<PAGE>
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 SEPTEMBER 30, 1999 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 October 7, 1999 there were outstanding 21,006,964 shares of the Company's
Common Stock, $.02 par value.
<PAGE>
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
PART I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Balance Sheets as of September 30, 1999
and December 31, 1998 3
Statements of Operations for the
three and nine months ended September 30,
1999 and 1998 4
Statements of Cash Flows for the
three and nine months ended September 30,
1999 and 1998 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 Disclosures
About Market Risk 13
Item 5. Other Information 14
Item 6. Exhibits 14
Signature 15
2
<PAGE>
NEORX CORPORATION
BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,294 $ 1,910
Investment securities 17,741 28,242
Prepaid expenses and other current assets 770 857
--------- ---------
Total current assets 20,805 31,009
--------- ---------
FACILITIES AND EQUIPMENT, at cost:
Leasehold improvements 3,283 3,283
Equipment and furniture 5,025 4,886
--------- ---------
8,308 8,169
Less: accumulated depreciation and amortization (7,318) (7,049)
--------- ---------
Facilities and equipment, net 990 1,120
--------- ---------
OTHER ASSETS, NET 246 312
--------- ---------
Total assets $ 22,041 $ 32,441
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,055 $ 756
Accrued liabilities 917 1,192
Deferred revenue -- 250
Current portion of convertible subordinated debentures 1,195 --
Current portion of capital leases -- 4
--------- ---------
Total current liabilities 3,167 2,202
LONG-TERM LIABILITIES:
Convertible subordinated debentures, 9:% (Due June 2000) -- 1,195
--------- ---------
Total liabilities 3,167 3,397
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Series preferred stock, $.02 par value,
3,000,000 shares authorized:
Convertible exchangeable preferred stock, Series 1,
208,240 shares issued and outstanding (entitled in
liquidation to $5,248) 4 4
Common stock, $.02 par value, 60,000,000 shares authorized,
21,006,964 shares issued and outstanding 420 420
Additional paid-in capital 163,189 163,189
Accumulated deficit (144,691) (134,637)
Accumulated other comprehensive income (loss) - unrealized
gain (loss) on investment securities (48) 68
--------- --------
Total shareholders' equity 18,874 29,044
--------- --------
Total liabilities and shareholders= equity $ 22,041 $ 32,441
========= =========
</TABLE>
See accompanying notes to the financial statements.
3
<PAGE>
NEORX CORPORATION
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------- ----------------------
1999 1998 1999 1998
------- ------- -------- -------
<S> <C> <C> <C> <C>
REVENUE $ 3 $ 149 $ 463 $ 7,697
------- ------- -------- -------
OPERATING EXPENSES:
Research and development 3,041 2,648 8,281 7,128
General and administrative 738 953 2,565 3,343
------- ------- -------- -------
Total operating expenses 3,779 3,601 10,846 10,471
------- ------- -------- -------
Loss from operations (3,776) (3,452) (10,383) (2,774)
OTHER INCOME (EXPENSE):
Interest income 297 358 798 1,467
Interest expense (29) (32) (88) (98)
------- ------- -------- -------
Net loss $(3,508) $(3,126) $ (9,673) $(1,405)
======= ======= ======== =======
Preferred stock dividends (127) (127) (381) (400)
------- ------- -------- -------
Net loss applicable to
common shares $(3,635) $(3,253) $(10,054) $(1,805)
======= ======= ======== =======
Loss per share:
Basic and diluted $ (.17) $ (.15) $ (.48) $ (.09)
======= ======= ======== =======
Shares used in calculation of loss per share:
Basic & diluted 21,007 21,004 21,007 20,874
======= ======= ======= =======
</TABLE>
See accompanying notes to the financial statements.
4
<PAGE>
NEORX CORPORATION
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1999 1998 1999 1998
------- ------ ------- -------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,508) $ (3,126) $ (9,673) $ (1,405)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 88 90 269 265
(Increase) decrease in prepaid
expenses and other assets (203) 393 153 542
Increase (decrease) in accounts
payable 293 - 299 (40)
Decrease in accrued liabilities (86) 19 (402) (97)
Decrease in deferred revenue - - (250) -
------- ------ ------- -------
Net cash used in operating activities (3,416) (2,624) (9,604) (735)
------- -------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investment
securities 5,544 23,274 26,219 57,095
Purchases of investment securities (1,129) (20,377) (15,834) (56,122)
Facilities and equipment purchases (102) (75) (139) (602)
Other - 7 - 19
------- ------- ------- -------
Net cash provided by investing
activities 4,313 2,829 10,246 390
------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of capital lease obligations - (11) (4) (32)
Proceeds from stock options and warrants
exercised - 35 - 482
Preferred stock dividends - - (254) (256)
------- ------- ------- -------
Net cash provided by (used in)
financing activities - 24 (258) 194
------- ------- ------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 897 229 384 (151)
CASH AND CASH EQUIVALENTS:
Beginning of period 1,397 1,569 1,910 1,949
-------- ------- ------- -------
End of period $ 2,294 $ 1,798 $ 2,294 $ 1,798
======== ======= ======= =======
</TABLE>
See accompanying notes to the financial statements.
5
<PAGE>
NEORX CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 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, 1998.
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 September 30,
1999 and the results of its operations and cash flows for the three and
nine month periods ended September 30, 1999 and 1998.
The results of operations for the three and nine month periods ended
September 30, 1999 are not necessarily indicative of the expected
operating results for the full year.
Note 2. Shareholders' Equity
Changes in shareholders' equity from December 31, 1998 to September 30,
1999 are as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Balance December 31, 1998 $29,044
Preferred stock dividends (381)
Net loss (9,673)
Accumulated other comprehensive
loss - unrealized loss on
investment securities (116)
-------
Balance September 30, 1999 $18,874
=======
</TABLE>
6
<PAGE>
NEORX CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
Note 3. Loss per share
The following is a reconciliation of the numerator and denominator of the basic
and diluted loss per share computations for the three and nine months ended
September 30, 1999 and 1998 (in thousands, except per share data):
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
----------------------- -----------------------
1999 1998 1999 1998
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Net loss $ (3,508) $(3,126) $ (9,673) $(1,405)
Less: preferred
stock dividends (127) (127) (381) (400)
-------- ------- -------- -------
Net loss applicable
to basic & diluted
loss per share $( 3,635) $(3,253) $(10,054) $(1,805)
======== ======= ======== =======
Weighted average shares-
basic & diluted 21,007 21,004 21,007 20,874
======== ======= ======== =======
Basic & diluted
loss per share $ (.17) $ (.15) $ (.48) $ (.09)
======= ======= ======== =======
</TABLE>
The numerator and denominator of the basic and diluted loss per share
calculations for all periods ended September 30, 1999 and 1998 were the same, as
including the effect of options to purchase additional shares of Common Stock
would have been antidilutive. Excluded for the three and nine month periods
ended September 30, 1999 were 3,667,690 shares of Common Stock issuable under
stock options. Excluded for the three and nine month periods ended September 30,
1998 were 1,289,859 shares of Common Stock issuable under stock options.
7
<PAGE>
NEORX CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
In addition, shares issuable upon conversion of the Company's Convertible
Subordinated Debentures and its Series 1 Preferred Stock are not included in
the calculation of diluted EPS for the three and nine month periods ended
September 30, 1999 and 1998 because the effect of including such shares would
have been antidilutive.
Note 4. Comprehensive Loss
The Company's total comprehensive loss for the quarters ended September 30,
1999 and 1998 was $(3,520,000) and $(3,126,000), respectively. Comprehensive
loss for the quarter ended September 30, 1999 consisted primarily of net loss.
Comprehensive loss for the quarter ended September 30, 1998 consisted of net
loss. The Company's total comprehensive loss for the nine months ended
September 30, 1999 and 1998 was $(9,789,000) and $(1,405,000), respectively.
Comprehensive loss for the nine months ended September 30, 1999 consisted
primarily of net loss. Comprehensive loss for the nine months ended September
30, 1998 consisted of net loss.
8
<PAGE>
NEORX CORPORATION
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
This discussion contains "forward-looking statements" which are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected. The words "believe", "expect", "intend",
"anticipate", and similar expressions are used to identify forward-looking
statements, but their absence does not mean the statement is not forward
looking. Many factors could affect the Company's actual results, including those
factors described under "Factors Affecting Forward Looking Statements",
contained in the Company's Annual Report on Form 10-K filed with the Commission.
These risk factors, among others, could cause results to differ materially from
those presently anticipated by the Company. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date of this report. 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 of this report or to
reflect the occurrence of unanticipated events.
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 1998.
Revenues for the quarter ended September 30, 1999 were $3,000 compared to
$149,000 for the quarter ended September 30, 1998. For the nine months ended
September 30, 1999 revenues were $463,000 compared to $7,697,000 for the nine
months ended September 30, 1998. For the nine months ended September 30,
1999, the Company recorded $463,000 of revenue from the licensing of
non-strategic patent technologies to Theseus, LTD. In January 1998, the
Company received a $7,000,000 milestone payment from Janssen Pharmaceutica NV
("Janssen"), a subsidiary of Johnson & Johnson, Inc., reflecting Janssen's
decision to begin Phase II trials of Avicidin-Registered Trademark- cancer
therapy product. Janssen terminated this agreement on December 29, 1998.
Total operating expenses for the quarter ended September 30, 1999 increased 5%
to $3,779,000 from $3,601,000 in the quarter ended September 30, 1998, and for
the nine month period increased 4% to $10,846,000 from $10,471,000. Research and
development expenses for the quarter ended September 30, 1999 increased 15% to
$3,041,000 from $2,648,000 for the same time period in 1998. Research and
development expenses for the nine months ended September 30, 1999 increased 16%
to $8,281,000 from $7,128,000 in 1998. The increase in research and development
expenses for the
9
<PAGE>
NEORX CORPORATION
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition (continued)
three-month period in 1999 is primarily the result of an agreement with The Dow
Chemical Company for the grant of an exclusive license for technology used in
NeoRx's Skeletal Targeted Radiotherapy ("STR") project. The increase in research
and development costs for the nine months ended September 30, 1999 results from
the Dow agreement and increased supplies and patient costs for the Company's STR
project.
The Company currently receives reimbursement payments for research and
development expenses from non-strategic patent technologies, but no longer
receives expense reimbursements related to the Avicidin-Registered Trademark-
and Biostent-Registered Trademark- programs. Reimbursed research and
development expenses totaled $90,000 and $381,000 for the quarters ended
September 30, 1999 and 1998. Reimbursed research and development expenses
totaled $236,000 and $1,801,000 for the nine months ended September 30, 1999
and 1998.
General and administrative expenses for the quarter ended September 30, 1999
decreased 23% to $738,000 from $953,000 for the quarter ended September 30,
1998. General and administrative expenses for the nine months ended September
30, 1999 decreased 23% to $2,565,000 from $3,343,000. General and administrative
expenses for the quarter and the nine months ended September 30, 1999 decreased
principally due to decreased expenses for personnel and outside consulting
services.
Interest income for the quarter ended September 30, 1999 decreased to $297,000
from $358,000 for the same time period in 1998, and decreased to $798,000 from
$1,467,000 for the nine months ended September 30, 1999 and 1998. These
decreases are due to the decrease in funds available for investment and lower
interest rates.
LIQUIDITY AND CAPITAL RESOURCES.
Cash and investment securities as of September 30, 1999 were $20,035,000
compared to $30,152,000 at December 31, 1998. The balance of cash and investment
securities decreased primarily as a result of the 1999 year-to-date net loss.
The Company expects that its capital resources and interest income will be
sufficient to finance its currently anticipated working capital and capital
requirements at least through the fourth quarter of 2000.
