufacturing Drug Product and replace the removed
amount with new Drug Substance such that all Drug Substance in Drug Storage
always has a [ * ] shelf life. Schwarz Pharma shall maintain the Drug Substance
in Drug Storage in accordance with Specifications and cGMP regulations and
applicable laws, shall allow NeoRx personnel access to the Drug Storage facility
at all reasonable times and shall not remove Drug Substance for its own use
except in accordance with Section 6.11.
(e) Within [ * ] after execution of this Agreement, NeoRx shall place
the Manufacturing Information with the Schwarz Pharma Legal Dept. NeoRx shall
place any new Manufacturing Information with the Schwarz Pharma Legal Dept. as
it becomes known to NeoRx and shall place the CMC file and any amendments or
other changes thereto with the Schwarz Pharma Legal Dept. within [ * ] of
submission to the FDA or to the appropriate governing health authority in
another country in the Territory. The Schwarz Pharma Legal Dept. shall keep all
such Information for archival purposes, shall not copy it and shall not disclose
or release it to other personnel at Schwarz Pharma, except in accordance with
Section 6.11.
(f) NeoRx shall maintain ongoing stability studies of the Drug
Substance using its methodology. NeoRx shall, at its expense, provide Schwarz
Pharma with reasonable samples, specimens and full reports of the results of the
stability studies.
(g) NeoRx shall obtain and maintain all necessary United States
manufacturing licenses, registrations, permits and approvals, including, but not
limited to FDA approval for the manufacturing facilities and export approval for
the Drug Substance and Drug Product and shall require the same of the maker of
the catheter. Schwarz Pharma, its Affiliates and its Sublicensees shall obtain
any required importation licenses or approvals for importation of Coronary
Product for sale in the Territory. NeoRx and Schwarz Pharma shall cooperate
reasonably to obtain such licenses or approvals.
(h) NeoRx shall be responsible for the safe handling, storage and
transportation of the Drug Product until delivered to Schwarz Pharma.
6.2 Clinical Supply
NeoRx shall provide Schwarz Pharma with such quantities of the Clinical
Trial Product, on which Schwarz Pharma is conducting Development, as Schwarz
[ * ] Confidential Treatment Requested.
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Pharma reasonably requires and orders pursuant to this Agreement. At least [ * ]
prior to commencement of clinical trials of the Coronary Product in the
Territory, Schwarz Pharma shall give NeoRx a rolling four (4) calendar quarter
forecast of its expected requirements for Clinical Trial Products, including
quantities, dosages and requested delivery dates. Schwarz Pharma shall update
such forecast at the beginning of each calendar quarter thereafter during
Development and provide such other forecasts for catheters as may be reasonably
requested by the catheter manufacturer. Schwarz Pharma shall place firm orders
for Clinical Trial Products (other than catheters) at least [ * ] in advance of
the requested delivery and in amounts not less than [ * ] or more than [ * ] of
the amounts set forth in the most recent forecast received by NeoRx at least [ *
] prior to the placement of the firm order. NeoRx shall deliver Drug Products
for clinical trials no earlier than [ * ] before, or later than [ * ] after, the
requested delivery date. Schwarz Pharma shall place firm orders for catheters at
least [ * ] in advance of the minimum time for ordering from the catheter
manufacturer. Notwithstanding the foregoing, if unanticipated changes arise with
respect to the quantity requirements of Clinical Trial Products for the trial
protocol, NeoRx will make a good faith effort to fulfill Schwarz Pharma's
quantity requirements, regardless of whether Schwarz Pharma followed the
foregoing forecasting and ordering procedures, provided that Schwarz Pharma
agrees to pay any excess costs associated therewith and Schwarz Pharma receives
documentation for such excess costs. Shipment, delivery and acceptance of the
Clinical Trial Products shall be in accordance with Sections 6.4(c), 6.4(d) and
6.4(g).
6.3 Purchase Price of Clinical Supplies
For purchases of Clinical Trial Products, Schwarz Pharma shall pay
NeoRx an aggregate price composed of the sum of the following components:
(a) The Drug Product and placebo included in the Clinical Trial
Product shall [ * ], FCA (INCOTERMS 1990) as set forth in Section 6.4(c);
(b) An amount for catheters equal to the price set forth in the
Cordis Agreement in the case of the MIC and the cost from the manufacturer in
the case of any other catheter; and
(c) Any reasonable and actual packaging costs for preparing the
final packaged Clinical Trial Products.
In the event of any unanticipated and severe changes in market
conditions or other circumstances affecting the costs per unit of the Clinical
Trial Product, the Parties agree to discuss such changed circumstances and to
negotiate in good faith appropriate adjustments to the price for such Clinical
Trial Products to reflect such changes.
The amounts determined under [ * ] shall be paid net [ * ] and the
amount determined under [ * ] shall be paid directly to Cordis or other catheter
[ * ] Confidential Treatment Requested.
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manufacturer or to NeoRx at least [ * ] prior to the date that NeoRx must make
payment to Cordis or other catheter manufacturer.
6.4 Commercial Product Supply
NeoRx shall supply, and Schwarz Pharma shall purchase, all of Schwarz
Pharma's commercial requirements for Coronary Products as follows:
(a) At least [ * ] prior to the first expected Regulatory Approval of a
Coronary Product in the Territory, Schwarz Pharma shall provide a good faith
estimate of its expected requirements for such Coronary Product for the first
year after product launch. Thereafter, Schwarz Pharma shall provide NeoRx a
rolling 12 month forecast, updated each quarter. Firm orders shall be placed at
least [ * ] in advance of requested delivery and in amounts not less than [ * ]
or more than [ * ] of the amounts set forth in the most recent forecast received
by NeoRx at least [ * ] prior to the placement of the firm order. NeoRx shall
attempt to supply any orders in excess of [ * ]; provided that Schwarz Pharma
agrees to pay any excess costs associated therewith and Schwarz Pharma receives
documentation for such excess costs. NeoRx shall deliver Coronary Products no
earlier than [ * ] before, or later than [ * ] after, the requested delivery
date.
(b) NeoRx shall immediately notify Schwarz Pharma in writing if NeoRx
acquires any information that NeoRx will not be able to supply the most recent
orders and/or forecasts of orders for any Coronary Product.
(c) For Coronary Products (or any component thereof) shipped by NeoRx
to Schwarz Pharma at an address outside the U.S., delivery shall be FCA
(INCOTERMS 1990) at the international airport nearest to the place of
manufacture or packaging which maintains regular non-stop commercial flights to
Europe. For Coronary Products (or any component thereof) shipped by the catheter
manufacturer directly to Schwarz Pharma, delivery shall be pursuant to the
delivery terms in the supply agreement with the catheter manufacturer, or as
otherwise agreed to by Schwarz Pharma and the catheter manufacturer. "FCA" shall
be construed in accordance with INCOTERMS 1990 of the International Chamber of
Commerce. Delivered Coronary Products shall be appropriately packaged for export
shipment. At Schwarz Pharma's request and cost, NeoRx or the catheter
manufacturer (as applicable) shall arrange shipping to specified Schwarz Pharma
locations; provided that Schwarz Pharma shall be responsible for obtaining all
import clearances required. Except as otherwise provided above, Schwarz Pharma
shall be responsible for compliance with all exportation and importation laws
and regulations.
(d) Title to and risk of loss of the Coronary Product shall transfer to
Schwarz Pharma upon delivery to the appropriate carrier.
[ * ] Confidential Treatment Requested.
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(e) Schwarz Pharma shall have the right to test a portion of each
shipment of Coronary Product (or any component thereof) to confirm such shipment
meets the Specifications. Shipments of Coronary Products not meeting the
Specifications may, at Schwarz Pharma's option, be returned to NeoRx at NeoRx's
expense. If Schwarz Pharma rejects in whole or in part any nonconforming
shipment of Drug Products, Schwarz Pharma shall provide NeoRx written notice of
such rejection within [ * ] of receiving the shipment and NeoRx shall replace
the nonconforming Drug Product, at no additional cost to Schwarz Pharma, as soon
as possible and not more than [ * ] following Schwarz Pharma's notice of the
rejection. If NeoRx disagrees with Schwarz Pharma's determination that a
shipment of Drug Product did not meet the Specifications, a sample of the
shipment shall be submitted to a mutually acceptable independent third-party
laboratory which shall determine whether the rejected shipment meets the
Specifications and such laboratory's determination shall be final and
determinative for purposes of this Agreement. The Party against whom the
laboratory rules shall bear all costs of the laboratory testing. If the
laboratory rules that the shipment failed to meet Specifications, the
replacement shipment shall be at no charge to Schwarz Pharma if Schwarz Pharma
has already paid for the original shipment. If the laboratory rules the rejected
shipment met the Specifications, then Schwarz Pharma shall promptly pay NeoRx
for the rejected shipment, any replacement shipment and any shipping costs
incurred by NeoRx in shipping the replacement shipment. NeoRx cannot be in a
Material Supply Breach or have had a Failure of Supply because of an improper
rejection or the inability to supply replacement Drug Product within [ * ] after
an improper rejection.
(f) To the extent any purchase order, invoice or acknowledgment form
used by NeoRx or Schwarz Pharma contains any provisions additional or contrary
to the provisions of this Agreement, such additional or contrary provision shall
have no force or effect and the terms of this Agreement shall control.
(g) Notwithstanding the foregoing, the supply of the MIC or other
catheter shall be governed by and subject to the terms of the Cordis Agreement
or other catheter agreement. NeoRx shall not modify the Cordis Agreement or
enter into an agreement with another catheter manufacturer to supply catheters
hereunder, without the prior written consent of Schwarz Pharma, which consent
shall not be unreasonably held. With respect to the Cordis Agreement, the
Parties agree that if Cordis breaches the Cordis Agreement, Schwarz Pharma shall
be subrogated to the rights of NeoRx as Schwarz Pharma's interests may appear;
and NeoRx shall be liable to Schwarz Pharma for such breach to the extent only
that Cordis is liable to NeoRx for such breach. In addition, (i) NeoRx proposals
and agreements for changes in the catheter design or specifications are to be
made only pursuant to the provisions of Article 3 of this Agreement; (ii) no
amendment or termination to the Cordis Agreement shall be made by NeoRx without
the prior written agreement of Schwarz Pharma, which shall not be unreasonably
withheld; (iii) NeoRx will appoint a representative to the committee described
in section 2.2.1 of the Cordis Agreement only with the prior written approval of
[ * ] Confidential Treatment Requested.
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Schwarz Pharma, which shall not be unreasonably withheld; and (iv) NeoRx will
cause catheters to be shipped by Cordis to such destinations as Schwarz Pharma
specifies for Schwarz Pharma's orders of the catheters included in Coronary
Products it orders.