10
<PAGE>
NEORX CORPORATION
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition (continued)
The Company's working capital and capital requirements will depend upon numerous
factors, including results of research and development activities, clinical
trials, expenses associated with expanding marketing, competitive and
technological developments and the timing, cost and successful continuation of
the Company's collaborative relationships. 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 manufacturing capabilities.
The Company intends to seek additional funding through arrangements with
corporate collaborators, public or private equity financing, out-licensing
certain technologies, or other sources.
Adequate funds may not be available when needed or on terms acceptable to the
Company. If funding is insufficient at any time in the future, the Company will
be forced to delay, reduce or eliminate some or all of its research and
development activities, clinical studies and trials and administrative programs,
dispose of assets or technology, or cease operations.
IMPACT OF YEAR 2000.
The Year 2000 Problem, which is pervasive and complex, is the result of computer
programs being written with two digits instead of four to define the applicable
year. The issue is whether computer systems will properly recognize a date using
"00" as the year 2000 instead of the year 1900. Systems that do not properly
recognize date-sensitive information could generate erroneous data or cause a
system to fail.
Readiness
The Company has conducted a study of its information technology computer systems
and believes that the Year 2000 problem does not pose significant operational
problems to its information technology systems. The majority of the Company's
software and computer equipment has been purchased within the last five years
from third-party vendors who have already provided upgrades intended to bring
their products into Year 2000 compliance. Based on this study, the Company has
initiated a project to take all necessary and reasonable steps to get the
mission-critical systems and operations Year 2000 compliant in a timely manner.
The project includes confirming the Year 2000 preparedness of significant third
parties.
11
<PAGE>
NEORX CORPORATION
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition (continued)
It is estimated that this project is 75% complete at September 30, 1999 and will
be completed by December 1999.
Costs
The total costs of the Year 2000 efforts are estimated to be $44,000. This
reflects the costs of updating research and development equipment and computer
hardware and software. The assessment of the costs of the Year 2000 compliance
effort, and the timetable for the planned completion of the internal Year 2000
modifications, are management's estimates. The estimates were based on numerous
assumptions as to future events. There can be no guarantee that these estimates
will prove accurate, and actual results could differ materially from those
estimated if these assumptions prove inaccurate. Additionally, there can be no
guarantee that significant third parties will successfully and timely convert
their systems.
Risks
The Company anticipates that its largest Year 2000 risks are in activities
involving research and development equipment and significant suppliers,
including clinical research organizations. If Year 2000 problems exist in these
areas, it could take longer for the Company to bring a product to market, which
could have a material adverse effect on the Company's business, financial
condition and results of operations. The Company is addressing the Year 2000
issue with its key third-party suppliers. As of September 30, 1999,
approximately 75% of key third-party suppliers have confirmed their Year 2000
readiness. The Company's review of its Year 2000 risks has not uncovered any
high-risk issues that would delay its efforts to bring its products to market.
Therefore, a contingency plan to address high-risk issues has not been
developed.
12
<PAGE>
NEORX CORPORATION
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to the impact of interest rate changes and changes in the
market values of its investments.
INTEREST RATE RISK
The Company's exposure to market rate risk for changes in interest rates relates
primarily to the Company's debt securities included in its investment portfolio.
The Company does not have any derivative financial instruments. The Company
invests in debt instruments of the U.S. Government and its agencies and
high-quality corporate issuers. Investments in both fixed rate and floating rate
interest earning instruments carry a degree of interest rate risk. Fixed rate
securities may have their fair market value adversely impacted due to a rise in
interest rates, while floating rate securities may produce less income than
expected if interest rates fall. Due in part to these factors, the Company's
future investment income may fall short of expectations due to changes in
interest rates or the Company may suffer losses in principal if forced to sell
securities which have declined in market value due to changes in interest rates.
At September 30, 1999, the Company owned government debt instruments in the
amount of $8.0 million and corporate debt securities in the amount of $9.0
million. The Company's exposure to losses as a result of interest rate changes
is managed through investing primarily in securities with maturities of one year
or less.
INVESTMENT RISK
The Company has received equity instruments under licensing agreements. These
investments are included in investment securities and are accounted for at fair
value with unrealized gains and losses reported as a component of comprehensive
income (loss) and classified as accumulated other comprehensive income (loss)-
unrealized gain (loss) on investment securities in shareholders' equity. Such
investments are subject to significant fluctuations in fair market value due to
the volatility of the stock market. At September 30, 1999, the Company owned
such corporate equity securities with a carrying value of approximately
$700,000.
13
<PAGE>
NEORX CORPORATION
Item 5. Other Information
LICENSE AGREEMENT BETWEEN NEORX CORPORATION AND THE DOW CHEMICAL COMPANY
As a result of its exercise of its option rights, the Company entered into an
agreement with The Dow Chemical Company ("Dow") under which Dow granted the
Company an exclusive license to use Dow's technology and patent rights to make,
use and sell in all areas of the world, except Australia, the STR product
containing holmium-166 currently under development by the Company. The Company
made an up-front payment to Dow and is obligated to make certain milestone and
royalty payments to Dow under the agreement.
Item 6. Exhibits
Exhibit
Number Exhibit
- ------ -------
10.39 License Agreement Between NeoRx
Corporation and The Dow Chemical Company
14
<PAGE>
NEORX CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NeoRx Corporation
(Registrant)
Date: November 12, 1999 By: /s/ Richard L. Anderson
------------------------------
Richard L. Anderson
President, Chief Operating Officer,
Secretary
(Principal Financial and
Accounting Officer)
15
<PAGE>
LICENSE AGREEMENT
THIS license agreement (hereinafter "LICENSE") is made between THE DOW
CHEMICAL COMPANY (hereinafter "DOW" or a "Party"), a corporation duly formed and
existing under the laws of the State of Delaware, having a place of business at
2030 Dow Center, Midland, Michigan 48674, United States of America, and NeoRx
CORPORATION (hereinafter "NEORX" or a "Party"), a corporation duly formed and
existing under the laws of the State of Washington, having a place of business
at 410 West Harrison, Seattle, Washington 98119;
WITNESSETH:
WHEREAS, DOW is engaged in certain research and development projects
involving certain [*] for various pharmaceutical applications, including bone
marrow suppression and ablation; and
WHEREAS, DOW has proprietary rights in technology relating to said
agents, including: patent rights, know-how, compounds, animal safety and
efficacy, clinical trial data, and various industrial property rights, including
those sublicensed from others; and
WHEREAS, NEORX desires to undertake the further development and
commercial exploitation of said agents; and
WHEREAS, NEORX desires to obtain an exclusive license for DOW's
technology relating to said agents; and
WHEREAS, DOW is willing to grant said license to NEORX;
WHEREAS, in connection with said license, DOW and NEORX desire to
provide for a transition in the development of the agents; and
WHEREAS, DOW and NEORX have signed an Option Agreement, effective [*]
which Option Agreement was exercised on [*] and its license terms are deemed to
be met by the terms included in this LICENSE.
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
<PAGE>
NOW, THEREFORE, DOW and NEORX, in consideration of the mutual covenants
contained herein, hereto agree as follows:
ARTICLE 1 - DEFINITIONS
When used in this LICENSE, the following terms shall have the meanings
set out below, unless the context requires otherwise. The singular shall be
interpreted as including the plural and vice versa, unless the context clearly
indicates otherwise.
1.1 "AFFILIATE" means a corporation or any other entity that at any time
during the term of this LICENSE directly or indirectly through one or
more intermediaries is CONTROLLED by the designated Party, but only for
so long as the relationship exists. A corporation or other entity shall
no longer be an AFFILIATE when through loss, divestment, dilution or
other reduction of a Party's ownership or control, the Party loses
CONTROL of such corporation or other entity.
1.2 "ADDITIONAL AGENT" means [*] including their
pharmaceutically-acceptable salts.
1.3 "AGENT" means [*] including its pharmaceutically-acceptable salts.
1.4 "APPROVAL" means final approval, in a country in the TERRITORY, by all
REGULATORY AUTHORITIES in that country, for commercial marketing of
PRODUCT, including for example, approval of final labeling and price
approval. If no approval is required to market a PRODUCT in a
particular country in the TERRITORY, then APPROVAL of the PRODUCT is
deemed to have occurred in that country upon the first sale of a
PRODUCT in that country to a THIRD PARTY.
1.5 "CDA" means the Confidential Disclosure Agreement between the Parties,
effective May 22, 1997 (copy attached hereto for reference only as
EXHIBIT A).
1.6 "COMBINATION PRODUCT" means a PRODUCT or AGENT sold together with or
for use with another component; provided, however, that, for purposes
of this definition, "[*]. NEORX must notify DOW promptly of any
commercial sale of such COMBINATION PRODUCT and identify the other
component for computation of the royalty.
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
2
<PAGE>
1.7 "COMPETITION" means the commercial sale of COMPETITIVE PRODUCTS, which
sales, in the aggregate, constitute [*] of NEORX's NET SALES in such
country. NEORX must promptly notify DOW in writing of the occurrence of
such COMPETITION and must supply evidence of such COMPETITION.
1.8 "COMPETITIVE PRODUCT" means a PRODUCT, AGENT or GENERIC PRODUCT sold or
used in the FIELD, including off label sale or use in the FIELD, [*].
1.9 "CONFIDENTIAL INFORMATION" means any proprietary information of either
Party that is submitted to the other Party hereunder, including, but
not limited to, TECHNOLOGY, PATENTS, or PROCESS PATENTS, any samples of
AGENT or PRODUCT, financial terms of this LICENSE, and business
development plans for the PRODUCT, and does not include information
excluded under Article 6.2.
1.10 "CONTROL" or "CONTROLLED" shall mean, in the case of a corporation,
ownership or control, directly or indirectly, of more than fifty
percent (50%) of the shares of stock entitled to vote for the election
of directors and, in the case of an entity other than a corporation,
ownership or control, directly or indirectly, of more than fifty
percent (50%) of the assets or the ability, in the case of either a
corporate or non-corporate entity, to direct the management and affairs
of such entity.
1.11 "[*]" means [*] and its salts.
1.12 "DEFENSIVE PATENTS" means those patent applications and patents listed
on APPENDIX D attached hereto and made a part hereof, together with all
continuations, registrations, confirmations, extensions, issuances, and
foreign counterparts of the foregoing, and where relevant to the FIELD
for GENERIC PRODUCT, AGENT or PRODUCT, including continuations-in-part,
divisions, reissues, patents-of-addition of the foregoing. The Parties
may review the list in APPENDIX D and discuss whether the patent
applications and patents in the TERRITORY have become relevant to
NEORX's FIELD and NEORX's business related thereto. With DOW's consent,
NEORX may elect to move patent applications or patents from APPENDIX D
to APPENDIX A.
1.13 "DOE" means the United States Department of Energy and corresponding
agencies of other countries in the TERRITORY.
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
3
<PAGE>
1.14 "[*]" means [*], including its pharmaceutically-acceptable salts.
1.15 "EFFECTIVE DATE" means June 30, 1999.
1.16 "EUROPE" means all countries of western Europe and middle Europe,
specifically, Albania, Austria, Belgium, Bulgaria, Croatia, Czech
Republic, Denmark, Finland, France, Germany, Gibraltar, Greece,
Guernsey, Hungary, Ireland, Isle of Man, Italy, Jersey, Latvia,
Liechtenstein, Lithuania, Luxembourg, Macedonia, Monaco, Netherlands,
Norway, Poland, Portugal, Romania, Serbia, Slovak Republic, Slovenia,
Spain, Sweden, Switzerland and United Kingdom.
1.17 "FDA" means the United States Food and Drug Administration or any
successor U.S. governmental agency performing similar functions.
1.18 "FIELD" means the IN VIVO use in human therapeutic applications that
results in [*] which applications are expected to be administered in
conjunction with or followed by treatments for [*]. Therefore, this
FIELD is understood by the Parties to include the IN VIVO use [*].
Furthermore, this FIELD is understood by the Parties to NOT include
[*].
1.19 "GENERIC PRODUCT" means a product composed of a [*] complexed with [*].
1.20 "GMPs" means the Good Manufacturing Practices as defined from time to
time in the Federal Food, Drug, and Cosmetic Act and related
regulations or any successor laws or regulations governing the
manufacture of the PRODUCT in the United States.
1.21 "HMOs" means health maintenance organizations and similar organizations
which provide group medical payment in the United States of America.
1.22 "HOLMIUM" or "Ho" means all isotopes of the element holmium, including
Holmium-166 or 166Ho.
1.23 "NET SALES" shall mean the amount invoiced on sales of PRODUCT or AGENT
(or as calculated in accordance with Article 5.3.3, sales of
COMBINATION PRODUCT) that are royalty bearing under Article 5 by NEORX
and its
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
4
<PAGE>
AFFILIATES and sublicensees to a THIRD PARTY, less the following
deductions to the extent included in the amounts invoiced:
(i) [*].
(ii) [*].
(iii) [*].
(iv) [*].
(v) [*].
(vi) [*].
NET SALES shall NOT include sales between or among NEORX and its
AFFILIATES and sublicensees, except sales of those PRODUCT or AGENT
that [*]. Also NET SALES shall NOT include sales for [*].
1.24. "NEORX's FIELD" means the IN VIVO use in human therapeutic
applications that results in [*], which applications are expected to
be and shall be described in the package insert (subject to FDA
approval) to be administered in conjunction with or followed by
treatments for [*]. Therefore, NEORX's FIELD is understood by the
Parties to include the IN VIVO use [*]. Furthermore, NEORX's FIELD is
understood by the Parties to NOT include [*].
1.25. "NRC" means the United States Nuclear Regulatory Commission and, for
other countries in the TERRITORY, the corresponding governmental
agencies for such regulations.
1.26. "OPTION" means the Option Agreement signed between the Parties,
effective [*], as amended, that was exercised on [*] (copy attached
for reference purposes as EXHIBIT B).
1.27. "ORPHAN DRUG" means the use of PRODUCT that qualifies under 57 CFR
62085 (December 29, 1992), Part 316.
1.28. "PATENTS" means all patent applications and patents in the TERRITORY to
which DOW has rights, together with any continuations,
continuations-in-part,
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
5
<PAGE>
divisions, reissues, registrations, confirmations, patents-of-addition,
and extensions of the foregoing, with any claims covering an AGENT,
PRODUCT or use, or manufacture of AGENT or PRODUCT in NEORX's FIELD
in the TERRITORY and which are owned, licensed or controlled by DOW,
or, [*]. The current PATENTS are listed in APPENDIX A (as attached
hereto and made a part hereof). APPENDIX A shall be updated from
time to time, at NEORX's request, but no more frequently than once
yearly after all patents have issued, and until all patents for a
given family have issued such reports shall be quarterly, unless
required sooner to provide information to compute the payments due
under this LICENSE. After first APPROVAL of a PRODUCT in NEORX's
FIELD in the TERRITORY, the Parties may review the list in
APPENDIX A and discuss whether the patent applications and patents in
the TERRITORY continue to be relevant to NEORX's FIELD and NEORX's
business related thereto. With DOW's consent, NEORX, may or may not
elect to move patent applications or patents from APPENDIX A to
APPENDIX D.
1.29. "PROCESS" means process[*], but does not include [*].
1.30. "PROCESS PATENTS" means all patent applications and patents in the
TERRITORY to which DOW has rights, together with any continuations,
continuations-in-part, divisions, reissues, registrations,
confirmations, patents-of-addition, and extensions of the foregoing,
with any claims that cover [*] and which are owned, licensed or
controlled by DOW, or which become owned, licensed or controlled by DOW
during the term of this LICENSE. The current PROCESS PATENTS are listed
in APPENDIX B (as attached hereto and made a part hereof). APPENDIX B
shall be updated from time to time, at NEORX's request, but no more
frequently than once yearly after all patents have issued, and until
all patents for a given family have issued such reports shall be
quarterly, unless required sooner to provide information to compute the
payments due under this LICENSE.
1.31. "PRODUCT" means any pharmaceutical preparation in finished dosage form
containing an AGENT as the active drug substance for use in NEORX's
FIELD.
1.32. "REGULATORY AUTHORITY" means the agency corresponding to the FDA of
each country in the TERRITORY and any other agency in the country from
which
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
6
<PAGE>
APPROVAL is required in order to commercially market a PRODUCT,
including approval of final labeling and price approval.
1.33. "SIGNATURE DATE" means the date of the last signature of the Parties to
this LICENSE.
1.34. "TECHNOLOGY" means data, information and process know-how relating to
an AGENT, PRODUCT or PROCESS which DOW owns or possesses as of the
EFFECTIVE DATE (or which DOW develops for NEORX under the OPTION
through June 30, 1999) and which are described in APPENDIX E attached
hereto and made a part hereof.
1.35. "TERRITORY" means the all countries in the world, excluding Australia
and its possessions.
1.36. "THIRD PARTY" means anyone, other than DOW, NEORX or their respective
AFFILIATES. Thus THIRD PARTY includes, without limitation, physicians,
hospitals, clinics, hospice facilities, patients, distributors,
formularies, and radiopharmacies.
1.37 "[*]" means the Curators of the [*].
1.38 "VALID CLAIM" means any claim of an issued patent included in a PATENT,
or PROCESS PATENT, which has not been held unenforceable or invalid by
a decision of a court or governmental agency of competent jurisdiction
from which no appeal is or can be taken or which has not been admitted
to be unenforceable or invalid through reissue, disclaimer or
otherwise.
ARTICLE 2 - GRANT OF LICENSES
2.1 GRANT OF LICENSES - DOW hereby grants to NEORX, and NEORX hereby
accepts:
(a) an EXCLUSIVE license to use the TECHNOLOGY to make, have made,
use, sell, have sold, offer to sell, export and import AGENT
and PRODUCT in the TERRITORY in NEORX's FIELD;
(b) an EXCLUSIVE license under the PATENTS to make, have made,
use, sell, have sold, offer to sell, export and import AGENT
and PRODUCT in the TERRITORY in NEORX's FIELD;
7
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
<PAGE>
(c) a NON-EXCLUSIVE license to use the PROCESS to make or have
made, in the TERRITORY, [*] to make AGENT and PRODUCT for
use in NEORX's FIELD in the TERRITORY; and
(d) a NON-EXCLUSIVE license under the PROCESS PATENTS to make or
have made, in the TERRITORY, [*] or AGENT to make AGENT and
PRODUCT for use in NEORX's FIELD in the TERRITORY;
These licenses under (a) and (b) above shall be fully exclusive, to the
exclusion of DOW and its AFFILIATES, but subject to Article 2.3, and
only so long as this LICENSE is in effect.
This grant shall also include ADDITIONAL AGENT to make the
corresponding PRODUCT, providing [*].
2.2 SUBLICENSING - Subject to Articles 2.4 and 2.5, the licenses granted
under Article 2.1 to NEORX include the right to sublicense THIRD
PARTIES and NEORX's AFFILIATES. NEORX will make and will be responsible
for all payments to DOW as a result of sublicensee and AFFILIATE sales
of PRODUCT in the TERRITORY. NEORX will also be responsible for the
observance by all sublicensees of all applicable provisions of this
LICENSE, and will [*] cause all sublicensees to observe the covenants
in this LICENSE [I.E., regarding confidentiality, maintenance of
records and reporting of NET SALES and royalty payments, exchanges of
information, governmental regulations (E.G., export licenses and NRC or
DOE issues) and adverse reaction information]. All such sublicenses
shall be in writing.
2.3 RESERVATIONS - DOW reserves the following rights.
2.3.1 DOW reserves the right to make, have made, export and use
[*], AGENT or PRODUCT in NEORX's FIELD in the TERRITORY for
the purposes of:
(i) process research;
(ii) basic research and development;
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
8
<PAGE>
(iii) supply to NEORX under such supply agreements as may
be agreed upon in writing between the Parties;
(iv) supply [*] in Australia; as needed to continue
support of clinical trials referred to in
Articles 3 and 4; support NEORX under separate
service agreements as may be agreed upon in writing
between the Parties; and
(v) publication of results obtained prior to the
EFFECTIVE DATE.
2.3.2 DOW reserves the right, solely at it option and expense, to do
research or development on GENERIC PRODUCT, AGENT, PRODUCT and
PROCESS for non-commercial purposes in NEORX's FIELD in the
TERRITORY and for commercial purposes in NEORX's FIELD outside
the TERRITORY.
2.3.3 Subject to Articles 11.4 and 11.5, DOW reserves the right for
DOW to proceed, solely at its option and expense, to research,
develop, make, have made, use, sell, export, import, have sold
and license in the TERRITORY OUTSIDE NEORX's FIELD:
(i) [*]; and
(ii) complexes of [*] with any metal, excluding
HOLUMIUM; and
(iii) complexes of other ligands with [*].
2.4 SUPPLY OF [*] - FOR PRODUCT FOR NEORX - DOW and NEORX may enter
into a separate commercial supply agreement under which DOW will
supply NEORX's requirements of [*] on mutually agreed terms and
conditions. This Article 2.4 shall not imply an obligation on either
Party to enter into a commercial supply agreement with the other
Party. Before seeking a THIRD PARTY supplier for [*], NEORX shall
notify DOW of NEORX's desire to get a supplier for [*]. DOW can
either decline to make a proposal to supply [*] or make and discuss
a proposal for supplying [*]; provided, however, that, whether or
not DOW makes and discusses a proposal with NEORX, NEORX shall be
free after [*] from its notice to DOW to enter into agreements with
THIRD PARTIES any time in the future for the supply of [*]. NEORX
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
9
<PAGE>
shall notify DOW in accord with Article 15.1 whether it does or does
not obtain such a supply agreement from DOW.
2.5 CONVEYANCE OF TECHNOLOGY BY DOW - Within thirty (30) days after the
SIGNATURE DATE, Dow shall convey the TECHNOLOGY listed on APPENDIX E
to NEORX; provided, however, that TECHNOLOGY developed by DOW through
the EFFECTIVE DATE under the OPTION may be conveyed by July 30, 1999.
In the event NEORX needs assistance in making or using [*], AGENT
or PRODUCT in NEORX's FIELD or in using the TECHNOLOGY in NEORX's
FIELD, the PARTIES may enter into a separate service agreement. NEORX
agrees that the TECHNOLOGY listed on APPENDIX E is the entire
obligation for transfer of TECHNOLOGY by DOW and that all items
listed on APPENDIX E have been received and need not be further
submitted at any time.
2.6 ADDITIONAL AGENT(S) - As soon as possible after the SIGNATURE DATE and
at NEORX's request, DOW shall [*]. [*].
2.7 [*] - DOW has the possibility to provide a [*].
2.8 DEFENSIVE PATENTS - NEORX, its AFFILIATES and sublicensees may NOT
commercially practice under DEFENSIVE PATENTS.
ARTICLE 3 - NEORX DEVELOPMENT, OTHER ACTIVITY, DILIGENCE
3.1 DEVELOPMENT AND MARKETING EFFORTS FOR PRODUCT - NEORX shall use its
reasonable and diligent efforts to carry out remaining developmental
work on PRODUCT, as it believes necessary, and to file applications
with the REGULATORY AUTHORITIES as NEORX deems necessary. For purposes
of this LICENSE, "reasonable and diligent efforts" shall mean efforts
reasonably consistent with those efforts used by NEORX with regard to
its developmental work and commercial activities for its own products
deemed to have similar commercial potential, consistent with its
business, research and development practices, and applicable legal and
regulatory requirements. NEORX has given DOW a copy of NEORX's schedule
for development of a PRODUCT for the
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
10
<PAGE>
United States and shall give DOW within [*] after the SIGNATURE DATE
a schedule for development of the PRODUCT for the European market.