6.5 Commercial Purchase Price of Coronary Product
For purchases of Coronary Product for commercial purposes, Schwarz
Pharma shall pay NeoRx an aggregate price composed of the sum of the following
components:
(a) [ * ] per unit of Drug Product, which unit price shall be adjusted
once per calendar year (at the end of such calendar year) for the percentage
increase in NeoRx's Fully Burdened Costs for manufacturing the Drug Product
(after taking into account economies of scale for the year in which the
calculation is made) as shown by documentation provided to Schwarz Pharma and
available for audit demonstrating such increase and which unit price shall be
renegotiated in the event the formulation for the Drug Product significantly
changes from that used in the Phase I study under Protocol 9501 dated March 5,
1996 and the manufacturing costs increase;
(b) An amount for catheters equal to the price set forth in the Cordis
Agreement in the case of the MIC and the cost from the manufacturer in the case
of any other catheter; plus shipping costs (if provided by NeoRx at Schwarz
Pharma's request);
(c) Any actual and reasonable packaging costs for preparing the
final, packaged Coronary Product; and
(d) An additional amount for the Coronary Products determined pursuant
to the following scale:
(i) [ * ] of Net Sales with respect to the first
[ * ] of Net Sales in the Territory during the calendar year;
(ii) [ * ] of Net Sales with respect to the next
[ * ] of Net Sales in the Territory during the calendar year; and
(iii) [ * ] of Net Sales with respect to Net Sales
greater than [ * ] in the Territory during the calendar year;
except to the extent reduced by [ * ] in the event Schwarz Pharma
exercises its rights to use a Third-Party manufacturer. [ * ].
If Schwarz Pharma determines, in its reasonable discretion exercised in
good faith, that it is economically beneficial to market a Coronary Product in
[ * ] Confidential Treatment Requested.
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any country in the Territory in kit form packaged with other therapeutic agents
(I.E., other than any form or variation of the Drug Substance or any other
therapeutic agent for use in the Field) appropriate for use with the Coronary
Product or to market other therapeutic agents in conjunction with a Coronary
Product as a separate product in any country in the Territory for use with a
Coronary Product, such that Net Sales include the price for the other
therapeutic agent, then the amount due with respect to Section 6.5(d) shall be
based upon an apportionment of the combined Net Sales between the Coronary
Product without the other therapeutic agent and the other therapeutic agent by
mutual agreement.
The amounts set forth in [ * ] shall be paid net [ * ]. The amount due
pursuant to [ * ] shall be paid [ * ] after the end of each calendar quarter
based on Net Sales during the quarter. With each payment, Schwarz Pharma shall
provide a statement setting forth the Net Sales and number of units sold by
product and country for the calendar quarter and the calculation of the amount
due pursuant to [ * ]. Within [ * ] after the end of each [ * ], Schwarz Pharma
shall provide NeoRx Net Sales or other sales information for the from which
estimates can be made. The amount due pursuant to Section 6.5(b) shall be paid
directly to Cordis or other catheter manufacturer as required under the Cordis
Agreement or other manufacture agreement or to NeoRx at least [ * ] prior to the
date that NeoRx must make payment to Cordis or such other catheter manufacturer.
If the aggregate purchase price to Schwarz Pharma of Coronary Products
purchased pursuant to this Section 6.5 that are sold by Schwarz Pharma, its
Affiliates and Sublicensees to end users during a calendar year in the
Territory, when divided by the aggregate Net Sales of the Coronary Products for
the calendar year in the Territory, exceeds [ * ], the Parties shall discuss and
renegotiate in good faith a reduced purchase price for the Coronary Products
pursuant to Section 6.5(d).
The amount due pursuant to Section 6.5(d), attributable to any Drug
Product that is delivered more than [ * ] later than the delivery date requested
by Schwarz Pharma in accordance with Section 6.4(a), shall be reduced at the
rate specified in [ * ] for the amount of time, past such [ * ], that the
delivery is late for reasons other than Force Majeure.
It is recognized and agreed that any [ * ] from an amended Cordis
Agreement or new agreement with another catheter manufacturer will be [ * ],
Schwarz Pharma.
6.6 Coronary Product for Promotional Purposes
NeoRx also shall provide to Schwarz Pharma, [ * ] Drug Product in
amounts up to [ * ] of Schwarz Pharma's forecasted annual purchase of the Drug
Product for commercial sale, provided that Schwarz Pharma uses such Drug Product
solely for promotional and marketing purposes and does not receive any direct
monetary compensation for distribution of the Drug Product. Shipment, delivery
and acceptance of the Drug Product shall be in accordance with Sections 6.4(a),
6.4(c), 6.4(d) and 6.4(e).
[ * ] Confidential Treatment Requested.
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6.7 Audits
Upon twenty (20) days' written notice to Schwarz Pharma, NeoRx and the
manufacturer of the catheter, if requested, shall have the right to have a
certified accountant acceptable to Schwarz Pharma or its Affiliate (as
applicable) audit no more than once annually Schwarz Pharma's, its Affiliates'
and/or its Sublicensees' records to confirm that all payments made are accurate.
Any audit performed pursuant to this Section 6.7 shall take place during regular
business hours at Schwarz Pharma's principal place of business or at any other
location where Schwarz Pharma may make the applicable records available;
provided, however that access to Schwarz Pharma's, its Affiliates' and/or its
Sublicensees' records shall be provided in such manner so as not to interfere
with the normal conduct of Schwarz Pharma's, its Affiliates' and/or its
Sublicensees' (as applicable) business or operations. Access to Schwarz
Pharma's, its Affiliates' and/or its Sublicensees' records shall be specifically
limited to records (or the relevant portion thereof) reasonably required to
determine that payments made under this Agreement are accurate (or if such
payments are not accurate then to determine the proper payment amount), and
NeoRx and/or its certified public accountant shall execute such confidentiality
agreements with respect to such access as Schwarz Pharma, its Affiliates and/or
its Sublicensees may reasonably request. If the audit reveals a deficiency of
payment due under Section 6.5(d) for any period under review of 5% or greater,
Schwarz Pharma shall promptly reimburse the reasonable costs of the audit.
6.8 Quality Control
(a) At least once per calendar quarter, and at any time upon ten days'
written notice from Schwarz Pharma, NeoRx shall provide Schwarz Pharma with
reasonable copies of the material safety data and information concerning the
safe manufacture, handling, and storage of the Drug Product.
(b) In addition to its own routine quality control in accordance with
FDA requirements, NeoRx shall conduct, at Schwarz Pharma's request and at
Schwarz Pharma's cost, such other tests as may be required by applicable
regulatory authorities of any country in the Territory.
(c) For each lot of Drug Product produced for Schwarz Pharma hereunder,
NeoRx shall furnish to Schwarz Pharma a certificate that the lot was
manufactured, tested and delivered in full compliance with cGMP and a copy of
NeoRx's certificate of analysis that all Drug Product included in such shipment
complies in all respects with the applicable agreed Specifications, showing
release of each such lot.
(d) Schwarz Pharma shall be responsible for properly storing and
handling Coronary Product and for the release of Coronary Product for sale by
Schwarz Pharma, its Affiliates and/or its Sublicensees in each country in the
Territory for which Regulatory Approval has been obtained.
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(e) NeoRx shall maintain proper and accurate records of all
manufacturing steps, processes, quality assurance and quality control procedures
for the Drug Product and will provide reasonable access thereto to Schwarz
Pharma from time to time upon Schwarz Pharma's reasonable request.
(f) Schwarz Pharma shall have the right to send authorized
representatives to any facilities where the Drug Product is manufactured by or
on behalf of NeoRx, to audit any manufacturing records and formulation and
testing operations and documentation as are necessary to confirm that production
of each batch of the Drug Product is in compliance with the cGMP regulations,
and to confirm that NeoRx is taking reasonable measures to protect the
manufacturing facility and its premises, and at any time upon reasonable advance
notice to NeoRx, but no more than once per quarter.
(g) The Parties shall have the right to send authorized representatives
to any facilities where the Drug Product is stored to inspect the stock and
confirm the method and adequacy of storage. Upon the request of Schwarz Pharma,
NeoRx shall notify Schwarz Pharma of the schedules of production runs of the
Drug Product. The Parties shall cooperate with the authorized representatives
conducting such audits and shall from time to time identify the persons and
timetable for such inspections.
(h) If Schwarz Pharma is required by a Regulatory Authority in any
country in the Territory to have inspected or approved the site of manufacturing
or storing the Drug Product, NeoRx will permit officials of the applicable
regulatory authorities to inspect the facility where the Drug Product is
manufactured or stored.
6.9 Regulatory Approval
Schwarz Pharma shall be responsible for obtaining all Regulatory
Approvals and maintaining in its own name all relevant product licenses for the
Coronary Product for import and sale in the Territory, provided that NeoRx shall
assist Schwarz Pharma in obtaining all Regulatory Approval and licenses pursuant
to this Section 6.9 with respect to the Manufacturing Information.
6.10 Coronary Product Recall Procedures
The Parties shall immediately inform each other in writing of all
incidents and/or any lot of Coronary Product which is alleged or proved to be
the subject of recall, market withdrawal or correction and shall cooperate with
each other in such recall, market withdrawal or correction. Any such recall,
market withdrawal or correction shall be at the sole expense of NeoRx, unless
the effect resulted from defective handling, storage or other cause by Schwarz
Pharma, its Affiliates or its Sublicensees or distributors.
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The Parties shall discuss procedures for Coronary Product recall,
market withdrawal or correction in the Territory, including disclosure of all
necessary information to prevent a recurrence of the event or circumstance.
6.11 Back-Up Manufacturing Rights
(a) In the event of a Breach of Manufacturing Process Demonstration or
Breach of Validation Deadline or a Drug Storage Breach, Schwarz Pharma may
elect, by written notice to NeoRx, to assume manufacturing of the Drug Product
pursuant to this Section 6.11, in which event NeoRx's right to supply the Drug
Product hereunder shall terminate.
(b) In the event that NeoRx commits a Material Supply Breach or a
Failure of Supply occurs and Schwarz Pharma gives written notice to NeoRx
thereof, NeoRx may draw down the Drug Substance then in Drug Storage to cure
such Material Supply Breach or Failure of Supply until the amount of Drug
Substance then in Drug Storage is not less than [ * ] of the amount required to
be maintained in Drug Storage pursuant to Section 6.1(d) at the time of the
Material Supply Breach or Failure of Supply. After getting current on orders
within [ * ] of the date of Schwarz Pharma's written notice, NeoRx shall replace
the Drug Substance removed from Drug Storage within the next [ * ]. During these
periods, Schwarz Pharma will not increase its inventory of Drug Product on hand
beyond a [ * ] supply. If NeoRx is unable to (i) cure a Material Supply Breach
or Failure of Supply by means of such draw down or otherwise within [ * ] of
Schwarz Pharma's written notice, (ii) replenish Drug Substance drawn down from
Drug Storage within [ * ] after getting current on Schwarz Pharma's orders, or
(iii) cure the Material Supply Breach or Failure of Supply without drawing down
from Drug Storage more than [ * ] of the amount required to be maintained in
Drug Storage pursuant to Section 6.1(d) at the time of the Material Supply
Breach or Failure of Supply, then Schwarz Pharma may elect, by written notice to
NeoRx, to assume manufacturing of the Drug Product pursuant to this Section
6.11, in which event NeoRx's right to supply the Drug Product hereunder shall
terminate.
(c) NeoRx hereby grants to Schwarz Pharma the Back-Up Manufacturing
License to be used only in the event Schwarz Pharma assumes manufacturing
pursuant to Section 6.11(a) or (b). In such event, Schwarz Pharma shall have the
right to remove from the Schwarz Pharma Legal Dept. the Manufacturing
Information and CMC for use in exercising the Back-Up Manufacturing License, and
shall receive from NeoRx reasonable technical assistance necessary to finish the
bulk Drug Substance in Drug Storage and to establish manufacturing. In the event
that Schwarz Pharma requires that a Third Party manufacture the Drug Substance
on its behalf, Schwarz Pharma may grant a sublicense of its Back-Up
Manufacturing License to one competent manufacturer and one back-up manufacturer
solely for the purpose of manufacturing the Drug Substance for Schwarz Pharma
and its Affiliates for their sale pursuant to this Agreement.
[ * ] Confidential Treatment Requested.
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(d) In the event Schwarz Pharma assumes manufacturing pursuant to
Section 6.11(b), Schwarz Pharma may remove Drug Substance from Drug Storage and
shall (i) in the case of a Material Supply Breach, [ * ] and (ii) in the case of
a Failure of Supply, pay NeoRx for each unit of Drug Substance removed, [ * ].
(e) In the event Schwarz Pharma assumes manufacturing pursuant to
Section 6.11(a) or (b), Schwarz Pharma shall be obligated to pay NeoRx [ * ].
(f) In the event Schwarz Pharma assumes manufacturing pursuant to
Section 6.11(b) due to a Failure of Supply or in the event there is a Failure of
Supply and Drug Storage Breach due to the same Force Majeure event that caused
the Failure of Supply and Schwarz Pharma assumes manufacturing, NeoRx may resume
manufacturing rights, and the Back-Up Manufacturing License shall in such event
cease to be exercised by Schwarz Pharma, after [ * ]; provided, however, that
NeoRx may only resume manufacturing after the first time that Schwarz Pharma has
assumed manufacturing due to a Failure of Supply. NeoRx shall have no right to
resume manufacturing rights in the event Schwarz Pharma assumes manufacturing
pursuant to Section 6.11(b) due to a Material Supply Breach.
7. MILESTONE PAYMENTS
7.1 Triggering Events
In partial consideration for the rights granted by NeoRx herein,
Schwarz Pharma shall pay NeoRx the following amounts:
(a) $8.0 million (up to $4.0 million of which may be paid in the form
of a purchase of NeoRx stock at a fifty percent (50%) premium pursuant to the
Stock Purchase Agreement attached hereto as Exhibit C, which shall be executed
by the Parties at the time of payment), within [ * ] after receipt of the Final
Report, unless Schwarz Pharma has given notice of termination in accordance with
Section 13.2(c)(i);
(b) [ * ] within [ * ] after the occurrence of the later of [ * ] and [
* ]; provided, however, that such [ * ] shall be reduced by [ * ] for each full
month that the [ * ] occurs after [ * ] and there shall be no payment obligation
under this Section 7.1(b) if there has been a [ * ], and provided, further, that
Schwarz Pharma shall make "Installment Payments" (as defined below) as set forth
in Section 7.2;
(c) [ * ] within [ * ] after the occurrence of [ * ]; provided,
however, that Schwarz Pharma shall make Installment Payments as set forth in
Section 7.2;
[ * ] Confidential Treatment Requested.
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(d) (i) if there has been [ * ], [ * ] within [ * ] after [ * ];
provided, however, that Schwarz Pharma shall make Installment Payments
as set forth in Section 7.2; or
(ii) if there has not been a [ * ], then [ * ] within [ * ]
after the later of [ * ] and the [ * ]; provided, however, that such [
* ] shall be reduced by [ * ] for each full month after the [ * ] that
the [ * ] occurs and there shall be no payment obligation under this
Section 7.1(d)(ii) if there has been [ * ], and provided, further, that
Schwarz Pharma shall make Installment Payments as set forth in Section
7.2; and
(e) [ * ] within [ * ] after receipt of the [ * ].
Notwithstanding the foregoing, in the event the Development Plan is
modified to the extent that the substance of [ * ] is no longer
relevant/appropriate, the definitions of such Milestones shall be appropriately
modified by mutual agreement (or by arbitration in accordance with Section 14.14
if no agreement) to targets of equivalent significance (as near as may be) under
the modified Development Plan.
7.2 Installment Payments
"Installment Payments" shall mean any payments made under this Section
7.2 that are to be applied towards their corresponding milestone payment
obligations in Section 7.1. In the event (the "Triggering Date") that (a) the
payment required under Section 7.1(b) is not paid by the later of [ * ] of such
Triggering Date, [ * ] and shall continue to make Installment Payments of [ * ]
(or such smaller amount which, when added to all previous Installment Payments
with respect to such milestone, equals the total amount to be paid with respect
to such milestone) on each anniversary of such Triggering Date until the earlier
of (x) the date the milestone is reached and the unpaid balance is paid and (y)
the date when all Installment Payments made with respect to such milestone equal
the amount to be paid with respect to such milestone.
If the Development Plan as in effect on the Effective Date is changed
significantly because of unanticipated requirements of the FDA (or other
equivalent body in another country), the Trigger Dates shall be extended or
shortened appropriately for the amount of time required for the modified
Development Plan which meets such requirements.
7.3 Payments Related to Manufacturing
In partial consideration for the rights granted by NeoRx herein,
Schwarz Pharma shall also pay NeoRx the following amounts:
(a) [ * ] within [ * ] after [ * ];
[ * ] Confidential Treatment Requested.
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(b) [ * ] within [ * ] after initiation of construction,
remodeling or other facilities renovations required for the establishment of a
Drug Substance manufacturing facility;
(c) [ * ] within [ * ] after completion of the construction or
remodeling activities in the manufacturing facility; and
(d) [ * ] within [ * ] after purchase and installation of the
major pieces of equipment in the manufacturing facility;
provided, however, that no payment shall be due under this Section 7.3 if there
has been a [ * ], and no payment obligations under Section 7.3(b), (c) or (d)
shall accrue if a [ * ] occurs prior to the event upon which such payment would
have accrued.
8. PATENT AND OTHER INTELLECTUAL PROPERTY IN TERRITORY
8.1 Ownership of Technology
Subject to the terms of this Agreement, NeoRx shall retain all right,
title and interest in and to the NeoRx Patents and NeoRx Know-How licensed to
Schwarz Pharma hereunder, and Schwarz Pharma shall retain all right, title and
interest in and to the Schwarz Pharma Patents and Schwarz Pharma Know-How. If
any invention or discovery is made by NeoRx and Schwarz Pharma employees or
agents (as determined under U.S. patent law), NeoRx and Schwarz Pharma shall
jointly own any such invention or discovery and all Joint Patents issued
thereon.
8.2 Prosecution and Maintenance of Patents
(a) NeoRx shall have the responsibility on its own account to acquire
and maintain patent protection and file for, procure, prosecute, maintain and
extend NeoRx Patents and Joint Patents covering Coronary Products in all Major
Countries and such other countries in the Territory as are selected by Schwarz
Pharma. The costs associated with such activities in the Major Countries shall
be borne by NeoRx. Schwarz Pharma shall promptly reimburse NeoRx for all of its
out-of-pocket costs for such activities with respect to countries other than the
Major Countries.
NeoRx shall use commercially reasonable efforts to prosecute diligently
the NeoRx Patents and Joint Patents in the Major Countries. NeoRx shall not take
any action or fail to take action that would materially adversely affect the
scope, validity or prosecution of the patentable claims in any of said patents,
including failing to use commercially reasonable efforts to prosecute any patent
application or defend any patent in any interference or opposition proceeding,
or not filing of any patent application in any country, to the extent such
action or failure to act materially impairs patent rights of commercial value,
without providing Schwarz Pharma with at least 30 days' prior notice, to the
[ * ] Confidential Treatment Requested.
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extent possible, of NeoRx's intent to take such proposed action or inaction.
Schwarz Pharma shall thereupon have the rights set forth in Section 8.3.
Subject to the rights of Schwarz Pharma set forth in Section 8.3, NeoRx
shall provide Schwarz Pharma with an opportunity to advise and review and
comment on the nature and text of new or pending NeoRx Patent and Joint Patent
applications, extensions and other proceedings with such opportunity to provide
Schwarz Pharma at least, to the extent possible, 30 days prior to any due date
for review and comment. Any comments from Schwarz Pharma shall be considered in
good faith by NeoRx. Major decisions regarding patent prosecution strategy shall
be discussed in good faith with Schwarz Pharma; however the final decision shall
be NeoRx's sole responsibility. NeoRx shall keep Schwarz Pharma promptly and
fully informed of the course of patent prosecution or other proceedings.
(b) During the term of this Agreement, NeoRx shall update Exhibit A
attached hereto to reflect changes in and additions to the status of the NeoRx
Patents and Joint Patents. Such an updated exhibit shall be delivered to Schwarz
Pharma quarterly.
8.3 Abandonment of Patents
If in a Major Country with respect to a NeoRx Patent or a NeoRx
patentable invention related to a Coronary Product, NeoRx elects not to file a
patent application or application for a certificate of invention, not to
maintain a patent or certificate of invention, to abandon a pending patent
application or application for certificate of invention, or to take any action
or fails to take any action that would materially affect the scope, validity or
prosecution of the patentable claims in any patent application in any country,
Schwarz Pharma shall be advised as provided in Section 8.2 and shall have the
right but not the obligation to file such application, maintain such patent or
certificate of invention or continue to attempt to maintain protection on the
subject matter disclosed in such pending application. Costs for this are then
the responsibility of Schwarz Pharma, and Schwarz Pharma will be assigned all
rights to the patent in that country. In any such case, Schwarz Pharma may
deduct its out-of-pocket costs in exercising such rights from the amounts
payable with respect to Section 6.5(d) for the Coronary Products sold in the
countries related to such application, patent or certificate of invention, and
NeoRx shall have a fully paid-up, royalty-free license, with rights to
sublicense, to such application, patent or certificate of invention, which
license shall be exclusive with respect to the supply of Coronary Products to
Schwarz Pharma hereunder and nonexclusive with respect to all other uses other
than in connection with Coronary Products.
8.4 Assistance With Patents
Each Party shall make available to the other Party or its respective
authorized attorneys, agents, representatives or employees whom the other Party
in its reasonable judgment requests, in order to assist such Party to obtain and
maintain patent protection for Coronary Products.
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Each Party, at no charge to the other Party, shall sign or cause to be
signed all legal documents necessary to file or prosecute patent applications or
applications for certificates of invention or to obtain or maintain patents or
certificates of invention.
8.5 Patent Infringement
Each Party shall promptly report in writing to the other Party during
the term of this Agreement any (a) known infringement or suspected infringement
of any of the NeoRx Patents or Joint Patents or (b) unauthorized use or
misappropriation of either Party's Know-How or Confidential Information of which
it becomes aware. Each Party shall provide the other Party with all available
evidence supporting said infringement, suspected infringement or unauthorized
use or misappropriation.
(a) NEORX PATENTS AND NEORX KNOW-HOW.
(i) Except as provided in Section 8.5(a)(ii), NeoRx retains
the right to initiate an infringement or other appropriate suit
anywhere in the Territory against anyone who at any time has infringed
or is suspected of infringing any of the NeoRx Patents or of using
without proper authorization all or any portion of the NeoRx Know-How.
NeoRx shall give Schwarz Pharma sufficient advance notice of NeoRx's
intent to file said suit and the reasons therefor, and shall provide
Schwarz Pharma with an opportunity to make suggestions and comments
regarding such suit. NeoRx shall keep Schwarz Pharma promptly informed,
and shall from time to time consult with Schwarz Pharma regarding the
status of any such suit and shall provide Schwarz Pharma with copies of
all documents filed in and all material written communications relating
to such suit.