NEORX shall keep such schedules updated through the time it is to
provide reports under Article 3.2. Such schedules represent NEORX's
current intentions, based on part on input from regulatory and
other authorities, and estimated time frames for development of
PRODUCT.
For NEORX to have been deemed by DOW to have used its reasonable and
diligent efforts, DOW expects that NEORX should:
(a) [*].
(b) Continue the clinical trials for the PRODUCT that are in
progress.
(c) File with the FDA for APPROVAL of the PRODUCT within [*] of
the successful conclusion of the clinical trials in the US if
the PRODUCT is commercially viable, where conclusion of the
clinical trials includes [*].
(d) Initiate commercial sales in the United States of PRODUCT
within [*] after APPROVAL in the United States, if the PRODUCT
is commercially viable.
It is recognized that performance under this Article 3.1 is subject to
Article 13.
3.2 DEVELOPMENT PROGRESS REPORTS - NEORX will provide DOW with [*] reports
(reports to be verbal with one written annual report per year) of its
development and registration activity, including submission(s) to
REGULATORY AUTHORITIES and APPROVAL(s) in the TERRITORY, until a
PRODUCT is commercially launched for NEORX's FIELD in the United States
and Europe. Such reports will provide sufficient information to allow
the evaluation of at least:
(a) NEORX's preclinical, clinical and registration activities for
a PRODUCT;
(b) the relationship of those activities under (a) above to
NEORX's development schedule shown for the PRODUCT for the
United States and Europe;
(c) NEORX's level of efforts at developing and registering a
PRODUCT; and
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
11
<PAGE>
(d) notice of any APPROVAL obtained.
3.3 CLINICAL AND PRECLINICAL STUDIES - NEORX shall carry out such further
studies of AGENT and PRODUCT as it deems necessary or advisable to
develop the PRODUCT and in order to file such forms for APPROVAL with
the REGULATORY AUTHORITIES for commercialization in the TERRITORY.
NEORX is having clinical trials performed at [*] pursuant to an
agreement between NEORX and [*]. DOW shall terminate its agreement(s)
with [*] with respect to clinical trials for AGENT and PRODUCT and
shall be responsible for any charges or costs in connection with such
agreement(s).
3.4 NEORX RESPONSIBILITY - NEORX shall be solely responsible for the
planning, design and execution of all its developmental work and
commercialization with AGENT and PRODUCT for the TERRITORY after the
EFFECTIVE DATE.
3.5 REGULATORY COSTS - All regulatory costs for NEORX's APPROVALS in the
TERRITORY shall be borne by NEORX after the EFFECTIVE DATE.
3.6 FUTURE RESEARCH - Upon the SIGNATURE DATE, NEORX agrees that any
research conducted by DOW on AGENT or PRODUCT at NEORX's written
request outside of the OPTION or after June 30, 1999 shall be paid by
NEORX at a rate to be negotiated by the Parties at the time of or
before the request. Any research conducted by DOW on AGENT or PRODUCT
after the SIGNATURE DATE shall be in accord with Articles 2.3, 2.4 and
2.5. At its expense, DOW will draft any resulting patent applications
and/or retain title to the patents conceived or reduced to practice
during this LICENSE where DOW employees are the sole inventors, but
NEORX will be exclusively licensed under this LICENSE for the TERRITORY
for NEORX's FIELD so long as this LICENSE is in effect.
ARTICLE 4 - PATENT RIGHTS
4.1 DOW TO MAINTAIN PATENTS AND PROCESS PATENTS - DOW shall have the
obligation and be responsible at its own cost and expense for
prosecuting the patent applications in PATENTS and PROCESS PATENTS and
for maintaining, extending and defending the patents in the PATENTS and
PROCESS PATENTS for the term of this LICENSE. DOW shall use good faith
efforts to prosecute, issue, maintain, extend and defend all PATENTS
and PROCESS PATENTS. Should any PATENT or PROCESS PATENT be finally
rejected, prior to abandonment DOW shall inform NEORX of the art or
reason for such rejection to
12
<PAGE>
determine whether NEORX has any data or information that may enable
the rejection to be argued and the PATENT or PROCESS PATENT maintained.
4.2 DOW TO MAINTAIN DEFENSIVE PATENTS - DOW shall also have the obligation
and be responsible at its own cost and expense for prosecuting and
MAINTAINING DEFENSIVE PATENTS. DOW shall notify NEORX in writing if DOW
voluntarily intends to abandon any DEFENSIVE PATENTS and, at NEORX's
request on a country by country basis made within thirty (30) days
after receipt of
13
<PAGE>
written notice and status information, DOW shall assign, [*], such
DEFENSIVE PATENT to NEORX. However, if DOW is abandoning a DEFENSIVE
PATENT for reasons that are due to lack of inventive step or novelty,
then DOW shall notify NEORX and may then abandon such DEFENSIVE PATENT.
After any such assignment of a DEFENSIVE PATENT, DOW may still
practice, royalty free (I.E., make, use, sell or have sold outside
NEORX's FIELD, but not sublicense) under the DEFENSIVE PATENT. [*].
4.3 NEORX TO ASSIST DOW IN EXTENSION OR RESTORATION OF PATENTS - Although
DOW shall be responsible for extension or restoration of PATENTS and
PROCESS PATENTS, which DOW shall seek under the U.S. Drug Price
Competition and Patent Term Restoration Act of 1984 and its amendments,
the Supplementary Certificate of Protection of the Member States of the
European Union and similar measures in other countries, NEORX agrees to
provide DOW with reasonably requested records, information and
assistance to achieve the extension or restoration of any PATENTS or
PROCESS PATENTS in a country of the TERRITORY.
4.4 NOTICE OF PATENT ACTIVITY - Using good faith efforts, DOW shall
promptly advise NEORX by sending a revised APPENDIX A OR B, as the case
may be, of the lapse, nullification, revocation, surrender or
invalidation of any of the PATENTS, PROCESS PATENTS or DEFENSIVE
PATENTS. Notification shall be promptly provided quarterly for PATENTS
AND PROCESS PATENTS that have granted, for any country in the TERRITORY
where filing for APPROVAL has occurred.
4.5 PATENTS AND PROCESS PATENTS FILE INSPECTION - At a mutually agreed upon
time, but no more frequently than once per calendar year if there is no
suit for litigation pending, NEORX may inspect any PATENTS' or PROCESS
PATENTS' file at the site where the file is kept. Such inspection shall
be confined to only those files that are not otherwise publicly
available at the time of such inspection.
4.6 VALIDITY, NON-INFRINGEMENT -
4.6.1 DOW DOES NOT WARRANT that the manufacture, use and sale of the
AGENT or PRODUCT do not fall within the scope of THIRD PARTY
patents or the
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
14
<PAGE>
industrial property rights of a THIRD PARTY. However, to the
best of DOW's knowledge, information and belief, as of the
EFFECTIVE DATE, the manufacture, use and sale of the AGENT
or PRODUCT for NEORX's FIELD does not fall within the scope
of patents which are not owned or licensed by DOW.
4.6.2 DOW represents that, under the terms of DOW's agreement with
the [*], the [*] has granted its entire right, title
and interest in, to and under the invention described and
claimed in PATENTS to DOW and that the [*] has not made
any reservations or contingencies in connection with such
grant which may diminish the rights granted by DOW to NEORX
under this LICENSE. DOW shall use its good faith efforts to
fulfill it's obligations, including payment of royalties,
under its agreement with the [*] to avoid being in breach
thereof, at least for as long as this LICENSE remains in
effect.
4.7 DISCLAIMER OF WARRANTIES AS TO PATENTS AND PROCESS PATENTS - Other than
as stated in Article 4.6, DOW makes no representation that the
inventions covered in any PATENTS or PROCESS PATENTS, are patentable or
that the PATENTS or PROCESS PATENTS are or will be valid or
enforceable, nor does DOW warrant or represent that the exercise of the
rights licensed hereunder is free of infringement of patent rights of
THIRD PARTIES. Should any infringement or damages be alleged, suit
brought or damages collected therefore, no damages are permitted to be
collected from DOW, except to the extent DOW breached its
representations in Article 4.6.
4.8 HOLD HARMLESS - DOW agrees to hold NEORX, its AFFILIATES, and upon
written notice its sublicensees, harmless for patent infringement under
any patents, owned by or licensed to DOW which may be otherwise
infringed by the performance by NEORX, its AFFILIATES and sublicensees
under this LICENSE so long as this LICENSE is in effect. This hold
harmless right by DOW does NOT apply to DEFENSIVE PATENTS.
4.9 COOPERATION - NEORX and DOW shall use good faith efforts to cooperate
with each other with respect to any issues that concern the development
of the PRODUCT under this LICENSE. NEORX is aware that competition in
the TERRITORY is likely if no PATENTS exist or are obtained and NEORX
accepts this LICENSE with that knowledge.
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
15
<PAGE>
ARTICLE 5 - PAYMENTS AND ROYALTIES
5.1 INITIAL PAYMENT - Within thirty (30) days from SIGNATURE DATE, a
payment of [*] shall be due to DOW. This [*].
5.2 PAYMENTS ON APPROVALS -
5.2.1 NEORX shall pay DOW within ten (10) business days payments of:
(a) [*] on the first APPROVAL in the United States for
the first indication for cancer therapy in NEORX's
FIELD, whether or not such indication is for an
ORPHAN DRUG, and
(b) an additional [*] on the first APPROVAL in the United
States for the first indication outside of cancer but
within NEORX's FIELD.
5.2.2 Also NEORX shall pay DOW within ten (10) business days
payments of:
(a) [*] on the first APPROVAL in EUROPE (I.E.,
consolidated submission approved or APPROVAL in any
country of EUROPE) for the first indication for
cancer therapy in NEORX's FIELD, and
(b) an additional [*] on the first APPROVAL in EUROPE
(I.E., consolidated submission approved or APPROVAL
in any country of EUROPE) for the first indication
outside of cancer but within NEORX's FIELD.
Should uses for AGENT or PRODUCT other than those defined in NEORX's
FIELD arise, they shall be subject to negotiation either under a
separate agreement or by amendment of this LICENSE.
5.3 EARNED ROYALTIES -
5.3.1 PATENTS - With respect to PRODUCTS and AGENTS which are
manufactured, sold or intended to be used in a country in the
TERRITORY where such activity would infringe (but for the
existence of this LICENSE) a VALID CLAIM of one or more of the
PATENTS and except as otherwise
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
16
<PAGE>
provided in this Article 5.3 or Article 8.3, 8.4 or 8.5,
NEORX will pay DOW an earned royalty of [*] of annual NET
SALES of such PRODUCT, on the first [*] of NET SALES
achieved by NEORX during NEORX's fiscal year; and [*] of
annual NET SALES on any PRODUCT in [*] of NET SALES
during NEORX's fiscal year. However, in the event there
is COMPETITION in the country in the TERRITORY, then the
foregoing royalty rates shall be reduced to [*] of annual NET
SALES in such country except for the United States where the
royalty rates shall be reduced to [*] of annual NET SALES as
long as U.S. Patent [*] is in force and thereafter is reduced
to [*] of annual NET SALES. Further, the NET SALES as to which
royalties are payable at the rates specified in the preceding
sentence and Articles 5.3.2, 8.3 and 8.4 shall not be included
in the calculation of cumulative NET SALES for purposes of
calculating the [*] cumulative annual NET SALES point at which
the [*] royalty increases to [*] above. APPENDIX C sets forth
an example of the royalty payment structure as a chart and
royalty example calculation, both for reference purposes only.