In any suit pursuant to this Section 8.5(a)(i), NeoRx shall have the
sole and exclusive right to select counsel and, except as provided
below, shall pay all expenses of the suit including without
limitation attorneys' fees and court costs. Any damages, royalties,
settlement fees or other consideration received by NeoRx as a result of
such suit shall be used to pay expenses related to the suit and the
remainder, if any, shall be paid [ * ].
If necessary, Schwarz Pharma shall join as a party to the suit but
shall be under no obligation to participate except to the extent that
such participation is required as a result of being a named party
to the suit. At NeoRx's request, Schwarz Pharma shall offer
reasonable assistance to NeoRx in connection therewith at no
charge to NeoRx, except for reimbursement of reasonable out-of-pocket
expenses.
Schwarz Pharma shall have the right to participate and be represented
in any such suit by its own counsel at its own expense. NeoRx shall not
[ * ] Confidential Treatment Requested.
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settle any suit or resolve any dispute involving rights of Schwarz
Pharma under this Agreement without obtaining the prior written
consent of Schwarz Pharma, which consent shall not be unreasonably
withheld.
(ii) If NeoRx elects not to initiate an infringement or other
appropriate suit pursuant to Section 8.5(a)(i), NeoRx shall promptly
advise Schwarz Pharma of its intent not to initiate such suit, and
Schwarz Pharma shall have the right to initiate an infringement or
other appropriate suit against anyone who at any time has infringed, or
is suspected of infringing, any of the NeoRx Patents, or of using
without proper authorization all or any portion of the NeoRx Know-How
or Confidential Information, in connection with Coronary Products in
the Territory.
In any suit pursuant to this Section 8.5(a)(ii), Schwarz Pharma shall
have the sole and exclusive right to select counsel and, except as
provided below, shall pay all expenses of the suit including without
limitation attorneys' fees and court costs. Any damages, royalties,
settlement fees or other consideration received by Schwarz Pharma as a
result of such suit shall be used to pay expenses related to the suit
and the remainder, if any, shall be paid [ * ].
If necessary, NeoRx shall join as a party to the suit but shall be
under no obligation to participate except to the extent that such
participation is required as a result of being a named party to the
suit. At Schwarz Pharma's request, NeoRx shall offer reasonable
assistance to Schwarz Pharma in connection therewith at no charge to
Schwarz Pharma, except for reimbursement of reasonable out-of-pocket
expenses.
NeoRx shall have the right to participate and be represented in any
such suit by its own counsel at its own expense. Schwarz Pharma shall
not settle any such suit or resolve any dispute involving rights of
NeoRx Patents or NeoRx Know-How without obtaining the prior written
consent of NeoRx, which consent shall not be unreasonably withheld as
it relates to Coronary Products in the Territory.
(b) JOINT PATENTS.
(i) Except as provided in Section 8.5(b)(ii), NeoRx retains
the right to initiate an infringement or other appropriate suit
anywhere in the world against any Third Party who at any time has
infringed or is suspected of infringing any of the Joint Patents. NeoRx
shall give Schwarz Pharma sufficient advance notice of NeoRx's intent
to file said suit and the reasons therefor, and shall provide Schwarz
Pharma with an opportunity to make suggestions and comments regarding
such suit. NeoRx shall keep Schwarz Pharma promptly informed, and shall
from time to time consult with Schwarz Pharma regarding the status of
any such suit and shall provide Schwarz Pharma with copies of all
documents filed in and all material written communications relating to
such suit.
[ * ] Confidential Treatment Requested.
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In any suit pursuant to this Section 8.5(b)(i), NeoRx shall have the
sole and exclusive right to select counsel and, except as provided
below, shall pay all expenses of the suit including without limitation
attorneys' fees and court costs. Any damages, royalties, settlement
fees or other consideration received by NeoRx as a result of such suit
shall be used to pay expenses related to the suit, with any residual
amount shared by NeoRx and Schwarz Pharma [ * ] or as otherwise agreed.
If necessary, Schwarz Pharma shall join as a party to the suit but
shall be under no obligation to participate except to the extent that
such participation is required as a result of being a named party to
the suit. At NeoRx's request, Schwarz Pharma shall offer reasonable
assistance to NeoRx in connection therewith at no charge to NeoRx,
except for reimbursement of reasonable out-of-pocket expenses,
including salaries of Schwarz Pharma's personnel, incurred in rendering
such assistance.
Schwarz Pharma shall have the right to participate and be represented
in any such suit by its own counsel at its own expense. NeoRx shall not
settle any such suit or resolve any dispute involving rights of Schwarz
Pharma without obtaining the prior written consent of Schwarz Pharma,
which consent shall not be unreasonably withheld.
(ii) If NeoRx elects not to initiate an infringement or other
appropriate suit pursuant to Section 8.5(b)(i), NeoRx shall promptly
advise Schwarz Pharma of its intent not to initiate such suit, and
Schwarz Pharma shall have the right to initiate an infringement or
other appropriate suit against any Third Party who at any time has
infringed, or is suspected of infringing, any of the Joint Patents.
In exercising its rights pursuant to this Section 8.5(b)(ii), Schwarz
Pharma shall have the sole and exclusive right to select counsel and,
except as provided below, shall pay all expenses of the suit including
without limitation attorneys' fees and court costs. Any damages,
royalties, settlement fees or other consideration received as a result
of such suit shall be used to pay expenses related to the suit, with
any residual amount shared by Schwarz Pharma and NeoRx [ * ] or as
otherwise agreed.
If necessary, NeoRx shall join as a party to the suit but shall be
under no obligation to participate except to the extent that such
participation is required as a result of being a named party to the
suit, whereby the reasonable costs incurred by NeoRx shall be
reimbursed by Schwarz Pharma only to the extent that NeoRx is named as
a party to the suit. At Schwarz Pharma's request, NeoRx shall offer
reasonable assistance to Schwarz Pharma in connection therewith at no
charge to Schwarz Pharma, except for reimbursement of reasonable
out-of-pocket expenses, including salaries of NeoRx personnel, incurred
in rendering such assistance.
[ * ] Confidential Treatment Requested.
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NeoRx shall have the right to participate and be represented in any
such suit by its own counsel at its own expense. Schwarz Pharma shall
not settle any such suit or resolve any dispute involving rights of
NeoRx without obtaining the prior written consent of NeoRx, which
consent shall not be unreasonably withheld.
8.6 Claimed Infringement
NeoRx shall indemnify, defend and hold harmless Schwarz Pharma, their
Affiliates or Sublicensees (the "Indemnified Schwarz Pharma Parties") from and
against any and all damages, costs and expenses, including reasonable attorneys'
fees, incurred or awarded in any and all actions, suits or proceedings brought
against any of the Indemnified Schwarz Pharma Parties by any Third Party
alleging infringement and/or violation of such Third Party's intellectual
property rights through the sale or use in the Field and Territory of any Drug
Product purchased from NeoRx under this Agreement, except to the extent that
such claim is the result of the negligence or willful misconduct of any one of
the Indemnified Schwarz Pharma Parties or a design or configuration requested by
a Schwarz Pharma Party or is related to the use of any Schwarz Pharma Patents or
Schwarz Pharma Know-How.
Schwarz Pharma shall, promptly after receipt of notification of a
Third-Party claim or notice of commencement of any action, suit or proceeding of
the type described in this Section 8.6, notify NeoRx of any such claim or the
commencement of any said action, suit or proceeding, providing a copy of all
papers delivered or served, and NeoRx shall have the right to assume the
direction and control of the defense of the claim. Schwarz Pharma shall have the
right to participate and be represented in any such suit or proceeding by its
own counsel at its own expense.
8.7 Third Party Patents in Territory
If a patent of a Third Party (except a patent relating to a catheter or
its use, provided such use is not specifically claimed to be for the delivery of
the Drug Substance) shall exist during the time of this Agreement in any country
of the Territory, and if it should prove impractical or impossible for Schwarz
Pharma or NeoRx to develop, manufacture, sell, have manufactured or have sold a
Coronary Product in such country without first obtaining a royalty-bearing
license from such Third Party under such patent, then Schwarz Pharma shall
decide whether to negotiate a license with the Third Party and [ * ] of the
royalties payable to the Third Party under any such license shall be deducted
from up to [ * ] of the amounts payable pursuant to Section 6.5(d) with respect
to such Coronary Product and country.
[ * ] Confidential Treatment Requested.
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In the event Schwarz Pharma is manufacturing a Drug Product pursuant to
Section 6.11 in accordance with methods developed by NeoRx for manufacturing and
Schwarz Pharma is sued for infringement or violation of a Third Party's
intellectual property rights as a result of such methods (i.e., for which there
is no indemnification pursuant to Section 8.6), Schwarz Pharma shall be entitled
to deduct [ * ] of any final judgment related to such infringement or violation
in such suit from up to [ * ] of the amounts otherwise payable under Section
6.5(d) during any quarter thereafter until the entire [ * ] of the final
judgment has been deducted.
In no event shall the amounts due under Section 6.5(d) be reduced by
more than [ * ] at any time as a result of both paragraphs of this Section 8.7.
8.8 Schwarz Pharma Payments During Infringement Claim
If Schwarz Pharma or its Affiliates and/or its Sublicensees are subject
to a suit alleging infringement or other violation of the intellectual property
rights of a Third Party in the using or selling (or having sold) of a Drug
Product as to which there is indemnification under Section 8.6, Schwarz Pharma
is entitled to, at the time of any such suit, place in an interest-bearing
escrow account [ * ] of any amounts due NeoRx pursuant to Section 6.5(d) with
respect to the sales of such Coronary Products which contain the Drug Product
that are the subject of the suit, pending the resolution of any such Third Party
suit. If such suit results in a judgment ordering or settlement granting an
award of damages, costs and/or expenses to such Third Party by Schwarz Pharma,
such award will be paid from the escrowed payments. Any award in excess of the
escrowed payment is still subject to the NeoRx obligation of indemnification
under Section 8.6. If such suit is resolved without a judgment against or
settlement by Schwarz Pharma, the escrowed payments related thereto, together
with earned interest thereon, shall be released to NeoRx.
8.9 Loss of Patent Rights
If a Coronary Product is not or ceases at any time to be covered by a
valid claim of any of the NeoRx Patents or Joint Patents in a Major Country in
the Territory and if Third Parties are selling in that country Directly
Competitive Products, then the Parties shall meet and in good faith negotiate
modified terms for the amounts payable pursuant to Section 6.5(d).
9. INDEMNIFICATION
9.1 Drug Product
Subject to compliance with Section 9.2, NeoRx agrees to indemnify and
defend Schwarz Pharma, its Affiliates and/or its Sublicensees, and their
[ * ] Confidential Treatment Requested.
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respective agents and employees, from and against any and all losses,
liabilities, damages, costs, fees and expenses, including reasonable legal costs
and attorneys' fees ("Losses") resulting from a Third Party claim, suit or
action based upon:
(a) a strict liability claim related to the Drug Product manufactured
by or on behalf of NeoRx, its Affiliates, agents or Sublicensees (other than
Schwarz Pharma, its Affiliates or its Sublicensees) or
(b) a death or injury to any person or damage to any property to the
extent caused by a defect in the Drug Product manufactured by or on behalf of
NeoRx, its Affiliates, agents or Sublicensees (other than Schwarz Pharma, its
Affiliates or its Sublicensees),
but excluding any Losses resulting from the gross negligence or intentionally
wrongful act or omission of Schwarz Pharma, its Affiliates or its Sublicensees
or any of their employees or agents.
9.2 Indemnity Procedure
In the event Schwarz Pharma is seeking indemnification under Section
9.1, it shall inform NeoRx of a claim as soon as reasonably practicable after it
receives notice of the claim, shall permit NeoRx to assume direction and control
of the defense of the claim (including the right to settle the claim solely for
monetary consideration), and, at NeoRx's expense, shall cooperate as reasonably
requested in the defense of the claim. Schwarz Pharma shall have the right to
retain its own counsel, with the fees and expenses to be paid by NeoRx, if
representation of Schwarz Pharma by the counsel retained by NeoRx would be
inappropriate due to actual or potential differing interests between such
indemnitee and any other party represented by such counsel in such proceedings.
NeoRx may not settle such action or claim, or otherwise consent to an adverse
judgment in such action or claim, that diminishes the rights or interests of
Schwarz Pharma without the express written consent of Schwarz Pharma, which
shall not be unreasonably withheld.
10. TRADENAME
(a) Schwarz Pharma, its Affiliates and/or its Sublicensees will select,
in their sole discretion, and use trademarks or tradenames to be owned by
Schwarz Pharma, its Affiliates and/or its Sublicensees (one or more as
applicable) for each Coronary Product. Schwarz Pharma, its Affiliates and/or its
Sublicensees shall not adopt, use, or register any acronym, trademark,
tradename, service mark or other marketing name of NeoRx or any confusingly
similar work or symbol as part of Schwarz Pharma's own trademark or tradename
for the Coronary Product or the name of any of its Affiliates or Sublicensees
for the Coronary Products it markets. However, Schwarz Pharma may accurately
identify the manufacturer of the Coronary Products as required by law. NeoRx
shall promptly report to Schwarz Pharma any infringement of any trademark or
tradename adopted pursuant to this Section 10(a) of which it learns.
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(b) Promptly upon execution of this Agreement NeoRx shall assign all of
its rights, title and interest in and to the trademark "Biostent" to Schwarz
Pharma in the Territory. Schwarz Pharma shall assign the trademark "Biostent"
back to NeoRx promptly upon early termination of this Agreement for any reason.
Schwarz Pharma shall be entitled to retain the trademark "Biostent" irrevocably
upon expiration, but not termination, of this Agreement.
11. CONFIDENTIALITY
11.1 Confidentiality
Except as otherwise provided in this Article 11, during the term of
this Agreement and for a period of [ * ] thereafter, each Party shall maintain
in confidence and shall use only for purposes of this Agreement all Confidential
Information disclosed by the other Party under this Agreement. Notwithstanding
the foregoing, a Party may disclose the other Party's Confidential Information
to those of its Affiliates, Sublicensees, directors, officers, employees,
agents, consultants and clinical investigators that have a need to know such
Information in order to achieve the purposes of this Agreement, provided that
such Party will obtain prior agreement from its Affiliates, Sublicensees,
directors, officers, employees, agents, consultants or clinical investigators to
whom disclosure is to be made to hold in confidence and not make use of such
Confidential Information for any purpose other than that permitted by this
Agreement. Each Party will promptly notify the other upon discovery of any
unauthorized use or disclosure of the Confidential Information.
11.2 Authorized Disclosure
Each Party may disclose Confidential Information to the extent such
disclosure is reasonably necessary in filing or prosecuting patent applications,
prosecuting or defending litigation or complying with applicable laws,
governmental regulations or court orders, provided that such Party will give
reasonable advance notice to the other Party of such disclosure requirement and
shall give the other Party sufficient opportunity to object to such disclosure
or to secure confidential treatment of such Confidential Information required to
be disclosed. Either Party may disclose (subject to the confidentiality
restrictions contained herein) Confidential Information to Third Parties to the
extent necessary to perform its obligations or exercise its rights under this
Agreement, provided such Third Parties execute confidentiality agreements
containing terms no less strict than those contained herein.
11.3 Press Release
Upon signing the Agreement, the Parties will consult with each other
prior to the issuance of any press releases that discuss aspects of this
Agreement and no press release or other public disclosure of this Agreement
shall be made without the mutual written consent of the Parties, except as may
be otherwise required by law. The principles to be observed by the Parties in
[ * ] Confidential Treatment Requested.
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public disclosures with respect to this Agreement shall be accuracy, the
requirements of confidentiality under this Article 11, and the normal business
practice in the biotechnology and pharmaceutical industries for disclosure by
companies comparable to NeoRx and Schwarz Pharma in their respective territories
and places of business.
11.4 Publications
Except as required by law, regulation, or court order, NeoRx and
Schwarz Pharma agree that neither Party shall publish any confidential or
proprietary Information relating to any Coronary Product or their use or present
the results of any studies or investigations carried out under this Agreement
without obtaining the nondisclosing Party's prior written approval for such
publication or presentation. At least thirty (30) days prior to any such
publication or presentation, the disclosing Party shall provide the
nondisclosing Party a copy of the proposed abstract, manuscript or presentation
(including information to be presented verbally) for its review. The
nondisclosing Party shall respond in writing within such time period with either
the need to seek patent protection or concern regarding competitive disadvantage
arising from the proposal. The disclosing Party agrees to provide the
nondisclosing Party any additional Information relating to the proposed
disclosure, including full-length English translations, as reasonably requested
by the nondisclosing Party in order to conduct the foregoing review, if the
nondisclosing Party has concerns about disclosure of Confidential Information.
In the event of concern, the disclosing Party agrees not to submit such abstract
or manuscript for publication or to make such presentation until the
nondisclosing Party has had a reasonable period of time (not to exceed thirty
(30) additional days) to seek patent protection for any material in such
publication or presentation or otherwise seek protection for any Confidential
Information that the nondisclosing Party reasonably believes has commercial
value based upon the secrecy of such information.
11.5 Agreement Confidential
The parties agree that the contents of this Agreement shall constitute
Confidential Information, and as such, will not be disclosed by either Party
without the written consent of the other, except as permitted elsewhere in this
Agreement, or required by applicable law.
12. REPRESENTATIONS AND WARRANTIES
12.1 Representations, Warranties, and Covenants of NeoRx
NeoRx represents, warrants and covenants as of the date of this
Agreement that:
(a) Corporate Power. NeoRx is duly organized and validly existing
and in good standing under the laws of Washington and has full corporate
power and authority to enter into this Agreement and to carry out the provisions
hereof.
(b) Due Authorization. NeoRx is duly authorized to execute and deliver
this Agreement and to perform its obligations hereunder.
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(c) Binding Agreement. This Agreement is a legal and valid obligation
binding upon NeoRx and enforceable in accordance with its terms. The execution,
delivery and performance of this Agreement by NeoRx do not conflict with any
agreement, instrument or understanding, oral or written, to which it is a party
or by which it may be bound, or violate any material law or regulation of any
court, governmental body or administrative or other agency having jurisdiction
over it. NeoRx hereby covenants that it will not enter any agreement or
understanding, oral or written, or execute any instrument, which conflicts with
NeoRx's obligations to Schwarz Pharma under this Agreement.
(d) Third Party Consents. To the best of NeoRx's knowledge, NeoRx has
obtained all necessary consents, approvals, assignments and authorizations of
all governmental authorities and other entities and persons required to be
obtained, as of the Effective Date, in connection with this Agreement.
(e) NeoRx Patents and Know-How. To the best of NeoRx's knowledge, all
NeoRx Patents and material Product Information in NeoRx's possession, as of the
Effective Date, that would be reasonably necessary to enable Schwarz Pharma to
develop, use, export, seek regulatory approval to sell, and sell Coronary
Products as contemplated under this Agreement are licensed to Schwarz Pharma
under the Exclusive Schwarz Pharma License. To the best of NeoRx's knowledge,
the exercise by Schwarz Pharma of its rights to the Exclusive Schwarz Pharma
License will not violate the rights of any Third Party except as previously
disclosed by NeoRx to Schwarz Pharma.
(f) Third Party Rights and Licenses. NeoRx shall use commercially
reasonable efforts to maintain in force all license agreements granting NeoRx
rights under the NeoRx Patents or NeoRx Know-How and shall timely obtain any
consents of Third Parties necessary to grant the Exclusive Schwarz Pharma
License hereunder. NeoRx shall not terminate, assign or materially reduce in
scope any license agreements granting NeoRx rights that are sublicensed to
Schwarz Pharma hereunder in a manner that materially adversely affects Schwarz
Pharma unless NeoRx first obtains the written consent of Schwarz Pharma. To the
extent permitted by any license agreement between NeoRx and a Third Party
granting NeoRx rights under any NeoRx Patent or NeoRx Know-How, Schwarz Pharma
shall be entitled to assume NeoRx's role as licensee under such license
agreement, but solely to the extent of the Exclusive Schwarz Pharma License
granted hereunder, if any such license agreement between NeoRx and such Third
Party terminates due to uncured breach by or bankruptcy of NeoRx.
(g) No Violation. Neither NeoRx nor any of its Affiliates is a party
to, subject to, or bound by an agreement or judgment, award, order or writ,
injunction or decree of any court, governmental body or arbitrator which would
conflict with or be breached by the execution, delivery or performance of this
Agreement, and there is (i) no action, suit, dispute or governmental,
administrative, arbitration or regulatory proceeding pending or threatened and
(ii) no investigation pending or threatened against or relating to NeoRx which,
in each case, could prevent NeoRx from carrying out its obligations under this
Agreement.
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(h) Validity of NeoRx Patents. NeoRx has no present knowledge from
which it reasonably can be inferred that NeoRx Patents are invalid or that their
exercise in connection with Coronary Products would violate the intellectual
property rights of Third Parties, except as previously disclosed in writing to
Schwarz Pharma.
(i) Sale of Business. If NeoRx enters into discussions with, or
receives an offer from, any Third Party with regard to the acquisition of NeoRx,
NeoRx agrees to consider in good faith whether its fiduciary obligations to its
shareholders require it to notify Schwarz Pharma (as a potential acquirer of
NeoRx) and, if so, will consider any offer by Schwarz Pharma to acquire NeoRx.
(j) Cordis Agreement. The Cordis Agreement, a complete copy of
which has been supplied by NeoRx to Schwarz Pharma, has not been modified or
amended and is in full force and effect.
12.2 Representations, Warranties and Covenants of Schwarz Pharma
Schwarz Pharma represents, warrants and covenants as of the date of
this Agreement that:
(a) Corporate Power. Schwarz Pharma is duly organized and validly
existing under the laws of Germany and has full corporate power and authority
to enter into this Agreement and to carry out the provisions hereof.
(b) Due Authorization. Schwarz Pharma is duly authorized to execute
and deliver this Agreement and to perform its obligations hereunder.