5.3.2 PROCESS PATENTS - With respect to PRODUCTS and AGENTS
incorporating [*] made by NEORX in the TERRITORY which are
manufactured, sold or intended to be used in a country in the
TERRITORY where such activity would infringe (but for the
existence of this LICENSE) a VALID CLAIM of one or more of the
PROCESS PATENTS (but not any PATENTS) and except as otherwise
provided in Articles 8.3, 8.4 and 8.5, NEORX will pay DOW an
earned royalty of [*] of annual NET SALES of such PRODUCT or
AGENT. No royalty is due under this Article 5.3.2 with respect
to any NET SALES as to which a royalty is due under Article
5.3.1. If DOW supplies the AGENT or [*], then no royalty, if
any, shall be due under this Article 5.3.2 because the royalty
will be part of the purchase price.
5.3.3 COMBINATION PRODUCT - NET SALES for a COMBINATION PRODUCT
shall be calculated by multiplying the NET SALES of the
COMBINATION PRODUCT by the fraction A/(A+B), where A is the
gross selling price of the PRODUCT or AGENT sold separately
(I.E., without the other components) and B is the gross
selling price of the other components. In the event that no
such separate sales are made, NET
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
17
<PAGE>
SALES for royalty payments shall be calculated by multiplying
NET SALES of the COMBINATION PRODUCT by the fraction C/(C+D),
where C is the fully allocated cost of the PRODUCT or AGENT
(not including the other components) and D is the fully
allocated cost of such other components, such costs being
determined using generally accepted accounting principles
consistently applied.
5.3.4 PUBLISHED PATENT APPLICATIONS - It is recognized that
royalties are not paid with respect to pending patent
applications included in PATENTS. However, with respect to any
country in the TERRITORY that publishes such patent
applications, back royalties will be paid by NEORX with
respect to NET SALES that have not been subject to royalties
under this Article 5 and that occurred in the country prior to
patent issuance and after publication in the country of the
patent application (E.G., as shown in APPENDICES A and B) that
eventually issues as a patent if such NET SALES of the PRODUCT
or AGENT would have infringed (but for the existence of this
LICENSE) a VALID CLAIM that eventually issues in the patent
and that survives any opposition, interference or similar
action challenging the issuance, such payment of back
royalties to be made after the patent issues and the
expiration or conclusion of any opposition, interference or
periods for filing in opposition or provoking or declaring an
interference and to include interest at the rate specified in
Article 5.12 from the date the royalty would have been paid
hereunder had such VALID CLAIM been issued at the time of
publication of the patent application in the country. For
purposes of this Article 5.3.4, publication of a patent
application by the European Patent Office shall be deemed
publication in all countries that are members of the European
Patent Convention.
5.3.5 EXPIRATION - In no event shall royalties be due under this
Article 5.3 after the last to expire PATENT or PROCESS PATENT
or AND after any patent term restoration or extension term
ceases for a PATENT or PROCESS PATENT or if a VALID CLAIM in a
PATENT or PROCESS PATENT does not exist which is being used
for PRODUCT or AGENT in any manner by NEORX or its AFFILIATES
or sublicensees.
5.4 ACHIEVEMENT OF MILESTONE PAYMENTS - Milestone payments shall be based
on NET SALES as a total for all uses in NEORX's FIELD and solely on the
first occurrence of the event as follows:
18
<PAGE>
------------------------------- --------------------------------
NET SALES IN A CALENDAR YEAR PAYMENT DUE DOW
US$ (million) US$
------------------------------- --------------------------------
[*] [*]
------------------------------- --------------------------------
------------------------------- --------------------------------
[*] [*]
------------------------------- --------------------------------
------------------------------- --------------------------------
[*] [*]
------------------------------- --------------------------------
with [*] of the payment due within thirty (30) days of the end of the
fourth quarter of the event for [*] years. The total payment, which
could be due if all milestones are achieved, is [*]. If the NET SALES
in subsequent year(s) fall below the trigger NET SALES, the remaining
payments for the year it did exceed are still due.
5.5 MINIMUM ANNUAL FEES - In the first full calendar year after the first
APPROVAL for any use in NEORX's FIELD, the following minimum fee shall
be due to DOW, which may be paid as earned royalty and/or cash:
---------------------------------- ------------------------
YEAR AFTER APPROVAL US$
---------------------------------- ------------------------
[*] [*]
---------------------------------- ------------------------
---------------------------------- ------------------------
[*] [*]
---------------------------------- ------------------------
Minimum annual fees are due at the same time as any fourth quarter
earned royalty payments and earned royalties are creditable against
these minimum annual fees.
If the market size is found to be commercially too small for the
PRODUCT for NEORX's FIELD (E.G., an ORPHAN DRUG) such that NEORX
believes that it cannot have sufficient profit, then NEORX must show
DOW the basis for that conclusion together with any reasonably
requested figures for support of that decision. If DOW agrees with
NEORX, then NEORX may (a) terminate the LICENSE, (b) request the wavier
of these minimum fees so that NEORX can sell the PRODUCT for ethical
concerns or compassionate use in NEORX's FIELD,
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
19
<PAGE>
but the earned royalty would still be due DOW, or (c) request that
the Parties agree to discuss the market potential for PRODUCT and
negotiate in good faith possible amendments to this LICENSE.
5.6 PAYMENTS - A report, including: the amount of payment with the date the
payment was made; an itemized payment listing; and date of this LICENSE
under which payment is being made and the number ______ (supplied
later), shall be sent to:
The Dow Chemical Company
Royalty Accounting
2020 Dow Center
Midland, MI 48674
USA
with the check payment made to THE DOW CHEMICAL COMPANY and sent to:
Royalty Accounting
P.O. Box 92718
Chicago, IL 60675-2718
USA;
or
if payment is by wire transfer, then to THE DOW CHEMICAL
COMPANY and sent to:
[*]
New York, NY
USA
ABA [*]
Account [*]
For the account of The Dow Chemical Company
Reference: Royalty Payment
NEORX may arrange that any payments due under this LICENSE may be paid,
in whole or in part, by NEORX's sublicensee(s); provided, however, that
NEORX
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
20
<PAGE>
shall still be responsible for any non-payments hereunder and pay
DOW what is due within 90 days of the original due date.
5.7 [*] ROYALTIES - DOW shall pay any royalties due to [*];
therefore a further copy of the royalty report and amount paid shall be
supplied to DOW under Article 15.1. Where necessary for DOW to
discharge its obligations to [*] under this Article 5.7, concerning
the PATENTS or TECHNOLOGY under agreements made by DOW, NEORX will
report reasonable additional information, if needed, for DOW to fulfill
its obligations. All such information to [*] shall be subject to
obligations of confidentiality and non-disclosure.
5.8 QUARTERLY ROYALTY REPORTS AND PAYMENTS - Within sixty (60) days after
the close of each calendar quarter, NEORX shall submit a report on the
NET SALES of PRODUCT or AGENT in NEORX's FIELD for the TERRITORY in
sufficient detail to enable a calculation of the royalty due in accord
with Article 5 and payment of the royalty (if any) due. NEORX will
indicate if any sales of PRODUCT or AGENT are not covered by PATENTS,
or PROCESS PATENTS and not royalty-bearing under this Article 5.
Under Article 4.4, DOW shall provide notice of grant or publication of
PATENTS or PROCESS PATENTS. The Parties recognize that delays may occur
in this reporting by DOW and NEORX shall not be held liable under
Article 5.3.4 for back due royalties (I.E., for this purpose - due more
than one quarter prior to the current reporting period) caused by late
notification by DOW for such recently granted or published PATENTS or
PROCESS PATENTS.
5.9 BOOKS OF ACCOUNT - NEORX shall maintain true and complete books of
account containing an accurate record of all data necessary for the
proper computation of royalty payments due from it or on behalf of any
AFFILIATE. Such records shall be maintained for at least [*] after the
date of the pertinent royalty payment.
5.10 AUDIT RIGHT - DOW shall have the right through a firm of independent
public accountants, to whom NEORX has no reasonable objection, to
examine the books of account of NEORX at reasonable times within three
(3) years after the end of the calendar year to which they relate (but
not more than once in each calendar year) for the purpose of verifying
the correctness of any report concerning diligence or payment of
royalties under Articles 3 and 5, respectively. Such
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
21
<PAGE>
examination shall be made during normal business hours at the place
of business of NEORX. The information furnished, as a result of any
such examination shall be maintained in confidence on the terms
specified in Article 6. The fees and expenses of such an audit shall
be borne by DOW. If any such audit shows any underpayment, a
correcting payment shall be made within thirty (30) days of NEORX's
receipt of the auditors' statement, unless NEORX disputes the
auditors' statement. If such error is material (meaning more than [*]),
then if NEORX owes DOW from such material error, NEORX shall be
subject to a penalty as if the payment were deemed late in accord
with Article 5.12. Should NEORX fail to make any correcting payment
within sixty (60) days from receipt of the auditors' statement, then
DOW shall have the right to terminate this LICENSE under Article
12.5, unless in good faith NEORX disputes the auditors' statement in
which event Article 16 applies.
5.11 WITHHOLDING TAX PAYMENTS - If any taxes for DOW's account, withholding
or otherwise, are levied by any taxing authority in the TERRITORY in
connection with the receipt by DOW of any amounts payable under Article
5 of this LICENSE according to any tax treaty or agreement between the
United States and any country in the TERRITORY, then NEORX shall have
the right to pay such taxes to the local tax authorities and to pay to
DOW the net amount due after reduction by the amount of such taxes,
together with
(i) evidence of payment of such taxes and a translation
thereof into English, and
(ii) indication of the amount of such tax paid, and
(iii) indication of the country in the TERRITORY and the
authority to whom it was paid, and
(iv) comply with NEORX's royalty reporting obligations
under this LICENSE.
However, if DOW still requires further information, the report due
under Article 5.11 may also be requested by DOW and NEORX shall
promptly provide that information.
- -------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
22
<PAGE>
5.12 LATE PAYMENTS - Royalty payments not remitted or deposited by the due
date shall bear interest at the current prime rate [*] established by a
leading New York bank, such as CitiBank, as published in THE WALL
STREET JOURNAL. Should NEORX fail to make any late payment within sixty
(60) days from its due date, then DOW shall have the right to terminate
this LICENSE under Article 12.5 upon fifteen (15) days written notice
to NEORX to allow cure.
ARTICLE 6 - CONFIDENTIALITY
6.1 NONDISCLOSURE - Each Party shall use good faith efforts to retain in
confidence and not disclose to any third party each other's
CONFIDENTIAL INFORMATION (which includes, but is not limited to,
TECHNOLOGY, PATENTS, and any samples of [*], AGENT or PRODUCT)
disclosed pursuant to the terms of this LICENSE. Such "good faith
efforts" shall mean the same degree of care, but no less than a
reasonable degree of care, as the receiving Party uses to protect its
own CONFIDENTIAL INFORMATION of a like nature. NEORX shall continue to
use the same good faith efforts with respect to the TECHNOLOGY and any
samples of [*], AGENT and PRODUCT already in its possession under the
OPTION that it received directly or indirectly from DOW.
6.2 EXCEPTIONS - Excepted from the obligation of confidence under Article
6.1 is that information which:
(a) is available, or becomes available, to the general
public without fault of the receiving Party; or
(b) is obtained by the receiving Party without an
obligation of confidence from a THIRD PARTY (other
than a governmental agency, the FDA, REGULATORY
AUTHORITIES or [*]) who is rightfully in
possession of such information and is under no
obligation of confidentiality to the disclosing Party
concerning such information; or
(c) is required by law or by court order to be disclosed
by the receiving Party in which cases the receiving
Party will use its best efforts to limit such
disclosure to that required by law and to maintain
the confidentiality of the disclosed information to
the extent possible; or
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
23
<PAGE>
(d) must be necessarily disclosed to REGULATORY
AUTHORITIES to permit NEORX to sell PRODUCT or AGENT
in NEORX's FIELD; or
(e) is released from confidentiality in writing by the
disclosing Party.