(c) Binding Agreement. This Agreement is a legal and valid obligation
binding upon Schwarz Pharma and enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by Schwarz Pharma do not
conflict with any agreement, instrument or understanding, oral or written, to
which it is a party or by which it may be bound, or violate any material law or
regulation of any court, governmental body or administrative or other agency
having jurisdiction over it. Schwarz Pharma hereby covenants that it will not
enter any agreement, or understanding, oral or written, or execute any
instrument, which conflicts with Schwarz Pharma's obligations to NeoRx under
this Agreement.
(d) No Violation. Neither Schwarz Pharma nor any of its Affiliates is a
party to, subject to, or bound by any agreement or judgment, award, order or
writ, injunction or decree of any court, governmental body or arbitrator which
would conflict with or be breached by the execution, delivery or performance of
this Agreement, and there is (i) no action, suit, dispute or governmental,
administrative, arbitration or regulatory proceeding pending or threatened and
(ii) no investigation pending or threatened against or relating to Schwarz
Pharma which, in each case, could prevent Schwarz Pharma from carrying out its
obligations under this Agreement.
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13. TERM OF AGREEMENT AND TERMINATION
13.1 Term
(a) Unless terminated in accordance with this Article 13 or Section
3.11, this Agreement shall expire upon the later of (i) [ * ] after commencement
of marketing the Coronary Product in a Major Country and (ii) expiration of the
last to expire of the NeoRx Patents issued in a Major Country.
(b) At least [ * ] prior to the expiration of the term if NeoRx is
manufacturing Drug Substance for Drug Product, the Parties will meet and
negotiate in good faith the price at which NeoRx would be willing to supply
Schwarz Pharma with Drug Substance after expiration of the term. NeoRx shall
have the right, but not the obligation, to supply Schwarz Pharma Drug Substance
after the expiration of the term at a price not greater than [ * ] of the world
market price for pharmaceutical grade Drug Substance. If NeoRx does not elect to
supply Schwarz Pharma at such price or the Parties are not otherwise able to
agree upon a supply arrangement for Drug Substance after the expiration of the
term, Schwarz Pharma shall return to NeoRx all Manufacturing Information and all
Drug Substance held in Drug Storage.
(c) If, at expiration of the term, Schwarz Pharma is manufacturing Drug
Products due to a Failure of Supply and NeoRx is attempting to regain
manufacturing rights in accordance with Section 6.11(f) (i.e., it is the first
time Schwarz Pharma has assumed manufacturing after a Failure of Supply), NeoRx
shall have the right, but not the obligation after [ * ], to supply Drug
Substance to Schwarz Pharma at a price not greater than [ * ] of the world price
for pharmaceutical grade Drug Substance. If NeoRx does not agree to supply
Schwarz Pharma on such terms or if NeoRx cannot regain manufacturing rights,
Schwarz Pharma shall receive at expiration of the term a royalty-free,
nonexclusive right to use the Manufacturing Information in the Territory. In
such event, Schwarz Pharma shall pay NeoRx for Drug Substance in Drug Storage at
the expiration of the term, if it has not already done so, in the amount
calculated pursuant to Section 6.11(d)(ii).
(d) If, at expiration of the term, Schwarz Pharma is manufacturing or
has elected to manufacture Drug Products due to a Material Supply Breach,
Schwarz Pharma shall receive a royalty-free, nonexclusive right to use the
Manufacturing Information in the Territory. [ * ], Schwarz Pharma shall [ * ]
any Drug Substance remaining in Drug Storage at the expiration of the term.
(e) If requested by Schwarz Pharma in writing at least [ * ] prior to
expiration of the term, NeoRx will agree to supply catheters to Schwarz Pharma
after the expiration of the term for a period of up to [ * ] or the expiration
of its then current agreement with its catheter manufacturer (the "Catheter
Agreement"), whichever occurs first, at the same price and upon the same terms
as provided in the Catheter Agreement.
[ * ] Confidential Treatment Requested.
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13.2 Termination
(a) Each Party shall have the right to terminate this Agreement after
written notice to the other that the other is in material breach of this
Agreement, unless the other Party cures the breach before the expiration of
sixty (60) days after such written notice.
(b) Notwithstanding the foregoing, NeoRx may terminate this Agreement
in the event Schwarz Pharma breaches a payment obligation hereunder and
thereafter fails to make full payment of amounts due NeoRx within thirty (30)
days after written notice from NeoRx to Schwarz Pharma, unless, with respect to
such payment, Schwarz Pharma is pursuing in good faith a claim in arbitration
pursuant to Section 14.14 or in any other manner authorized by law which is not
contrary to any enforceable terms of this Agreement that NeoRx has not performed
the tasks necessary to earn such payment.
(c) Notwithstanding the foregoing, Schwarz Pharma may terminate this
Agreement upon thirty (30) days' written notice to NeoRx:
(i) if, at Schwarz Pharma's discretion (not exercised
arbitrarily or capriciously), the results of the pharmacological,
toxicological and toxicokinetic studies do not support any further
clinical use of the Coronary Products in humans in the Field
(regardless of whether the FDA or the appropriate governing health
authority in another country in the Territory has approved an IND
application) or the Final Report shows that there have been (A)
occurrences of clinically significant adverse events requiring an IND
Safety Report as defined in CFR 312.32 that are determined by the
Project Physician using the study safety review process to be
"probably" or "possibly" related to the test Drug Substance or (B)
other adverse events which have been assessed as not serious or not
related to the study drug but which occurred with abnormal frequency
during the study compared to the control group;
(ii) upon reaching any of the milestones set forth in Section
7.1 (other than Section 7.1(a)) or the Triggering Date (or its
anniversary) for which an Installment Payment is due, provided written
notice of termination is given within 20 days after such milestone or
Triggering Date (or its anniversary), in which event termination of
this Agreement shall release Schwarz Pharma from its obligation to make
the payment associated with such milestone or Triggering Date (or its
anniversary);
(iii) upon the acquisition of NeoRx by any Third Party (whether
through merger, sale of stock, sale of all or substantially all of
NeoRx's assets or otherwise); or
(iv) if all Coronary Products are withdrawn from the market
for serious adverse health or safety reasons in any country in the
Territory.
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(d) This Agreement shall terminate effective immediately upon the
happening of any of the following events to a Party (the "Involved Party"),
unless the non-Involved Party notifies the Involved Party of its intention to
keep this Agreement in force, within thirty (30) days of finding out that the
Involved Party has filed in any court or agency pursuant to any statute or
regulation of the United States or Germany or any individual state or other
country, a petition in bankruptcy or insolvency or for reorganization or for an
arrangement or for the appointment of a receiver or trustee of the Involved
Party or its assets, or if the Involved Party shall be served with an
involuntary petition against it, filed in any insolvency proceeding, and such
petition shall not be dismissed within sixty (60) days after the filing thereof,
or if the Involved Party shall propose to be a party to any dissolution or
liquidation, or if the Involved Party shall make a general assignment for the
benefit of creditors. Neither this Agreement nor any license or right granted
hereunder may be terminated or rejected, based on any act recited in this
Section 13.2(d) by, on behalf of or for the benefit of the Involved Party.
(e) Upon termination pursuant to this Section 13.2, the Back-Up
Manufacturing License shall terminate and Schwarz Pharma shall cease any
manufacturing pursuant to 6.11 and shall promptly return to NeoRx all
Manufacturing Information and Drug Substance in Drug Storage.
13.3 Return of Materials and Information
Except for materials and Information to be retained or used after the
term of this Agreement as provided herein, each Party shall, upon termination or
expiration of this Agreement, destroy and not retain any copies of any
Confidential Information provided hereunder by the other Party, except one copy
may be retained in the legal department solely for archival purposes.
13.4 Accrued Rights; Surviving Obligations
Termination or expiration of this Agreement shall not affect any
accrued rights of either party. Additionally, the terms of Sections 3.5 (last
two sentences), 6.7, 8.1, 10(b), 13.1(c), 13.1(d), 13.2(e), 14.14 and 14.16 and
Articles 9 and 11 of this Agreement shall survive any termination or expiration
of this Agreement.
14. MISCELLANEOUS
14.1 Disclaimers; Limitation of Liability
EXCEPT AS SET FORTH IN THIS AGREEMENT, NEORX MAKES NO OTHER
REPRESENTATIONS OR WARRANTIES, WITH RESPECT TO THE NEORX PATENTS, NEORX
KNOW-HOW, CORONARY PRODUCTS OR DRUG PRODUCT, EXPRESS OR IMPLIED, INCLUDING
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT
OR PATENTABILITY. NeoRx's sole obligation and liability with respect to a
defective or nonconforming Drug Product shall be to replace the Drug Product as
set forth in Article 6 and, with respect to defective or nonconforming
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catheters, shall be based upon the warranty and obligations of the catheter
manufacturer. With respect to Coronary Products, NeoRx shall not be liable to
Schwarz Pharma for any special, indirect, incidental or consequential damages
for breach of warranty or any defect or nonconformance, including strict
liability or other liability in tort, except as provided in Article 9.
14.2 Liability Insurance
Schwarz Pharma will procure and maintain, through self-insurance or
otherwise, at its sole expense, liability insurance, including products
liability coverage, in such amounts as Schwarz Pharma customarily maintains with
respect to its development, use, distribution or sale of comparable products in
the Territory. Schwarz Pharma's insurance shall not be cancelable without thirty
(30) days' prior written notice to NeoRx. NeoRx shall, upon Schwarz Pharma's
reasonable request, provide sufficient information to Schwarz Pharma to enable
Schwarz Pharma to obtain product liability insurance with respect to Coronary
Products. NeoRx shall procure and maintain, at its sole expense, liability
insurance, including products liability coverage, in such amounts as NeoRx
customarily maintains with respect to its development, manufacture, storage,
use, distribution or sale of its comparable products. NeoRx shall name Schwarz
Pharma as an additional insured on such insurance policies as Schwarz Pharma may
reasonably request. NeoRx insurance shall not be cancelable without thirty (30)
days' prior written notice to Schwarz Pharma.
14.3 Entire Agreement; Amendment
This Agreement sets forth the terms of the collaboration agreement
between the Parties hereto and, except as otherwise set forth herein, supersedes
and terminates all prior representations, agreements and understandings between
the Parties regarding the subject matter hereof. No subsequent alteration,
amendment, change or addition to this Agreement shall be binding upon the
Parties unless reduced to writing and signed by an authorized officer of each
Party.
14.4 Assignment
Neither Party may assign or transfer this Agreement or any rights or
obligations hereunder without the prior written consent of the other, except
that (a) either party may make such an assignment without the other party's
consent to a successor to all or substantially all of the related business
assets of such party relating to this Agreement, whether by way or a merger,
sale of stock, sale of assets or other similar transaction; and (b) Schwarz
Pharma shall be allowed to subcontract any of its marketing and sales rights and
obligations to an Affiliate, Sublicensee or Third Party and such activity shall
not be considered an assignment or constitute or provide grounds for finding a
breach of this Agreement on the part of Schwarz Pharma.
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14.5 Notices
Any notice required or permitted to be given under this Agreement shall
be in writing, shall specifically refer to this Agreement and shall be effective
on receipt, when given by registered airmail or overnight courier and addressed,
unless otherwise specified in writing, to the addresses of the Parties described
below.