For the purpose of Article 6.1, a specific item of TECHNOLOGY shall not
be deemed to be within the foregoing exceptions merely because it is
embraced by more general information in the public domain or in the
possession of the receiving Party. In addition, any combination of
features shall not be deemed to be within the foregoing exceptions
merely because individual features are in the public domain or in the
possession of the receiving Party, but only if the combination itself
and its principle of operation are in the public domain or in the
possession of the receiving Party.
6.3 LEGALLY REQUIRED DISCLOSURES - Notwithstanding the provisions of
Article 6.1, if the receiving Party becomes legally compelled to
disclose any of the disclosing Party's CONFIDENTIAL INFORMATION, the
receiving Party shall promptly advise the disclosing Party of such
required disclosure in order that the disclosing Party may seek a
protective order or such other remedy as the disclosing Party may
consider appropriate in the circumstances. The receiving Party shall
disclose only that portion of the CONFIDENTIAL INFORMATION, which it is
legally required to disclose. Such a disclosure shall not release the
receiving Party with respect to the CONFIDENTIAL INFORMATION so
disclosed except to the extent of permitting the required disclosure.
6.4 DISCLOSURE TO AFFILIATES, CONTRACTORS - NEORX may disclose TECHNOLOGY
to its AFFILIATES, sublicensees, consultants, its clinical
investigators and contractors (E.G., parties under contract with NEORX
or its AFFILIATES for the custom manufacturing or shipping of PRODUCT,
conduct of clinical studies or obtention of registration in the
TERRITORY), as may be necessary to exercise the rights granted
hereunder and to register and prepare for commercialization of PRODUCT,
and to commercialize PRODUCT under this LICENSE, under conditions of
confidentiality at least as stringent as those set out in Articles 6.1,
6.2 and 6.3.
6.5 DISCLOSURE TO [*] - Notwithstanding the provisions of Article 6.1,
DOW may disclose the provisions of this LICENSE to [*] to comply
with DOW's reporting obligation. However, DOW shall request that the
terms of this LICENSE remain confidential and be on a need-to-know
basis.
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
24
<PAGE>
6.6 DOCUMENT RETURN - In the event of termination of this LICENSE for any
reason prior to its normal expiration, each Party will cease its use of
the other Party's CONFIDENTIAL INFORMATION provided hereunder
(including TECHNOLOGY that is CONFIDENTIAL INFORMATION) and, on written
request, within sixty (60) days return all such CONFIDENTIAL
INFORMATION, including any copies thereof; except that such
CONFIDENTIAL INFORMATION as is or has become no longer subject to
confidentiality under Article 6.1 need not be returned or destroyed.
Notwithstanding the foregoing, a Party may retain such documents as are
necessary for it to discharge its surviving obligations hereunder and
its legal obligations to the governmental authorities for counterpart
agencies to DOE and NRC; and NEORX may retain such copies of documents
as may be necessary for the defense of product liability or other
litigation or similar proceedings relating to AGENT or PRODUCT. Each
Party may retain one copy of any documents in its legal department as a
record of what was transmitted and to meet any continuing obligations
under this LICENSE.
6.7 SURVIVAL OF CONFIDENTIALITY - Termination of this LICENSE for any
reason shall not relieve the Parties of their obligations under Article
6. The provisions of Article 6 shall survive termination of this
LICENSE for [*].
ARTICLE 7 - THIRD PARTY INFRINGEMENT CLAIMS
7.1 DEFENSE OF THIRD PARTY PATENT CLAIMS - If a claim is brought by a THIRD
PARTY that manufacture, use or the sale of AGENT or PRODUCT in the
TERRITORY (regardless of use) infringes a patent of such THIRD PARTY,
NEORX will give prompt written notice to DOW of such claim if it
concerns a PATENT or PROCESS PATENT. [*] NEORX at its option and
expense may participate in any suit resulting from such claim that
DIRECTLY AFFECTS its market in NEORX's FIELD in the TERRITORY.
7.2 MUTUAL DECISIONS - From the SIGNATURE DATE and using their good faith
efforts, NEORX and DOW shall discuss any claim or suit brought by a
THIRD PARTY for patent infringement that such THIRD PARTY's patent is
infringed by
- -------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
25
<PAGE>
the manufacture, use or sale of AGENT or PRODUCT by NEORX or its
AFFILIATES in NEORX's FIELD in the TERRITORY. Specifically, NEORX and
DOW shall mutually try to agree on the strategy for such suit or
claim, E.G. whether to negotiate a settlement, sue or withdraw from
the country in the TERRITORY in which infringement is claimed; the
basis to be determined for sharing the costs of litigation, damages
awarded, and royalty to be paid to the third party; which Party
should conduct the defense or if both NEORX and DOW should jointly
defend; and the consequences of such decisions, such as amendment to
this LICENSE with regard to royalties due to DOW.
7.3 THIRD PARTY LICENSE - The Parties shall use their good faith efforts
(either individually or together) to negotiate any necessary agreement
for royalty payment to third parties with a view to enabling the
PRODUCT to be commercialized in NEORX's FIELD in the TERRITORY. As of
the EFFECTIVE DATE, DOW is not aware of the need for any such third
party license that is not already obtained.
ARTICLE 8 - PATENT ENFORCEMENT LITIGATION
8.1 PROSECUTION BY DOW - DOW, at its sole discretion, may take action on
its own behalf and expense to institute any action or proceeding by
reason of infringement of any of the PATENTS and PROCESS PATENTS for
NEORX's FIELD. If either Party learns of any infringement of a PATENT
or PROCESS PATENT or misappropriation of trade secrets for PROCESS or
TECHNOLOGY by a third party, it shall promptly notify the other Party.
DOW shall have the first right, at its own expense, to prosecute all
litigation against a third party infringer who may be infringing a
PATENT or PROCESS PATENT. NEORX shall provide all reasonable
cooperation, including any necessary use of its name, required to
prosecute such litigation. NEORX shall be consulted concerning the
litigation. DOW will bear the costs and shall be entitled to any
recovery obtained from such litigation, settlement or compromise
thereof until recovery of all expenses. Any recovery above expenses
shall be shared with [*] going to DOW and [*] going to NEORX.
8.2 PROSECUTION BY NEORX - If DOW does NOT prosecute such infringer or
otherwise abate such infringement (which infringement must be of
commercial significance
- -------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
26
<PAGE>
to NEORX and if disputed by DOW then Article 16 may be used) within
ninety (90) days after giving or receiving notification of such
infringement in the TERRITORY, unless an extension of the term is
mutually agreed upon by the Parties, then, NEORX shall have the right
to prosecute such infringer at its own expense in the FIELD in the
TERRITORY and shall be entitled to retain any recovery obtained from
such litigation, settlement or compromise thereof. NEORX's cost of
litigation in any quarter may be credited against up to [*] of the
royalties due to DOW under Articles 5.3, 5.4, 5.5 and 5.6 in the
following quarter(s) until fully credited. However, NEORX shall place
all royalties due to DOW in escrow from the date of filing the suit
until the action or proceeding is finally concluded whereupon: if the
PATENT or PROCESS PATENT in the country in the TERRITORY is held
valid (whether infringed or not), then the royalties in escrow (after
deduction of NEORX's cost of litigation as referred to hereinabove)
shall be paid to DOW; or if the PATENT or PROCESS PATENT in the
country in the TERRITORY is held invalid (whether infringed or not),
then the royalties in escrow shall be paid to NEORX.
At NEORX's request, DOW shall cooperate with NEORX in such litigation,
including joining in said litigation. DOW shall also cooperate, at
NEORX's expense, by way of providing access to evidence and witnesses
available to DOW.
8.3 PROSECUTION BY NEITHER NEORX NOR DOW - If DOW decides, after consulting
with NEORX, that neither DOW nor NEORX will defend the PATENT or
PROCESS PATENT in the FIELD in the particular country in the TERRITORY,
then the royalty for that PATENT or PROCESS PATENT in that country
becomes zero percent (0%) upon that decision date.
8.4 ROYALTY REDUCTION - If there is COMPETITION and NEORX desires that DOW
enforce PATENTS or PROCESS PATENTS, where such PATENTS or PROCESS
PATENTS are allegedly infringed in the FIELD in a country of the
TERRITORY, in accord with Article 8.1, and such infringer
constitutes[*], then NEORX must provide to DOW, at NEORX's expense, (a)
evidence in writing of the COMPETITION and percent of loss of NEORX's
NET SALES to this single infringer, (b) evidence in writing of
infringement of a PATENT or PROCESS PATENT in the country of the
TERRITORY, and (c) all reasonable cooperation with DOW, E.G., by
providing at DOW's request information in NEORX's possession,
witnesses, any technical assistance, and release to use any evidence of
such infringement.
If there is COMPETITION and DOW elects not to enforce the PATENT or
PROCESS PATENT and does not permit NEORX to enforce the PATENT or
27
<PAGE>
PROCESS PATENT under Article 8.2 in that country of the TERRITORY, then
NEORX may [*]. If there is COMPETITION and NEORX asks that DOW enforce
a DEFENSIVE PATENT in a country of the TERRITORY and DOW elects not to
enforce the DEFENSIVE PATENT, then NEORX may [*]. DOW is permitted six
(6) months after receipt from NEORX of its request and the accompanying
evidence to take action to stop the infringement. No royalty reduction
in this Article 8.4 shall occur in this six-month period.
8.5 INVALIDITY - In the event that a PATENT or PROCESS PATENT in the
TERRITORY is finally declared invalid or unenforceable in a judicial or
administrative proceeding from which no appeal is or can be taken, then
from and after that date no royalties shall be paid on the basis of
that PATENT or PROCESS PATENT in the relevant country of the TERRITORY,
subject to the provisions of Article 8.2, provided, however, that
royalties due for other PATENTS or PROCESS PATENTS, in the TERRITORY
not so held invalid or unenforceable shall not be affected.
8.6 SETTLEMENT - Any settlement of an infringement suit, whether brought by
DOW or by NEORX, shall be subject to the consent of both Parties, which
consent shall not be unreasonably withheld.
8.7 COOPERATION - Each Party shall cooperate with the other Party to the
extent reasonably requested in any legal action:
(i) brought by a THIRD PARTY against one Party; or
(ii) brought by a THIRD PARTY against both Parties; or
(iii) taken against a THIRD PARTY by either Party
regarding PATENTS and PROCESS PATENTS in NEORX's FIELD in the
TERRITORY, and each Party shall have the right to participate in any
defense, compromise or settlement to the extent that, in its judgment,
it may be prejudiced thereby. In addition, NEORX shall not settle any
claim or suit in any manner that shall adversely affect any PATENTS and
PROCESS PATENTS, require any payment by DOW or reduce the royalty due
to DOW hereunder without the prior written consent of DOW, except as
provided in Article 8.2. In addition, DOW
- -------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
28
<PAGE>
shall not settle any claim or suit in any manner that shall adversely
affect NEORX's license rights hereunder, require any payment by NEORX.
ARTICLE 9 - U.S. EXPORT CONTROL AND GOVERNMENT LICENSES
9.1 COMPLIANCE - NEORX agrees to comply with all necessary United States,
European and other country's governmental regulations in the TERRITORY
with respect to export of TECHNOLOGY and any PRODUCT or AGENT or [*].
NEORX agrees to not export or re-export any TECHNOLOGY, PRODUCTS, AGENT
or [*] received from DOW or the direct products of such TECHNOLOGY to
any prohibited country listed in the U.S. Export Administration
Regulations unless properly authorized by the U.S. government. NEORX
shall be responsible for the acts of its AFFILIATES, contractors,
consultants and sublicensees. NEORX assumes all liability if it or its
AFFILIATES fail to obtain any of the necessary licenses or commit any
violations of the United States Export Laws or Regulations.
9.2 DOE, NRC LICENSES - NEORX agrees to obtain all necessary licenses and
to comply with all applicable regulations of agencies similar to DOE
and NRC in the TERRITORY with respect to AGENT and PRODUCT.
9.3 CLEARANCES - NEORX agrees to obtain all necessary clearances from any
government in the TERRITORY for export or re-export with respect to the
TECHNOLOGY or AGENT or PRODUCT.
ARTICLE 10 - PRODUCT LIABILITY AND INDEMNIFICATION;
10.1 INDEMNITY BY DOW - DOW shall indemnify and hold NEORX and its
AFFILIATES, and their respective agents, directors, officers and
employees harmless from and against any and all liabilities, claims,
demands, damages, costs, expenses or money judgments (including
reasonable attorneys' fees and expenses) incurred by or rendered
against any of them for personal injury, sickness, disease or death or
property damage which directly arises out of:
(a) the intentional misconduct or negligence of DOW; or
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
29
<PAGE>
(b) the breach by DOW of its representations, warranties or
covenants contained in this LICENSE; or
(c) any activity carried out with AGENT or PRODUCT by DOW other
than through or on behalf of NEORX and its AFFILIATES (such as
preparation of PRODUCT for the clinical trials at [*]) under
this LICENSE or other written agreements between the Parties
provided, however, that NEORX shall give DOW notice in writing as soon
as practicable of any such claim or lawsuit and shall permit DOW to
undertake the defense thereof at DOW's expense. However,
(i) NEORX will cooperate in such defense by providing
access to witnesses and evidence available to it.
NEORX shall have the right to participate in any
defense to the extent that in its judgment, NEORX may
be prejudiced thereby; and
(ii) in any claim or suit in which NEORX seeks
indemnification by DOW, NEORX shall not settle, offer
to settle or admit liability or damages in any such
claim or suit without the prior written consent of
DOW.
10.2 INDEMNITY BY NEORX - NEORX shall indemnify and hold DOW and its
AFFILIATES, and their respective agents, directors, officers and
employees harmless from and against any and all liabilities, claims,
demands, damages, costs, expenses or money judgments (including
reasonable attorneys' fees and expenses) incurred by or rendered
against any of them for personal injury, sickness, disease or death or
property damage which arises out of
(i) the manufacturing, testing, use, promotion, sale or
distribution of AGENT or PRODUCT by NEORX or its AFFILIATES,
except for those instances provided in Article 10.1 for which
DOW is obligated to indemnify NEORX; or
(ii) the breach by NEORX of any of its representations, warranties
or covenants contained in this LICENSE; or
(iii) NEORX performing any function for NEORX's FIELD under the
ongoing clinical trials, whether under a DOW clinical trial or
not;
- -------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
30
<PAGE>
provided, however, that DOW shall give NEORX notice in writing as soon
as practicable of any such claim or lawsuit and shall permit NEORX to
undertake the defense thereof at NEORX's expense. However,
(i) DOW will cooperate in such defense by providing access to
witnesses and evidence available to it. DOW shall have the
right to participate in any defense to the extent that in its
judgment, DOW may be prejudiced thereby; and
(ii) in any claim or suit in which DOW seeks indemnification by
NEORX, DOW shall not settle, offer to settle or admit
liability or damages in any such claim or suit without the
prior written consent of NEORX.
ARTICLE 11 - WARRANTIES AND INSURANCE
11.1 BELIEF OF ACCURACY - DOW represents that the TECHNOLOGY, PROCESS and
any other CONFIDENTIAL INFORMATION transferred or provided to NEORX
hereunder are believed to be accurate and complete as of their current
status at DOW at the EFFECTIVE DATE and that DOW's interpretations and
conclusions drawn therefrom were made in good faith and in the exercise
of DOW's scientific judgment as of the dates of the documents contained
therein, and that to the best of DOW's knowledge, data subject to
regulations regarding GMPs (Good Laboratory Practices and Good Clinical
Practices) and other FDA regulations, is in compliance with such
regulations. However, DOW does not warrant or represent that such
information is or will be sufficient to obtain APPROVAL to market
PRODUCT or to commercially produce AGENT or PRODUCT or to commercialize
AGENT or PRODUCT with REGULATORY AUTHORITIES in the TERRITORY. NEORX
represents that it will be solely relying on its own evaluation of the
TECHNOLOGY and the other CONFIDENTIAL INFORMATION transferred or
provided to it hereunder and on its own medical and scientific
expertise in using the same in its development and commercialization of
AGENT and PRODUCT.
11.2 AUTHORITY - Each Party represents and warrants to the other Party that
it has full power and authority to enter into this LICENSE.
DOW represents and warrants to NEORX that it has full power and
authority to grant the licenses granted in Article 2
31
<PAGE>
11.3 INSURANCE - NEORX agrees to carry such liability insurance as would
reasonably be expected of a company of NEORX' net worth operating in
the pharmaceutical industry for the commercial purpose of PRODUCT under
this LICENSE and sufficient to meet any governmental requirements.
Written assurance that such insurance is in effect must be provided to
DOW by the SIGNATURE DATE. NEORX agrees to maintain such insurance for
the term of this LICENSE.
11.4 ADDITIONAL WARRANTIES BY DOW - DOW represents and warrants to NEORX
that:
(a) as of the EFFECTIVE DATE, APPENDIX A AND B, contain a true and
complete listing of all patents and patent applications in the
TERRITORY that are owned by DOW with any claims covering an
AGENT or PRODUCT, use or manufacture of an AGENT or PRODUCT in
NEORX's FIELD or a process to make [*]; and
(b) DOW has not licensed, [*].
11.5 GENERIC PRODUCTS - DOW warrants and covenants that: [*].
ARTICLE 12 - TERM AND TERMINATION
12.1 TERM - Unless terminated under the provisions of this Article 12, this
LICENSE shall continue in effect until the expiration of ALL PATENTS
and PROCESS PATENTS, provided, however, that the Articles of Article
12.7 shall survive termination of this LICENSE.
When this LICENSE expires under this Article 12.1, the licenses granted
under this LICENSE shall be paid-up; however, any payments still due
under Article 5.4 will continue until paid in full. However, NEORX may
continue to practice the TECHNOLOGY.
12.2 FAILURE TO USE LICENSE - If NEORX and its AFFILIATES shall have
(i) discontinued selling AGENT or PRODUCT in commercial quantities
using their reasonable and diligent efforts in accord with
Article 3.1 to commercialize; or
- -------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
32
<PAGE>
(ii) not paid the minimum annual fees required under Article 5.6,
then either NEORX or DOW shall have the right to terminate this LICENSE
upon [*]' written notice, unless during such [*] period after notice
the failure described in (i) through (iii) has been remedied or cured
(E.G., through the recommencing of commercial sales or the payment of
the minimum annual fee). If termination under this Article 12.2 results
voluntarily, then NEORX shall promptly supply to DOW all registration
information for REGULATORY AUTHORITIES that is available to NEORX or
its AFFILIATES for use by DOW, its AFFILIATES or sublicensees for a
fair consideration to NEORX.
12.3 TERMINATION FOR MATERIAL BREACH - In the event of a material breach by
either DOW or NEORX of any of the obligations contained in this
LICENSE, the other Party shall be entitled to terminate this LICENSE by
notice in writing under Article 15.1 provided that such notice shall
specify the breach or breaches complained of. If the said breach or
breaches are capable of remedy, the Party committing such breach or
breaches shall be entitled to a period of [*] days from the delivery of
such notice in which to remedy or to undertake to remedy the same. In
the case the defaulting Party shall fail to remedy the breach or to
undertake to remedy the breach to the satisfaction of the injured
Party, the injured Party shall have the right to terminate this LICENSE
in whole or only terminate those rights and obligations relating to the
particular breach by simple notification to the Party in default.
Failure of a Party to exercise its rights under this Article 12.3 shall
not be construed as a waiver as to future breaches whether or not they
are similar. Sales of PRODUCT or AGENT outside the TERRITORY or FIELD
(E.G., including off label uses), where such sales are intentional on
the part of NEORX, its AFFILIATES or sublicensees, shall constitute a
material breach if such AGENT, PRODUCT, process for manufacture, or use
falls within the scope of any unexpired DOW patent.
12.4 TERMINATION BY NEORX - NEORX may surrender and terminate this LICENSE
on [*]' written notice to DOW. NEORX will disclose to DOW its reasons
for any such termination.
12.5 TERMINATION BY DOW - DOW shall have the further right to terminate this
LICENSE immediately on written notice to NEORX if:
- -------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
33
<PAGE>
(a) NEORX shall cease to carry on business or shall go into
liquidation or a receiver shall be appointed to NEORX's
assets; or
(b) NEORX shall become bankrupt or insolvent or unable to meet any
of its financial obligations on their due dates; or
(c) NEORX fails to meet any of its payments in accord with
Articles 5.10 or 5.12, unless a good faith dispute exists in
which event Article 16 applies.
12.6 ON TERMINATION - NEORX shall, upon termination of this LICENSE by DOW
under Article 12.2, 12.3 or 12.5 or termination by NEORX under Article
12.2, 12.3 or 12.4:
(a) return to DOW all copies of documents containing TECHNOLOGY
and any materials received from DOW under confidentiality and
DOW's CONFIDENTIAL INFORMATION concerning AGENT and PRODUCT in
NEORX's FIELD as set forth in Article 6.6; and
(b) pay to DOW all payments and royalties due or accrued at the
termination date within thirty (30) days after termination,
AND pay to DOW when due all payments due under Article 5.4,
but if termination occurs under Article 12.3 (if breach by
NEORX) or 12.5, then payments due under Article 5.4, if
applicable, shall be accelerated and due within said thirty
(30) days; and
(c) make no further use of any kind of any and all TECHNOLOGY
disclosed hereunder by DOW, except to the extent such
information has become public knowledge other than through
fault of NEORX, and make no further use of the surviving
PATENTS; and
(d) assign to DOW any distributorships, AGENT or PRODUCT
manufacturing agreements and sublicense agreements, to the
extent they are specific to the AGENT or PRODUCT and are
assignable and to the extent such agreements were previously
agreed by the Parties to survive termination of this LICENSE;
or, at DOW's option, terminate such agreements as are
terminable unilaterally by NEORX.
12.7 SURVIVAL OF CERTAIN OBLIGATIONS - On termination or expiration of this
LICENSE: (a) the obligations of confidentiality set forth in Article 6
shall survive for the time stated therein; (b) export control
compliance set forth in Article 9 shall survive; (c) the
indemnification obligations set forth in Article 10 shall also survive
as to all claims or actions arising from events which occurred before
termination; and (d) on expiration of this LICENSE, TECHNOLOGY shall be
paid-up and rights to its
34
<PAGE>
use by NEORX shall continue. Upon termination of this LICENSE by DOW
for any reason pursuant to this Article 12, any sublicensee of NEORX
who is not then in material breach shall have its sublicense
converted to a direct license from DOW under the terms and conditions
of this LICENSE, as further limited and restricted by the terms of
the original sublicense.
12.8 SALE OF PRODUCT AFTER TERMINATION - In the event of termination of this
LICENSE, NEORX and its AFFILIATES and sublicensees (who have been
identified in writing to DOW) have the right over the following six (6)
months solely to sell any inventory of PRODUCTS (including PRODUCTS
manufactured from materials on hand or on order under an agreement)
provided earned royalties under Articles 5.3 and 5.5 and milestone
payments under Article 5.4 are paid thereon to DOW as would otherwise
be due and payable during the term of this LICENSE. DOW shall have the
right, but not the obligation, to purchase any PRODUCT, AGENT,
ADDITIONAL AGENT, or [*] not committed by agreement at [*].
ARTICLE 13 - FORCE MAJEURE
13.1 EVENT OF FORCE MAJEURE - In the event that performance under this
LICENSE, or any obligation hereunder, is hindered, delayed or prevented
by reason of: acts of God; strikes; lockouts; labor troubles;
intervention or any action or inaction of any government authority; any
material change in any regulations, policies or procedures of any
government authority; fire; riots; insurrections; invasions; war; or
other reason of similar nature beyond the reasonable control of the
Party and are without its fault or negligence, then performance of that
act shall be excused for the period of the delay and the period for the
performance of that act shall be extended for an equivalent period.