For NeoRx: NeoRx Corporation
410 West Harrison
Seattle, Washington 98119-4007
Attn: President
For Schwarz Pharma: Schwarz Pharma AG
Alfred-Nobel-Strasse 10
40789 Monheim
Germany
Attn: President
14.6 Severability
If any Article or part thereof of this Agreement is declared invalid by
any court of competent jurisdiction, or any government or other agency having
jurisdiction over either NeoRx or Schwarz Pharma deems any Article or part
thereof to be contrary to any anti-trust or competition laws then such
declaration shall not affect the remainder of the Article or other Articles. To
the extent possible the Parties shall revise such invalidated Article or part
thereof in a manner that will render such provision valid without impairing the
Parties' original intent.
14.7 Force Majeure
No Party shall be in breach of this Agreement, or liable to the other
Party, for any delay or failure of performance to the extent such delay or
failure is caused by Force Majeure, provided that the Party affected promptly
notifies the other Party and exerts all reasonable efforts to eliminate, cure or
overcome such Force Majeure and to resume performance of its obligations under
this Agreement. This Section 14.7 shall not affect the existence of or
consequences specified herein (i.e.,Sections 6.11, [ * ]) with respect to a [*].
14.8 Expenses
Except as otherwise provided in this Agreement, all expenses incurred
by Schwarz Pharma in connection with its obligations under this Agreement will
be borne solely by Schwarz Pharma and all expenses incurred by NeoRx in
connection with its obligations under this Agreement will be borne solely by
NeoRx.
[ * ] Confidential Treatment Requested.
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14.9 Non-Waiver
The failure of a Party in any one or more instances to insist upon
strict performance of any of the terms and conditions of this Agreement shall
not be construed as a waiver or relinquishment, to any extent, of the right to
assert or rely upon any such terms or conditions on any future occasion.
14.10 Disclaimer of Agency
This Agreement shall not constitute any Party the legal representative
or agent of another, nor shall any Party have the right or authority to assume,
create, or incur any Third Party liability or obligation of any kind, express or
implied, against or in the name of or on behalf of another except as expressly
set forth in this Agreement.
14.11 Further Actions
Each Party agrees to execute, acknowledge and deliver such further
instruments, and to do all such other acts, as may be necessary or appropriate
in order to carry out the purposes and intent of this Agreement.
14.12 Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be an original and all of which shall constitute together the same
document.
14.13 Governing Law
This Agreement shall be governed by and construed in accordance with
New York law.
14.14 Dispute Resolution; Arbitration
Any dispute, controversy or claim arising out of or relating to this
Agreement (hereinafter collectively referred to as "Dispute") shall be attempted
to be settled amicably by the Parties, in good faith, by submitting each such
Dispute to appropriate senior management representatives of each Party in an
effort to effect a mutually acceptable resolution thereof. If no mutually
acceptable resolution is achieved within the time permitted by one Party in a
notice to the other with respect to the Dispute, then the Parties shall submit
the Dispute to arbitration as set forth in this Section 14.14.
Any Dispute which cannot be amicably settled shall be referred to
arbitration held in New York, New York in the English language under the Rules
of Conciliation and Arbitration of the International Chamber of Commerce, to the
exclusion of any other forum, before a panel of three arbitrators appointed in
accordance with such rules. Each Party shall bear its own expenses in connection
with any such arbitration. The costs and expenses of the arbitration shall be
borne by the Parties equally unless the determination by the panel of
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arbitrators includes an award of costs, in which case expenses shall be borne in
accordance with such award. The decision and award of the Court of Arbitration
shall be final and conclusive upon the Parties in lieu of all other legal,
equitable or judicial proceedings between them, and any such award or decision
may be entered as a judgment and enforced in any court having jurisdiction over
the Party against whom enforcement is sought. In no event shall a demand for
arbitration be made after the date when institution of a legal or equitable
proceeding based upon such claim, dispute or other matter in question would be
barred by the applicable statute of limitations.
14.15 Official Language
The official text of this Agreement and any appendices, exhibits and
schedules hereto shall be made, written and interpreted in English. Any notices,
accounts, reports, documents, disclosures of information or statements required
by or made under this Agreement, whether during its term or upon expiration or
termination thereof, shall be in English. In the event of any dispute concerning
the construction or meaning of this Agreement, reference shall be made only to
this Agreement as written in English and not to any other translation into any
other language.
14.16 Payment; Interest
All payments hereunder shall be made in United States Dollars. Any
payments under this Agreement which are past due by more than 15 days shall
accrue and be payable with interest at the "prime rate" of interest quoted by
THE WALL STREET JOURNAL (or if not published, another appropriate publication)
for the last business day of each month or the maximum permitted by applicable
law, whichever is less.
14.17 Value of Collaboration and Know-How
Schwarz Pharma acknowledges that NeoRx's collaboration and work in
Development will be of substantial value and that the NeoRx Know-How constitutes
valuable and substantial trade secrets and know-how of NeoRx. The parties
acknowledge and agree that, for their mutual convenience and after considering
other alternatives, including other or larger milestone payments and fixed,
scheduled or other forms of prices for Coronary Products under Section 6.5, the
payments to NeoRx set forth in this Agreement, including the structure,
allocation (e.g., the purchase price for Coronary Products set forth in Section
6.5 and other payments for other rights hereunder) and timing of payments, are
an appropriate and mutually convenient way of compensating NeoRx.
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IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement as of the date first above written.
SCHWARZ PHARMA AG SCHWARZ PHARMA AG
BY _________________________ BY ________________________________
Its _________________________ Its _______________________________
NEORX CORPORATION
BY _______________________________
Its ______________________________
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EXHIBIT A
NEORX PATENTS
[ * ]
[ * ] Confidential Treatment Requested.
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EXHIBIT B
DEVELOPMENT PLAN
The attached outline of a Development Plan prepared by Schwarz Pharma
presumes the following:
[ * ]
(c) If such efficacy rate can be realized, the straightforward
clinical program attached seems to be realistic.
(d) Depending on discussions with regulatory authorities and experts
and depending on clinical study results and increasing knowledge, the contents
and time lines of the preliminary clinical program may change.
[ * ] Confidential Treatment Requested.
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EXHIBIT B
BIOSTENT
TIME SCHEDULE CLINICAL DEVELOPMENT PROGRAM PROPOSED (DRAFT 4)
[ * ]
[ * ] Confidential Treatment Requested.
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EXHIBIT C
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
__________ __, 1997, is entered into by and between NEORX CORPORATION, a
Washington corporation (the "Company"), and SCHWARZ PHARMA AG, a corporation
organized and existing under the laws of the Federal Republic of Germany (the
"Investor").
RECITAL
The Investor desires to purchase from the Company, and the Company
desires to sell to the Investor, shares of the Company's common stock, upon the
terms and conditions set forth herein and in connection with the execution of a
separate Development and Distribution Agreement, dated as of even date herewith.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:
1. Purchase and Sale
The Investor hereby agrees to purchase shares of the Company's common
stock (the "Shares") from the Company for an aggregate purchase price as
specified by the Investor (the "Purchase Price"), but not to exceed [ * ]. The
Company hereby agrees to issue, sell and deliver to the Investor in exchange for
the Purchase Price that number of Shares determined to the nearest whole number
by dividing (a) the Purchase Price by (b) the product of 1.5 multiplied by the
average of the last reported sales price of the Company's common stock on the
Nasdaq National Market as reported by Nasdaq on each of the 20 trading days
immediately preceding the date of this Agreement.
The closing of this purchase and sale of the Shares shall take place at
the offices of Perkins Coie, Seattle, Washington, on the date hereof and at such
time as may be mutually agreed upon between the Company and the Investor (the
"Closing"). At the Closing, the Investor shall pay the Purchase Price to the
Company by bank wire transfer to the account designated by the Company. After
receipt of the Purchase Price, the Company shall (a) deliver to the Investor, or
instruct its transfer agent to deliver to the Investor, a certificate
representing the Shares, (b) deliver a legal opinion to the Investor, dated as
of the date of this Agreement, and (c) cause its special counsel, Perkins Coie,
to deliver an opinion to the Investor, dated as of the date of this Agreement.
[ * ] Confidential Treatment Requested.
<PAGE>
2. Representations and Warranties of the Investor Regarding the Shares
The Investor hereby represents and warrants to the Company as of the
date of this Agreement as follows:
2.1 High Degree of Risk
The Investor recognizes that the Company has not yet developed a
marketable product and that there can be no assurance that the Company will be
able to develop a marketable product or that any such product developed will be
accepted in the marketplace. There can be no assurance that the Company will be
able to obtain its projected goals, and the Company will need significant
additional capital to be successful, which capital may not be readily available
when and as needed.
2.2 Professional Advice
The Investor has obtained, to the extent it deems necessary, its own
professional advice with respect to the risks inherent in the investment in the
Shares, the condition of the Company and the suitability of the investment in
the Shares in light of the Investor's financial condition and investment needs.
2.3 Sophistication
The Investor, either alone or with the assistance of its professional
advisors, has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the prospective
investment in the Shares.
2.4 Suitability
The Investor has adequate net worth and means for providing for its
current financial needs and contingencies and has no need for liquidity of
investment with respect to the Shares. The Investor's overall commitment to
investments that are illiquid or not readily marketable is not disproportionate
to its net worth, and investment in the Shares will not cause such overall
commitment to become excessive.
2.5 Access to Information
The Investor has been given access to all information requested by it
regarding the Company, including, in particular, the current financial condition
of the Company and the risks associated therewith, and has utilized such access
to its satisfaction for the purpose of obtaining information about the Company
and the Investor has either attended or been given a reasonable opportunity to
attend a meeting with representatives of the Company for the purpose of asking
questions of, and receiving answers from, such representatives concerning the
terms and conditions of the offering of the Shares and to obtain any additional
information, to the extent reasonably available, necessary to verify the
accuracy of information provided about the Company.
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2.6 Purchase Entirely for Own Account
The Shares will be acquired for investment for the Investor's own
account, not as a nominee or agent, and not with a view to the distribution of
any part thereof. The Investor has no present intention of selling, granting any
participation in or otherwise distributing the same in a manner contrary to the
Securities Act of 1933, as amended (the "Act"), including, without limitation,
Regulation S of the Act ("Regulation S"), or any applicable state or foreign
securities or Blue Sky laws, and has no agreement or arrangement with any person
to sell, transfer or grant participations to such person or to any third person
with respect to any of the Shares.
2.7 Due Diligence
The Investor has been solely responsible for its own due diligence
investigation of the Company and the Company's business, and its own analysis of
the merits and risks of the investment made pursuant to this Agreement, and is
not relying on anyone else's analysis or investigation of the Company, its
business or the merits and risks of the Shares other than professionals employed
specifically by the Investor to assist the Investor. In taking any action or
performing any role relative to the arranging of the investment being made
pursuant to this Agreement, the Investor has acted solely in its own interest
and not in the interest of any other person, and no other person has acted as an
agent or fiduciary for the Investor.