13.2 NOTIFICATION - Upon occurrence of an event of force majeure, the
affected Party shall promptly notify the other Party in writing,
setting forth the nature of the occurrence, its expected duration and
how that Party's performance is affected. The affected Party shall
resume the performance of its obligations as soon as practicable after
the force majeure event ceases.
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
35
<PAGE>
ARTICLE 14 - CONSENTS
14.1 COMMITMENTS - DOW agrees to take reasonable efforts to maintain in full
force and effect the agreements or written commitments, which DOW has
made prior to the SIGNATURE DATE for AGENT or PRODUCT in NEORX's FIELD
in the TERRITORY.
14.2 AGREEMENTS - DOW expects to enter into other agreements for a licensee
for AGENT and PRODUCT in NEORX's FIELD OUTSIDE the TERRITORY, I.E.,
Australia. After the SIGNATURE DATE, NEORX consents to let DOW disclose
to this other DOW licensee that NEORX is DOW's licensee for the
TERRITORY. If desired by NEORX and acceptable to that DOW licensee, DOW
shall provide NEORX with information on whom to contact at that DOW
licensee for possible collaboration between NEORX and such DOW licensee
in NEORX's FIELD.
ARTICLE 15 - NOTICES
15.1 OFFICIAL - Any notice, request or communication specifically provided
for or permitted to be given under this LICENSE must be in writing and
may be delivered by hand delivery, courier service, or electronic
transmission such as telex, facsimile, telegram or electronic mail, and
shall be deemed effective as of the time of actual delivery thereof to
the addressee. For purposes of notice the addresses of the Parties0
shall be as follows:
DOW: The Dow Chemical Company
Patent Department
1790 Building, Washington Street
Midland, Michigan 48674
Attention: Karen L. Kimble, JD
Senior Counsel
Telephone: 517-636-1687
Facsimile: 517 - 636 - 2523
NEORX: NeoRx Corporation
410 West Harrison
Seattle, Washington 98119
Attention: Paul G. Abrams, MD, JD
Chief Executive Officer
36
<PAGE>
Telephone: 206-281-7001, ext. 521
Facsimile: 206-284-7112
with a copy to:
NeoRx Corporation
410 West Harrison
Seattle, Washington 98119
Attention: Anna Lewak Wight, JD
Director of Intellectual Property
Telephone: 206-7001, ext. 526
Facsimile: 206-286-2537
15.2 TRANSITION - For purposes of scientific reporting, the addresses of the
Parties shall be as follows:
DOW: The Dow Chemical Company
Building B-1222
2301 Brazosport Blvd.
Freeport, Texas 77541
Attention: Jim Simon, PhD
Senior Associate Scientist
Telephone: 409-238-7494
Facsimile: 409-238-0516
NEORX: NeoRx Corporation
410 West Harrison
Seattle, Washington 98119
Attention: Alan R. Fritzberg, PhD
Chief Scientist and
Chairman of the Scientific Board
Telephone: 206-286-2522
Facsimile: 206-284-7112
15.3 CHANGES - Each Party may change its address and its representative for
notice by the giving of notice thereof in the manner hereinabove
provided.
37
<PAGE>
ARTICLE 16 - DISPUTE RESOLUTION
16.1 CHOICE OF LAW - This LICENSE shall be governed by the laws of the State
of Delaware, except its conflict of laws principles, in all respects of
validity, construction and performance, except that all questions
concerning the construction, validity, coverage or infringement of
patents or PATENTS, PROCESS PATENTS, and DEFENSIVE PATENTS shall be
decided in accordance with the patent law of the country where the
patent was granted.
16.2 DISPUTES - Both Parties shall make good faith efforts to resolve any
questions concerning construction and performance under this LICENSE,
excluding PATENTS, PROCESS PATENTS, and DEFENSIVE PATENTS, by:
16.2.1 Notice, contact and negotiation, all proceedings and documents
in English, between the Parties listed under Article 15.1
within [*] from the date of the notice by negotiation either
by telephone or by meeting in Chicago, IL; and
If unsuccessful under Article 16.2.1, then senior executive
management with settlement authority and counsel of DOW and
NEORx shall meet at a mutually agreeable location within [*]
from a date of notice that Article 16.2.1 failed to resolve
the issues. Counsel shall present the legal and factual
arguments to such executives in English, with supporting
evidence if necessary, and resolution by these executives is
expected within ten (10) days, which may be reduced to writing
in English as an amendment to this LICENSE; and
If such executives have not met or resolved the issues under
Article 16.2.2, then within [*] from the date of the notice
under Article 16.2.1, the Parties shall submit the issues to
mediation in Chicago, IL, in English, in accordance with the
Rules of the American Arbitration Association ("AAA"), which
may be modified by the Parties, and judgment shall not be
binding. The Parties agree that the following procedures shall
be adhered to even though they may, in part, not be in full
conformance with said Rules:
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
38
<PAGE>
(a) One mediator shall be selected within [*] from a list
of at least 20 mediators selected by the AAA composed
of counsel with chemistry or pharmaceutical expertise
who are practicing or retired partners in law firms
or in-house corporate counsel not affiliated with the
Parties with at least 15 years of experience in law
and knowledge of the pertinent laws of any country
relevant to the dispute. The mediation proceedings
and reports shall be in English. The time from the
beginning of submission for mediation and conclusion
of any oral or written proceedings shall not exceed
six (6) months; and
(b) Discovery shall be limited to only that for which
each Party has a substantial, demonstrable need, and
shall be conducted in the most expeditious and
cost-effective manner. The mediator shall resolve any
issues with regard to the discovery. Decision by the
mediator shall be given in writing within thirty (30)
days from the end of oral proceedings; and
(c) Although the decision by the mediator is non-binding,
should either Party then litigate in a court of
competent jurisdiction for the Parties, either Party
may introduce into court the decision reached by
mediation with its supporting evidence.
ARTICLE 17 - ASSIGNMENT
17.1 ASSIGNMENT - Neither Party to this LICENSE shall assign any rights
hereunder without the prior written consent of the other Party, such
consent not to be unreasonably withheld. The Parties agree, however,
that without such consent being required from DOW, NEORX may assign to
its AFFILIATES, but DOW must be notified in writing in accord with
Article 15.1.
17.2 CONSOLIDATION, REORGANIZATION OR MERGER - Should NEORX be consolidated,
reorganized or merged with another entity, this LICENSE and all rights
and obligations arising under this LICENSE may be assigned to the
successor entity or the assignee of all or substantially all of NEORX's
business and assets related to AGENT or PRODUCT without DOW's prior
written consent. However NEORX shall promptly notify DOW prior to such
action in accord with Article 15.1.
17.3 EFFECT ON SUCCESSORS AND ASSIGNEES - This LICENSE shall inure to the
benefit of and be binding upon such successors and permitted assignees.
39
<PAGE>
ARTICLE 18 - MISCELLANEOUS PROVISIONS
18.1 AMENDMENTS - This LICENSE may be amended only in writing executed by
both Parties.
18.2 ENTIRETY OF AGREEMENT - This LICENSE sets forth the entire agreement
and understanding between the Parties hereto as of the EFFECTIVE DATE
with respect to AGENT and PRODUCT for their commercialization in the
TERRITORY. The Parties agree that this LICENSE is in compliance with
the OPTION conditions in all respects. Nevertheless, the OPTION shall
remain in effect for development activities with regard to supplying
reports or performance of remaining activities and until it expires on
[*]. Also the CDA and OPTION shall remain in effect for activities done
prior to the EFFECTIVE DATE.
18.3 SEVERABILITY - If any term or provision under this LICENSE is deemed
invalid under the laws of a particular country or jurisdiction, the
invalidity shall not invalidate the whole LICENSE but it shall be
construed as if not containing that particular term or provision and
the rights and obligations of the Parties shall be construed and
enforced accordingly. The Parties shall negotiate in good faith a
substitute provision in compliance with the law to retain as nearly as
possible the Parties' intent in legally valid language. It is
understood that a service agreement may be entered into between the
Parties at a later date, which shall not modify this LICENSE.
18.4 WAIVERS, CUMULATIVE REMEDIES - A waiver by either Party of any term or
condition of this LICENSE in any one instance shall not be deemed
construed to be a waiver of such term or condition for any similar
instance in the future or of any subsequent breach hereof. All rights,
remedies, undertakings, obligations and agreements contained in this
LICENSE shall be cumulative and none of them shall be a limitation of
any other remedy, right, undertaking, obligation or agreement of either
Party.
18.5 HEADINGS - Headings in this LICENSE are included herein for ease of
reference and shall not affect the meaning of the provisions of this
LICENSE, nor shall they have any other legal effect.
- --------------
* Omitted confidential material filed separately with the Commission
pursuant to an application for confidential treatment.
40
<PAGE>
18.6 OTHER DOCUMENTS - Each Party agrees to execute such additional papers
or documents in customary legal form and to make such governmental
filings or applications as may be necessary or desirable to effect the
purposes of this LICENSE and carry out its provisions.
18.7 PUBLICITY - Neither DOW nor NEORX shall make the financial terms of
this LICENSE public, except as required by law. In the event that a
filing of a copy of this LICENSE with the U.S. Securities and Exchange
Commission is required, then NEORX shall seek confidential treatment of
information considered confidential by DOW. Any press release or
publicity of this LICENSE shall be reviewed and approved by both
Parties prior to any release.
18.8 INTERPRETATION - The Parties acknowledge and agree that: (a) each Party
and its counsel reviewed and negotiated the terms and provisions of
this LICENSE and have contributed to its revision; (b) the rule of
construction to the effect that any ambiguities are resolved against
the drafting Party shall not be employed in the interpretation of this
LICENSE; and (c) the terms and revisions of this LICENSE shall be
construed fairly as to all Parties and not in favor of or against any
Party, regardless of which Party was generally responsible for the
preparation of this LICENSE.
18.9 BANKRUPTCY - All rights and licenses granted under or pursuant to this
LICENSE by DOW to NEORX are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of Title 11, U.S.C. (the "Bankruptcy Code"),
licenses of rights to "intellectual property" as defined under Section
101(60) of the Bankruptcy Code. The Parties agree that NEORX, as
licensee of such rights under this LICENSE, shall retain and may fully
exercise all of its rights and elections under the Bankruptcy Code.
IN WITNESS WHEREOF, the Parties have duly executed duplicate originals
of this LICENSE by their appropriate authorized representative. This License may
be subject to management and/or Board approval by each Party. Upon signature
below such approval is indicated to have been obtained. Separate signature pages
are acceptable in facsimile form, and shall be accepted IN LIEU of original
signatures if time constraints prevent original signatures, provided each Party
receives a dated, signed, legible facsimile indicating the signatory for the
other Party.
THE DOW CHEMICAL COMPANY NEORX CORPORATION
41
<PAGE>
By By
--------------------------------- ---------------------------------
Name Richard M. Gross JD Name Paul G. Abrams, MD, JD
Title: Vice President, R&D Title Chief Executive Officer
Date Date
------------------------------- -------------------------------
42
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 9/30/99
10(A) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,294
<SECURITIES> 17,741
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,805
<PP&E> 8,308
<DEPRECIATION> 7,318
<TOTAL-ASSETS> 22,041
<CURRENT-LIABILITIES> 1,972
<BONDS> 1,195
0
4
<COMMON> 420
<OTHER-SE> 18,450
<TOTAL-LIABILITY-AND-EQUITY> 22,041
<SALES> 0
<TOTAL-REVENUES> 463
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,846
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88
<INCOME-PRETAX> (9,673)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,673)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,673)
<EPS-BASIC> (.48)
<EPS-DILUTED> (.48)
</TABLE>