2.8 Restricted Securities; Compliance with Regulation S
The Investor understands that (a) the Shares have not been registered
under the Act, (b) the Shares will be issued in reliance on Regulation S and,
therefore, cannot be sold or transferred except in compliance with Regulation S
unless they are subsequently registered under the Act or another exemption from
such registration is available, and (c) the Shares are subject to resale
restrictions as set forth in Section 2.9 of this Agreement and the Investor may
not be able to liquidate its investment in the event of an emergency or pledge
the Shares as collateral security for loans. In this connection, the Investor
represents that it is familiar with Regulation S as currently in effect, and
understands the resale limitations imposed thereby and by Section 2.9 of this
Agreement. The Investor acknowledges and understands that the Company's reliance
upon such exemptions under Regulation S is predicated in part on the Investor's
representations contained herein. The Investor is not a U.S. person (as that
term is used in Regulation S), is not located in the U.S. and is acquiring the
Shares in an offshore transaction, and such Investor is not acquiring the Shares
for the account or benefit of any U.S. person. The Investor has not, in
connection with the purchase of Shares hereunder, offered, sold (including by
any short sale), or entered into any transaction (including the purchase of any
put or sale of any call) involving the sale or potential sale of the common
stock of the Company in the United States or to or for the account or benefit of
any U.S. person.
-3-
<PAGE>
2.9 Restrictions on Disposition
(a) For the period of one year from the date of the Closing, the
Investor may not sell, assign or otherwise transfer any interest, direct or
indirect, in all or any part of the Shares or enter into any transaction,
including the purchase of any put or sale of any call or any short sale,
involving the sale or potential sale of the Company's common stock.
(b) Without in any way limiting the covenants set forth above, the
Investor further agrees not to make any disposition of all or any portion of the
Shares unless and until:
(i) if reasonably requested by the Company, the Investor
shall have furnished the Company with an opinion of counsel (which opinion may
be delivered by the Investor's in-house counsel), reasonably satisfactory to the
Company, that such disposition will not require registration of such shares
under the Act; and
(ii) the Company shall have been satisfied that such proposed
disposition complies in all respects with Regulation S or any successor rule
providing a safe harbor for such disposition without registration.
(c) In addition to the foregoing provisions of this Section 2.9, in
order to preserve an orderly market for the Company's common stock, (A) at least
five business days prior to any such proposed disposition, the Investor shall
provide to the Company notice of such disposition; (B) the Investor shall
provide the Company or its agent an opportunity to arrange the sale to one or
more parties of the Shares proposed to be transferred and shall cooperate fully
with the Company or such agent in such process (including discussions of the
terms of such sale with no more than two brokers designated by the Company and
to sell such Shares to one or both of such brokers if an agreement is reached);
and (C) if, after three business days from the date the notice referred to in
subparagraph (c)(i)(A) is received by the Company, an agreement regarding such a
sale has not been reached, the Investor may dispose of such Shares in any manner
it so chooses so long as such disposition is not in violation of this Agreement,
and the Company agrees to immediately cause its transfer agent to issue a clean
certificate evidencing the Shares, without any restrictive legend thereon, if
applicable securities laws do not require a legend, restriction or holding
period.
2.10 Domicile; Principal Place of Business
The Investor represents that it is domiciled in, and has its principal
place of business in, the jurisdiction set forth in the first paragraph of this
Agreement.
2.11 Legends
It is understood that the certificate evidencing the Shares will bear a
legend as follows:
-4-
<PAGE>
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "ACT")
OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES EVIDENCED
BY THIS CERTIFICATE HAVE BEEN ISSUED IN A TRANSACTION GOVERNED
BY REGULATION S PROMULGATED UNDER THE ACT AND MAY NOT BE
TRANSFERRED EXCEPT IN ACCORDANCE WITH SAID REGULATION S, OR
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN
APPLICABLE EXEMPTION FROM REGISTRATION UNDER THE ACT.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESALE RESTRICTIONS AS SET FORTH IN A STOCK PURCHASE AGREEMENT DATED AS
OF ______________, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY."
2.12 Acknowledgment
The Investor, by executing below, acknowledges that it understands that
the Company is relying upon the accuracy and completeness of its representations
and warranties set forth in this Agreement in deciding whether to sell shares of
the Company's common stock to the Investor and in complying with the Company's
obligations under applicable securities laws.
3. Representations and Warranties of the Investor
The Investor hereby represents and warrants to the Company as of the
date of this Agreement as follows:
3.1 Organization and Existence
The Investor is a corporation duly organized, validly existing and in
good standing under the laws of the Federal Republic of Germany and has all
requisite power and authority to enter into and perform this Agreement. The
Investor has furnished to the Company complete and accurate information with
respect to the beneficial owners of the Investor. The Investor agrees to update
this information promptly if the beneficial owners of the Investor change at any
time.
3.2 Authorization
The execution, delivery and performance by the Investor of this
Agreement have been duly authorized by all necessary action on the part of the
Investor. This Agreement constitutes a valid and binding agreement of the
Investor, enforceable in accordance with its terms except as (a) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (b) the availability of equitable
remedies may be limited by equitable principles of general applicability.
-5-
<PAGE>
3.3 Governmental Authorization
No consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Investor is required
in connection with the valid execution and delivery of this Agreement or the
purchase of the Shares.
3.4 Noncontravention
The execution, delivery and performance by the Investor of this
Agreement do not and will not (a) contravene or conflict with the organizational
documents of the Investor; (b) assuming compliance with the matters referred to
in Section 3.3 hereof, contravene or conflict with or constitute a violation of
any provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to the Investor; or (c) constitute a default under or
give rise to any right of termination, cancellation or acceleration of any
material right or obligation of the Investor under any provision of any material
agreement, contract or other instrument binding upon the Investor.
3.5 Finders' Fees
There is no investment banker, broker, finder or other intermediary who
has been retained by or is authorized to act on behalf of the Investor and who
might be entitled to any fee or commission from the Investor in connection with
the transactions contemplated by this Agreement.
3.6 Financing
The Investor has sufficient funds available to purchase the Shares.
4. Representations and Warranties of the Company
The Company hereby represents and warrants to the Investor as of the
date of this Agreement as follows:
4.1 Corporate Organization
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington and has all requisite
power and authority to enter into and perform this Agreement.
4.2 Corporate Authorization
The execution, delivery and performance by the Company of this
Agreement are within the corporate powers of the Company and have been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement constitutes a valid and binding agreement of the Company, enforceable
in accordance with its terms except as (a) the enforceability thereof may be
-6-
<PAGE>
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (b) the availability of equitable remedies may be limited by
equitable principles of general applicability.
4.3 Governmental Authorization
No consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Company is required in
connection with the valid execution and delivery of this Agreement or the offer,
sale or issuance of the Shares, except qualification or registration (or taking
such action as may be necessary to secure an exemption from qualification or
registration, if available) of the offer and sale of the Shares under all
applicable federal and state securities laws, which filings and qualifications,
if required, will be accomplished in a timely manner.
4.4 Noncontravention
The execution, delivery and performance by the Company of this
Agreement do not and will not (a) contravene or conflict with the Articles of
Incorporation or Bylaws of the Company; (b) assuming compliance with the matters
referred to in Section 4.3 hereof, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to the Company; (c) constitute a default
under or give rise to any right of termination, cancellation or acceleration of
any material right or obligation of the Company under any provision of any
material agreement, contract or other instrument binding upon the Company; or
(d) result in the creation or imposition of any lien on any asset of the
Company.
4.5 Validity of the Shares
The Shares have been duly authorized and, when issued and delivered to
and paid for by the Investor pursuant to this Agreement, will be validly issued,
fully paid and nonassessable, and such shares are free of preemptive or similar
rights.
4.6 Capitalization
There has been no material change in the authorized capital stock of
the Company as disclosed in the Company's Report on Form 10-Q for the quarter
ended September 30, 1996.
4.7 Nasdaq National Market
The Company's common stock is quoted on the Nasdaq National Market and
the Company is in compliance with the applicable provisions of Schedule D to the
By-laws of the National Association of Securities Dealers, Inc.
-7-
<PAGE>
4.8 Finders' Fees
There is no investment banker, broker, finder or other intermediary who
has been retained by or is authorized to act on behalf of the Company and who
might be entitled to any fee or commission from the Company in connection with
the transactions contemplated by this Agreement.
5. Public Reports
The Company has provided to the Investor true and complete copies of
all reports, proxy statements and other documents (the "Public Reports") filed
by the Company with the SEC under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), since December 31, 1995. The Public Reports
include all the reports the Company has been required to file under the Exchange
Act since that date. As of their respective dates, none of the Public Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.
6. Miscellaneous
6.1 Notices
Any notice required or permitted to be given under this Agreement shall
be in writing, shall specifically refer to this Agreement and shall be effective
on receipt, when given by registered airmail or overnight courier and addressed,
unless otherwise specified in writing, to the addresses described below.
For NeoRx:
NeoRx Corporation
410 West Harrison
Seattle, Washington 98119-4007
Attn: President
with a copy (which shall not constitute notice) to:
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, Washington 98101-3099
Fax: (206) 583-8500
Attn: James R. Lisbakken
For Schwarz Pharma:
Schwarz Pharma AG
-8-
<PAGE>
Alfred-Nobel-Str. 10
40789 Monheim
Germany
Attn: President
6.2 Amendments; No Waivers
(a) Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Investor and the Company or, in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by either party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
6.3 Expenses
All costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.
6.4 Successors and Assigns
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns; PROVIDED that neither party may assign, delegate or otherwise transfer
any of its rights or obligations under this Agreement without the consent of the
other party hereto.
6.5 Governing Law
The Investor agrees that this Agreement shall be enforced, governed and
construed in all respects in accordance with the laws of the State of
Washington, and that the rights, powers and duties set forth herein shall be
binding upon the Investor and its successors and permitted assigns, and shall
inure to the benefit of its successors and permitted assigns.
6.6 Counterparts; Effectiveness
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective
when each party hereto shall have received a counterpart hereof signed by the
other party hereto.
-9-
<PAGE>
6.7 Entire Agreement
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter of this Agreement. No representation, inducement,
promise, understanding, condition or warranty not set forth herein has been made
or relied upon by either party hereto. Neither this Agreement nor any provision
hereof is intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
6.8 Captions
The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof.
6.9 Lock-Up Agreement
The Investor agrees that, if requested by the Company in conjunction
with an underwritten public offering, the Investor will enter into a written
agreement that it will not, directly or indirectly, offer, sell, contract to
sell, grant any option to purchase, make any short sale, pledge or grant any
interest in, or otherwise dispose of, transfer or make a distribution of any
shares of the Company's common stock for a period of 180 days after the date
such public offering is declared effective by the SEC.
6.10 Survival
Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations and warranties made by the Company
and the Investor herein and in the certificates for the Shares delivered
pursuant hereto shall survive the execution of this Agreement, the delivery to
the Investor of the Shares being purchased and the payment therefor.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
NEORX CORPORATION
By _____________________________________
Its_____________________________________
SCHWARZ PHARMA AG SCHWARZ PHARMA AG
By ________________________ By ____________________________________
Its________________________ Its____________________________________
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS OF NEORX CORPORATION AS OF 3/31/97 AND 12/31/96, AND THE RELATED
STATEMENTS OF OPERATIONS FOR EACH OF THE 3 MONTHS ENDED 3/31/97 AND 3/31/96 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q REPORT FOR THE PERIOD
ENDED 3/31/97.
</LEGEND>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
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<SECURITIES> 12,941
<RECEIVABLES> 0
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<INVENTORY> 500
<CURRENT-ASSETS> 26,170
<PP&E> 7,123
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<BONDS> 1,231
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<TOTAL-LIABILITY-AND-EQUITY> 27,014
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